20 20
Annual Report CNA Financial Corporation Faced with unprecedented challenges in 2020, CNA demonstrated flexibility and resilience as we continued to move forward – strengthening our market visibility, increasing our specialization and deepening our industry partnerships. With a steadfast focus on technology, analytics and collaborative global underwriting, we continue to provide the deep expertise and customized solutions our agents, brokers and policyholders expect. 2020 Financial Highlights
Net Written Premium Net Income $8.1B $690M
Earnings per Share Dividends Paid $2.53 $950M
Book Value per Share Shareholders’ Equity Excluding Accumulated Other Comprehensive Income $12.7 B 6% Increase
From Year-End 2019, Adjusted for $3.48 Dividends Paid in 2020 2020 Shareholder Letter
In 2020, CNA and the insurance industry rose to meet the many unique challenges presented by the global pandemic. I am immensely proud of how our employees seamlessly transitioned to a remote working environment and how we deployed innovative strategies and tactics to effectively deliver on our commitments to policyholders and to maintain the expert level of support our agents and brokers expect from CNA.
. Strong execution and underlying performance in Property & Casualty
CNA’s resilience and agility in remarkable circumstances allowed us to successfully grow our business as underwriting market conditions strengthened. The global pandemic was a catalyst for claim activity that accelerated already improving Property & Casualty (P&C) insurance pricing, terms and conditions. These hardening market conditions were necessary as the pandemic followed many years of inadequate pricing, elevated frequency and severity of insured catastrophe losses, increasing liability claims costs driven by social inflation, and pressures on investment income due to a protracted low interest rate environment.
In 2020, we achieved 9% Gross Written Premium growth (excluding Captives) and 6% Net Written Premium growth. This robust growth was driven by strong customer retention and new business, both achieving significantly improved pricing and terms and conditions. Notably, we recorded improved underlying margins in each of our three P&C operating segments, and overall we delivered an Underlying Combined Ratio of 93.1% – marking our fourth consecutive year of Underlying Combined Ratio improvement.
Our underlying performance improvement is a function of the core strategic priorities we have institutionalized across CNA over the last four years: continuously enhancing our underwriting-focused culture; attracting, developing and retaining the highest quality talent; advancing our deep specialization through new products and risk solutions; and building long-lasting strategic partnerships with agents and brokers.
The meaningful improvement in our underlying P&C performance offset what otherwise would have been a steeper decline in overall Core Income, which was 25% lower than the prior year, due to losses relating to elevated natural catastrophes, civil unrest and the impacts of COVID-19. Always building for the future
Notwithstanding unparalleled challenges during the year, CNA’s operating performance was solid. We are tremendously proud of our execution in 2020, and we remain confident in our ability to grow profitably as we continue to evolve and improve our capabilities in order to provide the best insurance solutions for our customers.
Investments in technology and analytics continue to advance our standards of execution. Our improving data management and cloud capabilities have allowed us to launch new tools to enhance the ease of doing business with CNA, while our expanded use of artificial intelligence has enabled predictive insights that augment and supplement the entire underwriting value chain.
As I often observe, our employees are our greatest competitive advantage, and central to our ability to attract and retain top talent is our commitment to Diversity & Inclusion. Our D&I Council and dedicated Employee Resource Groups lead the agenda for engagement across CNA, with education and allyship being critical cornerstones of our ongoing commitment to equality and to building an increasingly inclusive working environment.
2020 marked the sixth consecutive year for which we earned a perfect 100% score on the Human Rights Campaign Foundation’s Corporate Equality Index – the national benchmarking tool on corporate policies and practices pertinent to lesbian, gay, bisexual and transgender employees.
As social unrest unfolded in cities across the United States during the year, racism became a topic of discussion for CNA in a much more transparent way. CNA’s African American Employee Networking Group hosted “A Conversation on Race” where colleagues openly shared experiences. The event significantly increased awareness and empathy across the CNA employee population and sparked ongoing dialogue and action across the company. I cannot emphasize enough that there is no place for intolerance at CNA.
Looking beyond our internal working environment, we continue to support positive improvement within the communities to which our customers belong through volunteerism and corporate philanthropy. Additionally, we utilize our portfolio exposure expertise and Risk Control engineering to help insureds prevent and temper the impacts of climate change, as well as other new and emerging risks.
Excellent financial strength
Robust capital adequacy and strong credit fundamentals reflect the strength and quality of CNA’s balance sheet. We maintain a conservative capital structure, a high-quality investment portfolio, and excellent liquidity – factors four leading rating agencies recognized when they affirmed our financial strength ratings in 2020.
Stable earnings and improved underlying P&C underwriting performance have strengthened our balance sheet and will continue to support our long-term financial strength. Furthermore, we are committed to de-risking our runoff portfolio exposures and in 2020 we took two significant actions to reduce future potential for legacy reserve volatility. We entered into an agreement to cede a portfolio of legacy Excess Workers’ Compensation reserves, and we also meaningfully reduced reserve risk associated with our runoff Long Term Care portfolio by lowering our discount rate assumptions for the second consecutive year. This decision was supported by expectations for a prolonged low interest rate environment going forward. Thank you for your continued support
Our performance during an extraordinary year is reflective of our strong capabilities. We were well-positioned to capitalize on market opportunities and we demonstrated that CNA can operate effectively in an ever-changing, dynamic environment. The strength of our underlying performance, growth and execution is a testament to our dedicated team.
I would like to thank all our CNA employees for their creativity and passion for the long-term success of CNA, and also to thank our agents and partners for their ongoing collaboration and support. I remain incredibly optimistic about the future for CNA and the opportunities we see ahead.
Dino E. Robusto Chairman and Chief Executive Officer CNA Financial Corporation, February 9, 2021 Directors
Dino E. Robusto André Rice1 James S. Tisch Chairman of the Board and Founder and President President and Chief Executive Officer Chief Executive Officer Muller & Monroe Asset Management, LLC Loews Corporation CNA Financial Corporation
Michael A. Bless1 Kenneth I. Siegel Jane J. Wang President and Chief Executive Officer Senior Vice President Vice President Century Aluminum Company Loews Corporation Loews Corporation
Jose O. Montemayor1 Andrew H. Tisch Principal Co-Chairman of the Board Black Diamond Capital Partners I, LP Loews Corporation
Don M. Randel1 Benjamin J. Tisch Retired President Vice President The Andrew W. Mellon Foundation Loews Corporation
Executive Officers
Dino E. Robusto Nick Creatura Kevin J. Leidwinger Chairman of the Board and President and Chief Executive President and Chief Operating Officer, Chief Executive Officer Officer, Canada Commercial CNA Financial Corporation CNA Insurance Companies CNA Insurance Companies
Albert J. Miralles Jr.2 Daniel P. Franzetti3 Jalil Rehman5 Executive Vice President and Chief Executive Vice President, President and Chief Executive Officer, Financial Officer Worldwide Claim UK and Europe CNA Financial Corporation CNA Insurance Companies CNA Insurance Companies
Elizabeth A. Aguinaga José Ramón González Kevin G. Smith Executive Vice President and Chief Human Executive Vice President and General President and Chief Operating Officer, Resources Officer Counsel Specialty CNA Insurance Companies CNA Financial Corporation CNA Insurance Companies
Michael A. Costonis Robert J. Hopper4 Douglas M. Worman Executive Vice President and Chief Executive Vice President and Chief Actuary Executive Vice President and Chief Operations Officer CNA Insurance Companies Underwriting Officer CNA Insurance Companies CNA Insurance Companies
Headquarters: Transfer Agent: Shareholder Information: CNA Financial Corporation Broadridge Corporate Issuer Solutions, Inc. The common stock of CNA Financial 151 North Franklin Street P.O. Box 1342 Corporation is listed on the New York Chicago, IL 60606 Brentwood, NY 11717 Stock Exchange and the Chicago Stock 312-822-5000 www.shareholder.broadridge.com/cna Exchange. Its trading symbol is CNA. cna.com Phone U.S. and Canada: 877-456-5752 Outside U.S. and Canada: 1-720-414-6894 Investor Relations: Independent Auditors: [email protected] Amy C. Adams Deloitte & Touche LLP Senior Vice President & Treasurer 111 South Wacker Drive [email protected] Chicago, IL 60606 151 North Franklin Street Chicago, IL 60606
1 Member of Audit and Compensation Committees | 2 Assumed role 2/25/20 | 3 Assumed role 4/6/20 | 4 Assumed role 8/24/20 | 5 Assumed role 9/1/20 Form 10-K 2020 CNA Financial Corporation +$ *)**) )+( * )$. $ %## )) %$ -0B78=6C>=
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