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CNA FINANCIAL CORP - Quarter Report: 2024 June (Form 10-Q)

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For the three and six months ended June 30, 2024, immediate charges to net income resulting from adverse development that caused the Net Premium Ratio (NPR) to exceed 100% for certain cohorts were $ million and $ million. For the three and six months ended June 30, 2023, immediate charges to net income resulting from adverse development that caused the NPR to exceed 100% were $ million and $ million.
For the three and six months ended June 30, 2024, the portion of losses recognized in a prior period due to NPR exceeding 100% for certain cohorts which, due to favorable development, was reversed through net income was $ million and $ million. For the three and six months ended June 30, 2023, the portion of losses recognized in a prior period due to NPR exceeding 100% which, due to favorable development, was reversed through net income was less than $ million and $ million.

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Note G.
billion, which will be paid over the lifetime of the annuitants. The Company does not believe any payment is likely under these guarantees, as the Company is the beneficiary of a trust that must be maintained at a level that approximates the discounted reserves for these annuities.
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Note H.
 $ $ $ Expected return on plan assets()()()()Amortization of net actuarial loss    Total net periodic pension cost (benefit)$ $ $ $ 
The following table indicates the line items in which the non-service cost (benefit) is presented in the Condensed Consolidated Statements of Operations.
Periods ended June 30Three MonthsSix Months
(In millions)2024202320242023
Non-Service Cost (Benefit):
Insurance claims and policyholder's benefits$ $ $ $ 
Other operating expenses    
Total net periodic pension cost (benefit)$ $ $ $ 

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Note I.
)$()$()$()$()$()Other comprehensive income (loss) before reclassifications()()  () 
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $, $, $, $, $ and $
()()()  ()
Other comprehensive income (loss) net of tax (expense) benefit of $, $, $(), $(), $ and $()
 ()  () 
Balance as of June 30, 2024
$()$()$()$ $()$()
(In millions)Net unrealized gains (losses) on investments with an allowance for credit lossesNet unrealized gains (losses) on other investmentsPension and postretirement benefitsCumulative impact of changes in discount rates used to measure long duration contractsCumulative foreign currency translation adjustmentTotal
Balance as of April 1, 2023
$()$()$()$()$()$()
Other comprehensive income (loss) before reclassifications()()   ()
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $, $, $, $, $ and $
()()()  ()
Other comprehensive income (loss) net of tax (expense) benefit of $, $, $(), $(), $ and $
()()   ()
Balance as of June 30, 2023
$()$()$()$()$()$()






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)$()$()$()$()$()Other comprehensive income (loss) before reclassifications()()  () 
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $, $, $, $, $ and $
()()()  ()
Other comprehensive income (loss) net of tax (expense) benefit of $(), $, $(), $(), $ and $()
 ()  () 
Balance as of June 30, 2024
$()$()$()$ $()$()
)$()$()$ $()$()
Cumulative effect adjustment from changes in accounting guidance, net of tax (expense) benefit of $, $, $, $, $ and $
   () ()
Balance as of January 1, 2023
()()()()()()Other comprehensive income (loss) before reclassifications()  ()  
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $, $, $, $, $ and $
()()()  ()
Other comprehensive income (loss) net of tax (expense) benefit of $, $(), $(), $, $ and $()
()  ()  
Balance as of June 30, 2023
$()$()$()$()$()$()

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Note J.
business segments: Specialty, Commercial and International. These segments are collectively referred to as Property & Casualty Operations. The Company's operations outside of Property & Casualty Operations are managed and reported in segments: Life & Group and Corporate & Other.
The accounting policies of the segments are the same as those described in Note A to the Consolidated Financial Statements within CNAF's Annual Report on Form 10-K for the year ended December 31, 2023. The Company manages most of its assets on a legal entity basis, while segment operations are generally conducted across legal entities. As such, only Insurance and Reinsurance receivables, Insurance reserves, Deferred acquisition costs, Goodwill and Deferred non-insurance warranty acquisition expense and revenue are readily identifiable for individual segments. Distinct investment portfolios are not maintained for every individual segment; accordingly, allocation of assets to each segment is not performed. Therefore, a significant portion of Net investment income and Net investment gains or losses are allocated primarily based on each segment's net carried insurance reserves, as adjusted. All significant intersegment income and expense have been eliminated. Income taxes have been allocated on the basis of the taxable income of the segments.
In the following tables, certain financial measures are presented to provide information used by management to monitor the Company's operating performance. Management utilizes these financial measures to monitor the Company's insurance operations and investment portfolio.
The performance of the Company's insurance operations is monitored by management through core income (loss), which is derived from certain income statement amounts. The Company's investment portfolio is monitored by management through analysis of various factors including unrealized gains and losses on securities, portfolio duration and exposure to market and credit risk.
Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses. The calculation of core income (loss) excludes net investment gains or losses because net investment gains or losses are generally driven by economic factors that are not necessarily reflective of the Company's primary operations.
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 $ $ $ $ $ $ Net investment income       Non-insurance warranty revenue       Other revenues()    () Total operating revenues     () Claims, benefits and expenses      Net incurred claims and benefits       Policyholders’ dividends       Amortization of deferred acquisition costs       Non-insurance warranty expense       Other insurance related expenses       Other expenses     () Total claims, benefits and expenses     () Core income (loss) before income tax   ()()  Income tax (expense) benefit on core income (loss)()()()   ()Core income (loss) $ $ $ $()$()$  Net investment gains (losses)()Income tax (expense) benefit on net investment gains (losses) Net investment gains (losses), after tax()Net income (loss)$ 
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 $ $ $ $ $ $ Net investment income       Non-insurance warranty revenue       Other revenues     () Total operating revenues     () Claims, benefits and expenses    Net incurred claims and benefits       Policyholders’ dividends       Amortization of deferred acquisition costs       Non-insurance warranty expense       Other insurance related expenses       Other expenses  ()  () Total claims, benefits and expenses     () Core income (loss) before income tax   ()()  Income tax (expense) benefit on core income (loss)()()()   ()Core income (loss)$ $ $ $()$()$  Net investment gains (losses)()Income tax (expense) benefit on net investment gains (losses) Net investment gains (losses), after tax()Net income (loss)$ 
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 $ $ $ $ $ $ Net investment income       Non-insurance warranty revenue       Other revenues     () Total operating revenues     () Claims, benefits and expenses      Net incurred claims and benefits       Policyholders’ dividends       Amortization of deferred acquisition costs       Non-insurance warranty expense       Other insurance related expenses       Other expenses     () Total claims, benefits and expenses     () Core income (loss) before income tax   ()()  Income tax (expense) benefit on core income (loss)()()()   ()Core income (loss) $ $ $ $ $()$  Net investment gains (losses)()Income tax (expense) benefit on net investment gains (losses) Net investment gains (losses), after tax()Net income (loss)$ 
June 30, 2024
(In millions)      
Reinsurance receivables$ $ $ $ $ $ $ 
Insurance receivables       
Deferred acquisition costs       
Goodwill       
Deferred non-insurance warranty acquisition expense       
Insurance reserves 
Claim and claim adjustment expenses       
Unearned premiums       
Future policy benefits       
Deferred non-insurance warranty revenue       
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 $ $ $ $ $ $ Net investment income       Non-insurance warranty revenue       Other revenues     () Total operating revenues     () Claims, benefits and expenses    Net incurred claims and benefits       Policyholders’ dividends       Amortization of deferred acquisition costs       Non-insurance warranty expense       Other insurance related expenses       Other expenses  ()  () Total claims, benefits and expenses     () Core income (loss) before income tax   ()()  Income tax (expense) benefit on core income (loss)()()()   ()Core income (loss)$ $ $ $()$()$  Net investment gains (losses)()Income tax (expense) benefit on net investment gains (losses) Net investment gains (losses), after tax()Net income (loss)$ 
December 31, 2023
(In millions)
Reinsurance receivables$ $ $ $ $ $ $ 
Insurance receivables       
Deferred acquisition costs       
Goodwill       
Deferred non-insurance warranty acquisition expense       
Insurance reserves 
Claim and claim adjustment expenses       
Unearned premiums       
Future policy benefits       
Deferred non-insurance warranty revenue       

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 $ $ $ Surety    Warranty & Alternative Risks    Specialty revenues    CommercialMiddle Market    Construction    Small Business    Other Commercial    Commercial revenues    InternationalCanada    Europe    Hardy    International revenues    Life & Group revenues    Corporate & Other revenues     Eliminations()()()()Total operating revenues    Net investment gains (losses)()()()()Total revenues$ $ $ $ 
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Note K.
billion and $ billion reported under Liabilities as of June 30, 2024 and December 31, 2023. For the three and six months ended June 30, 2024, the Company recognized $ billion and $ billion of revenues in each period that were included in the deferred revenue balance as of January 1, 2024. For the three and six months ended June 30, 2023, the Company recognized $ billion and $ billion of revenues that were included in the deferred revenue balance as of January 1, 2023. For the three and six months ended June 30, 2024 and 2023, non-insurance warranty revenue recognized from performance obligations related to prior periods due to a change in estimate was not material. The Company expects to recognize approximately $ billion of the deferred revenue in the remainder of 2024, $ billion in 2025, $ billion in 2026 and $ billion thereafter.

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Item 2. Management's Discussion and Analysis (MD&A) of Financial Conditions and Results of Operations
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, 2023.
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. The calculation of core income (loss) excludes net investment gains or losses because net investment gains or losses are generally driven by economic factors that are not necessarily reflective of our primary operations. Management monitors core income (loss) for each business segment to assess segment performance. 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 CNA's 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 and deductible amounts. 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, expense and dividend ratios. The underlying combined ratio is the sum of the underlying loss ratio, the expense ratio and the dividend ratio. 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), calculated using GAAP financial results, to monitor our insurance operations. Underwriting gain (loss) is pretax and is calculated as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses. Underlying underwriting gain (loss) represents underwriting results excluding catastrophe losses and development-related items.
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 to the Condensed Consolidated Financial Statements included under Part I, Item 1.
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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 discussed 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, 2023 for further information.

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CATASTROPHES AND RELATED REINSURANCE
Various events can cause catastrophe losses. These events can be natural or man-made, including hurricanes, tornadoes, windstorms, earthquakes, hail, severe winter weather, fires, floods, riots, strikes, civil unrest, cyber-attacks, pandemics and acts of terrorism that produce unusually large aggregate losses.
Catastrophes are an inherent risk of the property and casualty insurance business and have contributed to material period-to-period fluctuations in our results of operations and/or equity. We use various analyses and methods, including using one of the industry standard natural catastrophe models, to estimate hurricane and earthquake losses at various return periods and to inform underwriting and reinsurance decisions designed to manage our exposure to catastrophic events. We generally seek to manage our exposure through the purchase of catastrophe reinsurance and utilize various reinsurance programs to mitigate catastrophe losses, including excess-of-loss occurrence and aggregate treaties covering property and workers’ compensation, a property quota share treaty and the Terrorism Risk Insurance Program Reauthorization Act of 2019 (TRIPRA), as well as individual risk agreements that reinsure losses from specific classes or lines of business. We conduct an ongoing review of our risk and catastrophe reinsurance coverages and from time to time make changes as we deem appropriate. In the second quarter of 2024, we renewed our excess-of-loss property catastrophe reinsurance as described below:
Group North American Property Treaty
We purchased corporate catastrophe excess-of-loss treaty reinsurance covering our U.S. states and territories and Canadian property exposures underwritten in our North American and European companies. The treaty has a term of June 1, 2024 to June 1, 2025 and provides coverage for the accumulation of covered losses from catastrophe occurrences above our per occurrence retention of $250 million up to $1.4 billion for all losses. Losses stemming from terrorism events are covered unless they are due to a nuclear, biological or chemical attack. All layers of the treaty provide for one full reinstatement.
Group Workers' Compensation Treaty
We also purchased corporate Workers' Compensation catastrophe excess-of-loss treaty reinsurance for the period January 1, 2024 to January 1, 2025 providing $275 million of coverage for the accumulation of covered losses related to natural catastrophes above our per occurrence retention of $25 million. The treaty also provides $775 million of coverage for the accumulation of covered losses related to terrorism events above our per occurrence retention of $25 million. Of the $775 million in terrorism coverage, $200 million is provided for nuclear, biological, chemical and radiation events. One full reinstatement is available for the first $275 million above the retention, regardless of the covered peril.

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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.
Periods ended June 30Three MonthsSix Months
(In millions)2024202320242023
Operating Revenues
Net earned premiums$2,498 $2,347 $4,939 $4,595 
Net investment income618 575 1,227 1,100 
Non-insurance warranty revenue404 407 811 814 
Other revenues9 7 18 14 
Total operating revenues3,529 3,336 6,995 6,523 
Claims, Benefits and Expenses
Net incurred claims and benefits (re-measurement gain (loss) of $(25), $(33), $(40) and $(34))
1,874 1,772 3,672 3,418 
Policyholders' dividends8 7 17 14 
Amortization of deferred acquisition costs435 403 879 782 
Non-insurance warranty expense388 384 782 768 
Other insurance related expenses329 318 616 623 
Other expenses83 59 168 119 
Total claims, benefits and expenses3,117 2,943 6,134 5,724 
Core income before income tax412 393 861 799 
Income tax expense on core income(86)(85)(180)(166)
Core income326 308 681 633 
Net investment losses(10)(32)(32)(67)
Income tax benefit on net investment losses1 7 6 14 
Net investment losses, after tax(9)(25)(26)(53)
Net income$317 $283 $655 $580 
Three Month Comparison
Core income increased $18 million for the three months ended June 30, 2024 as compared with the same period in 2023. Core income for our Property & Casualty Operations increased $6 million driven by higher net investment income partially offset by higher catastrophe losses. Core results for our Life & Group segment improved $19 million, while core loss for our Corporate & Other segment increased $7 million.
Catastrophe losses were $82 million and $68 million for the three months ended June 30, 2024 and 2023. Unfavorable net prior year loss reserve development of $23 million and $18 million was recorded for the three months ended June 30, 2024 and 2023 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.






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Six Month Comparison
Core income increased $48 million for the six months ended June 30, 2024 as compared with the same period in 2023. Core income for our Property & Casualty Operations increased $32 million driven by higher net investment income and favorable net prior year loss reserve development partially offset by higher catastrophe losses. Core results for our Life & Group segment improved $27 million, while core loss for our Corporate & Other segment increased $11 million.
Catastrophe losses were $170 million and $120 million for the six months ended June 30, 2024 and 2023. Unfavorable net prior year loss reserve development of $16 million and $31 million was recorded for the six months ended June 30, 2024 and 2023 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.
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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.
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Specialty
The following table details the results of operations for Specialty.
Periods ended June 30Three MonthsSix Months
(In millions, except ratios, rate, renewal premium change and retention)2024202320242023
Gross written premiums$1,728 $1,769 $3,410 $3,549 
Gross written premiums excluding third-party captives984 961 1,864 1,847 
Net written premiums857 825 1,649 1,613 
Net earned premiums831 812 1,645 1,609 
Underwriting gain60 74 136 154 
Net investment income154 142 304 271 
Core income 169 177 346 348 
Other performance metrics:
Underlying loss ratio59.6 %58.6 %59.4 %58.5 %
Effect of catastrophe impacts— — — — 
Effect of development-related items(0.4)(0.3)(0.5)(0.2)
Loss ratio59.2 58.3 58.9 58.3 
Expense ratio33.2 32.4 32.5 31.9 
Dividend ratio0.3 0.2 0.3 0.2 
Combined ratio92.7 %90.9 %91.7 %90.4 %
Underlying combined ratio93.1 %91.2 %92.2 %90.6 %
Rate— %(1)%1 %— %
Renewal premium change1 — 2 2 
Retention90 89 89 89 
New business$118 $120 $212 $228 
Three Month Comparison
Gross written premiums, excluding third-party captives, for Specialty increased $23 million for the three months ended June 30, 2024 as compared with the same period in 2023 driven by favorable renewal premium change and retention. Net written premiums for Specialty increased $32 million for the three months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.
Core income decreased $8 million for the three months ended June 30, 2024 as compared with the same period in 2023 primarily due to lower underlying underwriting results and higher claim costs in our non-insurance auto warranty business, partially offset by higher net investment income.
The combined ratio of 92.7% increased 1.8 points for the three months ended June 30, 2024 as compared with the same period in 2023 primarily due to a 0.9 point increase in the loss ratio and a 0.8 point increase in the expense ratio. The increase in the loss ratio was due to an increase in the underlying loss ratio primarily driven by continued rate pressure over the last several quarters. The increase in the expense ratio was driven by higher acquisition costs. There were no catastrophe losses for three months ended June 30, 2024 and 2023.
Favorable net prior year loss reserve development of $3 million and $4 million was recorded for the three months ended June 30, 2024 and 2023. 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.

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Six Month Comparison
Gross written premiums, excluding third-party captives, for Specialty increased $17 million for the six months ended June 30, 2024 as compared with the same period in 2023 driven by favorable renewal premium change and retention. Net written premiums for Specialty increased $36 million for the six months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.
Core income decreased $2 million for the six months ended June 30, 2024 as compared with the same period in 2023 primarily due to lower underlying underwriting results and higher claim costs in our non-insurance auto warranty business partially offset by higher net investment income.
The combined ratio of 91.7% increased 1.3 points for the six months ended June 30, 2024 as compared with the same period in 2023 primarily due to a 0.6 point increase in the expense ratio and a 0.6 point increase in the loss ratio. The increase in the expense ratio was driven by higher acquisition costs. The increase in the loss ratio was due to an increase in the underlying loss ratio primarily driven by continued rate pressure over the last several quarters partially offset by favorable net prior year loss reserve development. There were no catastrophe losses for six months ended June 30, 2024 and 2023.
Favorable net prior year loss reserve development of $8 million and $4 million was recorded for the six months ended June 30, 2024 and 2023. 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)June 30, 2024December 31, 2023
Gross case reserves$1,893 $1,604 
Gross IBNR reserves5,426 5,527 
Total gross carried claim and claim adjustment expense reserves$7,319 $7,131 
Net case reserves$1,607 $1,392 
Net IBNR reserves4,305 4,524 
Total net carried claim and claim adjustment expense reserves$5,912 $5,916 

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Commercial
The following table details the results of operations for Commercial.
Periods ended June 30Three MonthsSix Months
(In millions, except ratios, rate, renewal premium change and retention)2024202320242023
Gross written premiums$1,927 $1,719 $3,613 $3,161 
Gross written premiums excluding third-party captives1,802 1,604 3,484 3,044 
Net written premiums1,458 1,329 2,796 2,517 
Net earned premiums1,247 1,120 2,449 2,166 
Underwriting gain39 42 68 83 
Net investment income175 165 351 314 
Core income167 159 325 310 
Other performance metrics:
Underlying loss ratio62.0 %61.5 %62.0 %61.5 %
Effect of catastrophe impacts6.1 5.2 6.4 4.7 
Effect of development-related items(0.1)(0.5)— (0.3)
Loss ratio68.0 66.2 68.4 65.9 
Expense ratio28.5 29.6 28.4 29.8 
Dividend ratio0.5 0.5 0.5 0.5 
Combined ratio97.0 %96.3 %97.3 %96.2 %
Underlying combined ratio91.0 %91.6 %90.9 %91.8 %
Rate7 %8 %7 %8 %
Renewal premium change7 11 8 10 
Retention84 85 84 85 
New business$405 $343 $772 $653 
Three Month Comparison
Gross written premiums for Commercial increased $208 million for the three months ended June 30, 2024 as compared with the same period in 2023 driven by rate and higher new business. Net written premiums for Commercial increased $129 million for the three months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.
Core income increased $8 million for the three months ended June 30, 2024 as compared with the same period in 2023, driven by improved underlying underwriting results and higher net investment income partially offset by higher catastrophe losses.
The combined ratio of 97.0% increased 0.7 points for the three months ended June 30, 2024 as compared with the same period in 2023 due to a 1.8 point increase in the loss ratio partially offset by a 1.1 point improvement in the expense ratio. The increase in the loss ratio was primarily driven by higher catastrophe losses, an increase in the underlying loss ratio and lower favorable net prior year loss reserve development. Catastrophe losses were $76 million, or 6.1 points of the loss ratio, for the three months ended June 30, 2024, as compared with $59 million, or 5.2 points of the loss ratio, for the three months ended June 30, 2023. The improvement in the expense ratio was primarily driven by higher net earned premiums partially offset by higher acquisition costs.
Favorable net prior year loss reserve development of $6 million and $13 million was recorded for the three months ended June 30, 2024 and 2023. 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.


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Six Month Comparison
Gross written premiums for Commercial increased $452 million for the six months ended June 30, 2024 as compared with the same period in 2023 driven by rate and higher new business. Net written premiums for Commercial increased $279 million for the six months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.
Core income increased $15 million for the six months ended June 30, 2024 as compared with the same period in 2023, driven by improved underlying underwriting results and higher net investment income partially offset by higher catastrophe losses.
The combined ratio of 97.3% increased 1.1 points for the six months ended June 30, 2024 as compared with the same period in 2023 due to a 2.5 point increase in the loss ratio partially offset by a 1.4 point improvement in the expense ratio. The increase in the loss ratio was primarily driven by higher catastrophe losses. Catastrophe losses were $158 million, or 6.4 points of the loss ratio, for the six months ended June 30, 2024, as compared with $103 million, or 4.7 points of the loss ratio, for the six months ended June 30, 2023. The improvement in the expense ratio was primarily driven by higher net earned premiums partially offset by higher employee related costs.
Favorable net prior year loss reserve development of $8 million and $15 million was recorded for the six months ended June 30, 2024 and 2023. 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)June 30, 2024December 31, 2023
Gross case reserves$3,350 $3,291 
Gross IBNR reserves7,267 6,812 
Total gross carried claim and claim adjustment expense reserves$10,617 $10,103 
Net case reserves$2,948 $2,878 
Net IBNR reserves6,485 6,143 
Total net carried claim and claim adjustment expense reserves$9,433 $9,021 
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International
The following table details the results of operations for International.
Periods ended June 30Three MonthsSix Months
(In millions, except ratios, rate, renewal premium change and retention)2024202320242023
Gross written premiums$417 $421 $791 $819 
Net written premiums359 359 619 630 
Net earned premiums311 302 626 592 
Underwriting gain25 22 46 31 
Net investment income32 25 63 48 
Core income44 38 81 62 
Other performance metrics:
Underlying loss ratio58.1 %57.9 %58.1 %57.7 %
Effect of catastrophe impacts2.0 3.1 2.0 2.9 
Effect of development-related items(1.0)— (0.5)2.5 
Loss ratio59.1 61.0 59.6 63.1 
Expense ratio32.8 31.2 33.0 31.5 
Combined ratio91.9 %92.2 %92.6 %94.6 %
Underlying combined ratio90.9 %89.1 %91.1 %89.2 %
Rate0 %4 %0 %4 %
Renewal premium change2 7 3 7 
Retention80 83 81 83 
New business$72 $92 $140 $177 
Three Month Comparison
Gross written premiums for International decreased $4 million for the three months ended June 30, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, gross written premiums decreased $4 million driven by lower new business. Net written premiums for International were consistent with the prior year quarter. Excluding the effect of foreign currency exchange rates, net written premiums increased $1 million for the three months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.
Core income increased $6 million for the three months ended June 30, 2024 as compared with the same period in 2023 primarily driven by higher net investment income.
The combined ratio of 91.9% improved 0.3 points for the three months ended June 30, 2024 as compared with the same period in 2023 due to a 1.9 point improvement in the loss ratio partially offset by a 1.6 point increase in the expense ratio. The improvement in the loss ratio was driven by lower catastrophe losses and favorable net prior year loss reserve development. Catastrophe losses were $6 million, or 2.0 points of the loss ratio, for the three months ended June 30, 2024, as compared with $9 million, or 3.1 points of the loss ratio, for the three months ended June 30, 2023. The increase in the expense ratio was driven by higher employee related costs and acquisition costs.
Favorable net prior year loss reserve development of $3 million was recorded for the three months ended June 30, 2024 compared to no net prior year loss reserve development for the three months ended June 30, 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part 1, Item 1.


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Six Month Comparison
Gross written premiums for International decreased $28 million for the six months ended June 30, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, gross written premiums decreased $35 million driven by lower new business. Net written premiums for International decreased $11 million for the six months ended June 30, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, net written premiums decreased $15 million for the six months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.
Core income increased $19 million for the six months ended June 30, 2024 as compared with the same period in 2023 driven by unfavorable net prior year loss reserve development recorded in the prior year quarter and higher net investment income partially offset by lower underlying underwriting results.
The combined ratio of 92.6% improved 2.0 points for the six months ended June 30, 2024 as compared with the same period in 2023 due to a 3.5 point improvement in the loss ratio partially offset by a 1.5 point increase in the expense ratio. The improvement in the loss ratio was driven by favorable net prior year loss reserve development and lower catastrophe losses. Catastrophe losses were $12 million, or 2.0 points of the loss ratio, for the six months ended June 30, 2024, as compared with $17 million, or 2.9 points of the loss ratio, for the six months ended June 30, 2023. The increase in the expense ratio was driven by higher employee related costs partially offset by higher net earned premiums.
Favorable net prior year loss reserve development of $3 million was recorded for the six months ended June 30, 2024 compared to unfavorable net prior year loss reserve development of $15 million for the six months ended June 30, 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part 1, Item 1.
The following table summarizes the gross and net carried reserves for International.
(In millions)June 30, 2024December 31, 2023
Gross case reserves$829 $864 
Gross IBNR reserves1,954 1,845 
Total gross carried claim and claim adjustment expense reserves$2,783 $2,709 
Net case reserves$692 $708 
Net IBNR reserves1,648 1,568 
Total net carried claim and claim adjustment expense reserves$2,340 $2,276 
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Life & Group
The following table summarizes the results of operations for Life & Group.
Periods ended June 30Three MonthsSix Months
(In millions)2024202320242023
Net earned premiums$109 $113 $219 $228 
Claims, benefits and expenses355 375 696 716 
Net investment income239 229 470 443 
(d) Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (in millions)N/A

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