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

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PART I
Item 1. Condensed Consolidated Financial Statements
CNA Financial Corporation
Condensed Consolidated Statements of Operations (Unaudited)
Three months ended March 31
(In millions, except per share data)20242023
Revenues
Net earned premiums$ $ 
Net investment income  
Net investment losses()()
Non-insurance warranty revenue  
Other revenues  
Total revenues  
Claims, Benefits and Expenses
Insurance claims and policyholders’ benefits (re-measurement (loss) gain of $() and $)
  
Amortization of deferred acquisition costs  
Non-insurance warranty expense  
Other operating expenses   
Interest  
Total claims, benefits and expenses  
Income before income tax  
Income tax expense()()
Net income$ $ 
Basic earnings per share$ $ 
Diluted earnings per share$ $ 
Weighted Average Outstanding Common Stock and Common Stock Equivalents
Basic
Diluted
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).

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CNA Financial Corporation
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Three months ended March 31
(In millions)20242023
Comprehensive Income
Net income$ $ 
Other Comprehensive Income, net of tax
Changes in:
Net unrealized gains and losses on investments with an allowance for credit losses ()
Net unrealized gains and losses on other investments() 
Net unrealized gains and losses on investments() 
Impact of changes in discount rates used to measure long-duration contract liabilities ()
Foreign currency translation adjustment() 
Pension and postretirement benefits  
Other comprehensive income, net of tax  
Total comprehensive income$ $ 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).
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CNA Financial Corporation
Condensed Consolidated Balance Sheets
(In millions, except share data)March 31, 2024 (Unaudited)December 31, 2023
Assets  
Investments:  
Fixed maturity securities at fair value (amortized cost of $ and $, less allowance for credit loss of $ and $)
$ $ 
Equity securities at fair value (cost of $ and $)
  
Limited partnership investments  
Other invested assets  
Mortgage loans (less allowance for credit loss of $ and $)
  
Short-term investments  
Total investments  
Cash  
Reinsurance receivables (less allowance for uncollectible receivables of $ and $)
  
Insurance receivables (less allowance for uncollectible receivables of $ and $)
  
Accrued investment income  
Deferred acquisition costs  
Deferred income taxes  
Property and equipment at cost (less accumulated depreciation of $ and $)
  
Goodwill  
Deferred non-insurance warranty acquisition expense  
Other assets (includes $ and $ due from Loews Corporation)
  
Total assets$ $ 
Liabilities  
Insurance reserves: 
Claim and claim adjustment expenses$ $ 
Unearned premiums  
Future policy benefits  
Short-term debt  
Long-term debt  
Deferred non-insurance warranty revenue  
Other liabilities (includes $ and $ due to Loews Corporation)
  
Total liabilities  
Commitments and contingencies (Notes C and G) par value; shares authorized; shares issued; and shares outstanding)  
Additional paid-in capital  
Retained earnings  
Accumulated other comprehensive loss()()
Treasury stock ( and shares), at cost
()()
Total stockholders’ equity  
Total liabilities and stockholders' equity$ $ 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).
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CNA Financial Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three months ended March 31
(In millions)20242023
Cash Flows from Operating Activities  
Net income$ $ 
Adjustments to reconcile net income to net cash flows provided by operating activities:
Deferred income tax expense  
Trading portfolio activity ()
Net investment losses   
Equity method investees() 
Net amortization of investments()()
Depreciation and amortization  
Changes in:
Receivables, net()()
Accrued investment income()()
Deferred acquisition costs()()
Insurance reserves  
Other, net()()
Net cash flows provided by operating activities  
Cash Flows from Investing Activities  
Dispositions:
Fixed maturity securities - sales  
Fixed maturity securities - maturities, calls and redemptions  
Equity securities  
Limited partnerships  
Mortgage loans  
Purchases:
Fixed maturity securities()()
Equity securities()()
Limited partnerships()()
Mortgage loans()()
Change in other investments()()
Change in short-term investments  
Purchases of property and equipment()()
Other, net  
Net cash flows (used) provided by investing activities() 
Cash Flows from Financing Activities
Dividends paid to common stockholders()()
Proceeds from the issuance of debt  
Purchase of treasury stock ()
Other, net()()
Net cash flows used by financing activities()()
Effect of foreign exchange rate changes on cash() 
Net change in cash  
Cash, beginning of year  
Cash, end of period$ $ 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).
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CNA Financial Corporation
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
Three months ended March 31
(In millions)20242023
Common Stock
Balance, beginning of period$ $ 
Balance, end of period  
Additional Paid-in Capital
Balance, beginning of year  
Stock-based compensation()()
Balance, end of period  
Retained Earnings
Balance, beginning of period, as previously reported  
Cumulative effect adjustments from changes in accounting guidance, net of tax ()
Balance, beginning of period  
Dividends to common stockholders ($ and $ per share)
()()
Net income  
Balance, end of period  
Accumulated Other Comprehensive Loss
Balance, beginning of period, as previously reported()()
Cumulative effect adjustments from changes in accounting guidance, net of tax ()
Balance, beginning of period()()
Other comprehensive income  
Balance, end of period()()
Treasury Stock
Balance, beginning of period()()
Stock-based compensation  
Purchase of treasury stock  ()
Balance, end of period()()
Total stockholders' equity$ $ 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).

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CNA Financial Corporation
Notes to Condensed Consolidated Financial Statements
Note A.
% of the outstanding common stock of CNAF as of March 31, 2024.
Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, including certain financial statement notes, is not required for interim reporting purposes and has been condensed or omitted. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in CNAF's Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) for the year ended December 31, 2023, including the summary of significant accounting policies in Note A.
Accounting Standards Pending Adoption

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Note B.
 $ Common Stock and Common Stock EquivalentsBasic      Weighted average shares outstanding  DilutedWeighted average shares outstanding  Dilutive effect of stock-based awards under compensation plans  Total  Earnings (loss) per share      Basic $ $ Diluted$ $ 
Excluded from the calculation of diluted earnings (loss) per share is the impact of potential shares attributable to exercises or conversions into common stock under stock-based employee compensation plans that would have been antidilutive during the respective periods.
share repurchases during the three months ended March 31, 2024. The Company repurchased shares of CNAF common stock at an aggregate cost of $ million during the three months ended March 31, 2023.
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Note C.
 $ Equity securities  Limited partnership investments  Mortgage loans  Short-term investments  Trading portfolio  Other  Gross investment income  Investment expense()()Net investment income$ $ 
Net investment income (loss) recognized due to the change in fair value of common stock held as of March 31, 2024 and 2023
$ $() $ Gross losses()()Net investment gains (losses) on fixed maturity securities()()Equity securities ()Short-term investments and other() Net investment gains (losses)$()$()
Net investment gains (losses) recognized due to the change in fair value of non-redeemable preferred stock held as of March 31, 2024 and 2023
$ $()
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 $ Asset-backed  Impairment losses (gains) recognized in earnings$ $ 
There were losses recognized on mortgage loans during the three months ended March 31, 2024 or 2023.
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 $ $ $ $ States, municipalities and political subdivisions     Asset-backed:Residential mortgage-backed     Commercial mortgage-backed     Other asset-backed     Total asset-backed     U.S. Treasury and obligations of government-sponsored enterprises     Foreign government     Total fixed maturity securities available-for-sale     Total fixed maturity securities trading — — —  Total fixed maturity securities$ $ $ $ $ 
) )) )) )) )    ) ) 
December 31, 2023Cost or
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Allowance for Credit LossesEstimated
Fair
Value
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds$ $ $ $ $ 
States, municipalities and political subdivisions     
Asset-backed:
Residential mortgage-backed     
Commercial mortgage-backed     
Other asset-backed     
Total asset-backed     
U.S. Treasury and obligations of government-sponsored enterprises     
Foreign government     
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 million and $ million of overseas deposits within Other invested assets, which can be redeemed at net asset value in 90 days or less. Overseas deposits are excluded from the fair value hierarchy because their fair value is recorded using the net asset value per share (or equivalent) practical expedient.
Other Liabilities
Level 2 securities include currency forward contracts valued using observable market forward rates.
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 Discounted cash flowCredit spread
% - % (%)
December 31, 2023Estimated Fair Value
(In millions)		Valuation Technique(s)Unobservable Input(s)Range
 (Weighted Average)
Fixed maturity securities$ Discounted cash flowCredit spread
% - % (%)
For fixed maturity securities, an increase to the credit spread assumptions would result in a lower fair value measurement.
Financial Assets and Liabilities Not Measured at Fair Value
 $ $ $ $ LiabilitiesShort-term debt$ $ $ $ $ Long-term debt     
December 31, 2023Carrying
Amount		Estimated Fair Value
(In millions)Level 1Level 2Level 3Total
Assets
Mortgage loans$ $ $ $ $ 
Liabilities
Short-term debt$ $ $ $ $ 
Long-term debt     
The carrying amounts reported on the Condensed Consolidated Balance Sheets for Cash, Short-term investments not carried at fair value, Accrued investment income and certain Other assets and Other liabilities approximate fair value due to the short term nature of these items. These assets and liabilities are not listed in the tables above.
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Note E.
 million and $ million for the three months ended March 31, 2024 and 2023 primarily related to severe weather related events.

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 $ Ceded  Net reserves, beginning of year      
For the three months ended March 31, 2024 and 2023, 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 months ended March 31, 2024 and 2023, 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.
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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.
Three months ended March 31
(In millions)20242023
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 $()
 ()  () Balance as of March 31, 2024$()$()$()$()$()$()
)$()$()$ $()$()
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 $()
()  ()  Balance as of March 31, 2023$()$()$()$()$()$()

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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 our 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)$ 
March 31, 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 March 31, 2024 and December 31, 2023. For the three months ended March 31, 2024 and 2023, the Company recognized $ billion of revenues in each period that were included in the deferred revenue balance as of January 1, 2024 and 2023. For the three months ended March 31, 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. For certain products within Small Business, where quantifiable, rate includes the influence of new business as well. 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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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.
Three months ended March 31
(In millions)20242023
Operating Revenues
Net earned premiums$2,441 $2,248 
Net investment income609 525 
Non-insurance warranty revenue407 407 
Other revenues9 7 
Total operating revenues3,466 3,187 
Claims, Benefits and Expenses
Net incurred claims and benefits (re-measurement gain (loss) of $(15) and $1)
1,798 1,646 
Policyholders' dividends9 7 
Amortization of deferred acquisition costs444 379 
Non-insurance warranty expense394 384 
Other insurance related expenses287 305 
Other expenses85 60 
Total claims, benefits and expenses3,017 2,781 
Core income before income tax449 406 
Income tax expense on core income(94)(81)
Core income355 325 
Net investment losses(22)(35)
Income tax benefit on net investment losses5 7 
Net investment losses, after tax(17)(28)
Net income $338 $297 
Core income increased $30 million for the three months ended March 31, 2024 as compared with the same period in 2023. Core income for our Property & Casualty Operations increased $26 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 $8 million, while core loss for our Corporate & Other segment increased $4 million.
Catastrophe losses were $88 million and $52 million for the three months ended March 31, 2024 and 2023. Favorable net prior year loss reserve development of $7 million was recorded for the three months ended March 31, 2024 as compared with unfavorable net prior year loss reserve development of $13 million recorded for the three months ended March 31, 2023 related to our Specialty, Commercial and International 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.
Three months ended March 31
(In millions, except ratios, rate, renewal premium change and retention)20242023
Gross written premiums$1,682 $1,780 
Gross written premiums excluding third-party captives880 886 
Net written premiums792 788 
Net earned premiums814 797 
Underwriting gain76 80 
Net investment income150 129 
Core income 177 171 
Other performance metrics:
Underlying loss ratio59.2 %58.4 %
Effect of catastrophe impacts— — 
Effect of development-related items(0.6)— 
Loss ratio58.6 58.4 
Expense ratio31.8 31.4 
Dividend ratio0.3 0.2 
Combined ratio90.7 %90.0 %
Underlying combined ratio91.3 %90.0 %
Rate2 %2 %
Renewal premium change3 4 
Retention88 88 
New business$94 $108 
Gross written premiums, excluding third-party captives, for Specialty decreased $6 million for the three months ended March 31, 2024 as compared with the same period in 2023 driven by lower new business partially offset by favorable rate. Net written premiums for Specialty increased $4 million for the three months ended March 31, 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 $6 million for the three months ended March 31, 2024 as compared with the same period in 2023 primarily due to higher net investment income and favorable net prior year loss reserve development partially offset by higher claim costs in our non-insurance auto warranty business and lower underlying underwriting results.
The combined ratio of 90.7% increased 0.7 points for the three months ended March 31, 2024 as compared with the same period in 2023 primarily due to a 0.4 point increase in the expense ratio and a 0.2 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 partially offset by favorable net prior year loss reserve development. There were no catastrophe losses for three months ended March 31, 2024 and 2023.
Favorable net prior year loss reserve development of $5 million was recorded for the three months ended March 31, 2024 as compared with no net prior year loss reserve development for the three months ended March 31, 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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The following table summarizes the gross and net carried reserves for Specialty.
(In millions)March 31, 2024December 31, 2023
Gross case reserves$1,621 $1,604 
Gross IBNR reserves5,600 5,527 
Total gross carried claim and claim adjustment expense reserves$7,221 $7,131 
Net case reserves$1,386 $1,392 
Net IBNR reserves4,516 4,524 
Total net carried claim and claim adjustment expense reserves$5,902 $5,916 

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Commercial
The following table details the results of operations for Commercial.
Three months ended March 31
(In millions, except ratios, rate, renewal premium change and retention)20242023
Gross written premiums$1,686 $1,442 
Gross written premiums excluding third-party captives1,682 1,440 
Net written premiums1,338 1,188 
Net earned premiums1,202 1,046 
Underwriting gain29 41 
Net investment income176 149 
Core income158 151 
Other performance metrics:
Underlying loss ratio62.0 %61.5 %
Effect of catastrophe impacts6.8 4.2 
Effect of development-related items— — 
Loss ratio68.8 65.7 
Expense ratio28.2 29.8 
Dividend ratio0.6 0.5 
Combined ratio97.6 %96.0 %
Underlying combined ratio90.8 %91.8 %
Rate6 %7 %
Renewal premium change8 9 
Retention85 86 
New business$367 $310 
Gross written premiums for Commercial increased $244 million for the three months ended March 31, 2024 as compared with the same period in 2023 driven by favorable renewal premium change and higher new business. Net written premiums for Commercial increased $150 million for the three months ended March 31, 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 $7 million for the three months ended March 31, 2024 as compared with the same period in 2023, driven by higher net investment income and improved underlying underwriting results partially offset by higher catastrophe losses.
The combined ratio of 97.6% increased 1.6 points for the three months ended March 31, 2024 as compared with the same period in 2023 primarily due to a 3.1 point increase in the loss ratio partially offset by a 1.6 point improvement in the expense ratio. The increase in the loss ratio was primarily driven by higher catastrophe losses. Catastrophe losses were $82 million, or 6.8 points of the loss ratio, for the three months ended March 31, 2024, as compared with $44 million, or 4.2 points of the loss ratio, for the three months ended March 31, 2023. The improvement in the expense ratio was driven by higher net earned premiums and lower acquisition costs partially offset by higher employee related costs.
Favorable net prior year loss reserve development of $2 million was recorded for the three months ended March 31, 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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The following table summarizes the gross and net carried reserves for Commercial.
(In millions)March 31, 2024December 31, 2023
Gross case reserves$3,280 $3,291 
Gross IBNR reserves7,052 6,812 
Total gross carried claim and claim adjustment expense reserves$10,332 $10,103 
Net case reserves$2,884 $2,878 
Net IBNR reserves6,330 6,143 
Total net carried claim and claim adjustment expense reserves$9,214 $9,021 
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International
The following table details the results of operations for International.
Three months ended March 31
(In millions, except ratios, rate, renewal premium change and retention)20242023
Gross written premiums$374 $398 
Net written premiums260 271 
Net earned premiums315 290 
Underwriting gain21 9 
Net investment income31 23 
Core income37 24 
Other performance metrics:
Underlying loss ratio58.1 %57.5 %
Effect of catastrophe impacts2.0 2.8 
Effect of development-related items— 5.1 
Loss ratio60.1 65.4 
Expense ratio33.2 31.8 
Combined ratio93.3 %97.2 %
Underlying combined ratio91.3 %89.3 %
Rate1 %4 %
Renewal premium change3 8 
Retention82 83 
New business$68 $85 
Gross written premiums for International decreased $24 million for the three months ended March 31, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, gross written premiums decreased $31 million driven by lower new business. Net written premiums for International decreased $11 million for the three months ended March 31, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, net written premiums decreased $16 million for the three months ended March 31, 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 $13 million for the three months ended March 31, 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. There was no net prior year loss reserve development recorded for the three months ended March 31, 2024 compared to unfavorable net prior year loss reserve development of $15 million for the three months ended March 31, 2023.
The combined ratio of 93.3% improved 3.9 points for the three months ended March 31, 2024 as compared with the same period in 2023 due to a 5.3 point improvement in the loss ratio partially offset by a 1.4 point increase in the expense ratio. The improvement in the loss ratio was driven by unfavorable net prior year loss reserve development recorded in the prior year quarter. Catastrophe losses were $6 million, or 2.0 points of the loss ratio, for the three months ended March 31, 2024, as compared with $8 million, or 2.8 points of the loss ratio, for the three months ended March 31, 2023. The increase in the expense ratio was driven by higher employee related costs partially offset 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 1, Item 1.
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The following table summarizes the gross and net carried reserves for International.
(In millions)March 31, 2024December 31, 2023
Gross case reserves$849 $864 
Gross IBNR reserves1,896 1,845 
Total gross carried claim and claim adjustment expense reserves$2,745 $2,709 
Net case reserves$695 $708 
Net IBNR reserves1,604 1,568 
Total net carried claim and claim adjustment expense reserves$2,299 $2,276 
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Life & Group
The following table summarizes the results of operations for Life & Group.
Three months ended March 31
(In millions)20242023
Net earned premiums$110 $115 
Claims, benefits and expenses341 341 
Net investment income231 214 
Core loss increased $4 million for the three months ended March 31, 2024 as compared with the same period in 2023. The current quarter includes a $5 million after-tax charge related to office consolidation.
The following table summarizes the gross and net carried reserves for Corporate & Other.
(In millions)March 31, 2023December 31, 2023
Gross case reserves$1,350 $1,353 
Gross IBNR reserves1,277 1,333 
Total gross carried claim and claim adjustment expense reserves$2,627 $2,686 
Net case reserves$138 $129 
Net IBNR reserves222 239 
Total net carried claim and claim adjustment expense reserves$360 $368 

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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.
Three months ended March 31
(In millions)20242023
Fixed income securities:
Taxable fixed income securities$472 $430 
Tax-exempt fixed income securities38 49 
Total fixed income securities510 479 
Limited partnership and common stock investments68 28 
Other, net of investment expense31 18 
Net investment income$609 $525 
Effective income yield for the fixed income securities portfolio4.7 %4.6 %
Limited partnership and common stock return2.9 %1.3 %
Net investment income increased $84 million for the three months ended March 31, 2024 as compared with the same period in 2023 driven by favorable limited partnership and common stock returns and higher income from fixed income securities as a result of favorable reinvestment rates.
Net Investment (Losses) Gains
The components of Net investment (losses) gains are presented in the following table.
Three months ended March 31
(In millions)20242023
Fixed maturity securities:
Corporate bonds and other$(17)$(23)
States, municipalities and political subdivisions— 10 
Asset-backed(15)(9)
Total fixed maturity securities(32)(22)
Non-redeemable preferred stock11 (14)
Derivatives, short term and other(1)1 

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