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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K/A
AMENDMENT NO. 1 TO FORM 10-K
 
     
þ   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2007
OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to               
Commission File Number 1-5823
 
CNA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
     
Delaware   36-6169860
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
     
333 S. Wabash
  60604
Chicago, Illinois
(Address of principal executive offices) 		  (Zip Code)
(312) 822-5000
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
     
    Name of each exchange on
Title of each class   which registered
Common Stock
with a par value
of $2.50 per share 		 
New York Stock Exchange
Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
             
Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o
(Do not check if a smaller reporting company)		   Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ
As of February 22, 2008, 270,716,622 shares of common stock were outstanding. The aggregate market value of the common stock held by non–affiliates of the registrant as of June 30, 2007 was approximately $1,438 million based on the closing price of $47.69 per share of the common stock on the New York Stock Exchange on June 30, 2007.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the CNA Financial Corporation Proxy Statement prepared for the 2008 annual meeting of shareholders, pursuant to Regulation 14A, are incorporated by reference into Part III of this Report.
 
 

 

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PART I
ITEM 1. BUSINESS
SIGNATURES
Certification
Certification
Certification
Certification

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Explanatory Note
This Amendment No. 1 to Part I, Item 1 of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2007 is being filed solely for the purpose of correcting the Cumulative net paid amount presented in the 2006 column on the Schedule of Loss Reserve Development. This Amendment No. 1 does not affect the Financial Statements and Supplementary Data or Management’s Discussion and Analysis of Financial Condition and Results of Operations as originally filed in the Annual Report on Form 10-K on February 26, 2008.

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PART I
ITEM 1. BUSINESS
CNA Financial Corporation (CNAF) was incorporated in 1967 and is an insurance holding company. Collectively, CNAF and its subsidiaries are referred to as CNA or the Company. References to “CNA,” “the Company,” “we,” “our,” “us” or like terms refer to the business of CNA and its subsidiaries. Our property and casualty insurance operations are conducted by Continental Casualty Company (CCC), incorporated in 1897, and The Continental Insurance Company (CIC), organized in 1853, and affiliates. CIC became a subsidiary of ours in 1995 as a result of the acquisition of The Continental Corporation (Continental). Loews Corporation (Loews) owned approximately 89% of our outstanding common stock as of December 31, 2007.
We serve a wide variety of customers, including small, medium and large businesses, associations, professionals, and groups and individuals with a broad range of insurance and risk management products and services.
Our insurance products primarily include commercial property and casualty coverages. Our services include risk management, information services, warranty and claims administration. Our products and services are marketed through independent agents, brokers, managing general agents and direct sales.
Our core business, commercial property and casualty insurance operations, is reported in two business segments: Standard Lines and Specialty Lines. Our non-core operations are managed in two business segments: Life & Group Non-Core and Corporate & Other Non-Core. These segments are managed separately because of differences in their product lines and markets. Discussions of each segment including the products offered, the customers served, the distribution channels used and competition are set forth in the Management’s Discussion and Analysis (MD&A) included under Item 7 and in Note N of the Consolidated Financial Statements included under Item 8.
Competition
The property and casualty insurance industry is highly competitive both as to rate and service. Our consolidated property and casualty subsidiaries compete not only with other stock insurance companies, but also with mutual insurance companies, reinsurance companies and other entities for both producers and customers. We must continuously allocate resources to refine and improve our insurance products and services.
Rates among insurers vary according to the types of insurers and methods of operation. We compete for business not only on the basis of rate, but also on the basis of availability of coverage desired by customers, ratings and quality of service, including claim adjustment services.
There are approximately 2,300 individual companies that sell property and casualty insurance in the United States. Our consolidated property and casualty subsidiaries ranked as the 13th largest property and casualty insurance organization and we are the seventh largest commercial insurance writer in the United States based upon 2006 statutory net written premiums.
Regulation
The insurance industry is subject to comprehensive and detailed regulation and supervision throughout the United States. Each state has established supervisory agencies with broad administrative powers relative to licensing insurers and agents, approving policy forms, establishing reserve requirements, fixing minimum interest rates for accumulation of surrender values and maximum interest rates of policy loans, prescribing the form and content of statutory financial reports and regulating solvency and the type, quality and amount of investments permitted. Such regulatory powers also extend to premium rate regulations, which require that rates not be excessive, inadequate or unfairly discriminatory. In addition to regulation of dividends by insurance subsidiaries, intercompany transfers of assets may be subject to prior notice or approval by the state insurance regulators, depending on the size of such transfers and payments in relation to the financial position of the insurance affiliates making the transfer or payment.
Insurers are also required by the states to provide coverage to insureds who would not otherwise be considered eligible by the insurers. Each state dictates the types of insurance and the level of coverage that must be provided to such involuntary risks. Our share of these involuntary risks is mandatory and generally a function of our respective share of the voluntary market by line of insurance in each state.
Further, insurance companies are subject to state guaranty fund and other insurance-related assessments. Guaranty fund assessments are levied by the state departments of insurance to cover claims of insolvent insurers. Other insurance-related assessments are generally levied by state agencies to fund various organizations including disaster

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relief funds, rating bureaus, insurance departments, and workers’ compensation second injury funds, or by industry organizations that assist in the statistical analysis and ratemaking process.
Reform of the U.S. tort liability system is another issue facing the insurance industry. Over the last decade, many states have passed some type of reform. In recent years, for example, significant state general tort reforms have been enacted in Georgia, Ohio, Mississippi and South Carolina. Specific state legislation addressing state asbestos reform has been passed in Ohio, Georgia, Florida and Texas in past years as well. Although these states’ legislatures have begun to address their litigious environments, some reforms are being challenged in the courts and it will take some time before they are finalized. Even though there has been some tort reform success, new causes of action and theories of damages continue to be proposed in state court actions or by legislatures. For example, some state legislatures are considering legislation addressing direct actions against insurers related to bad faith claims. As a result of this unpredictability in the law, insurance underwriting and rating are expected to continue to be difficult in commercial lines, professional liability and some specialty coverages and therefore could materially adversely affect our results of operations and equity.
Although the federal government and its regulatory agencies do not directly regulate the business of insurance, federal legislative and regulatory initiatives can impact the insurance industry in a variety of ways. These initiatives and legislation include tort reform proposals; proposals addressing natural catastrophe exposures; terrorism risk mechanisms; federal regulation of insurance; and various tax proposals affecting insurance companies.
In addition, our domestic insurance subsidiaries are subject to risk-based capital requirements. Risk-based capital is a method developed by the National Association of Insurance Commissioners to determine the minimum amount of statutory capital appropriate for an insurance company to support its overall business operations in consideration of its size and risk profile. The formula for determining the amount of risk-based capital specifies various factors, weighted based on the perceived degree of risk, which are applied to certain financial balances and financial activity. The adequacy of a company’s actual capital is evaluated by a comparison to the risk-based capital results, as determined by the formula. Companies below minimum risk-based capital requirements are classified within certain levels, each of which requires specified corrective action. As of December 31, 2007 and 2006, all of our domestic insurance subsidiaries exceeded the minimum risk-based capital requirements.
Subsidiaries with insurance operations outside the United States are also subject to regulation in the countries in which they operate. We have operations in the United Kingdom, Canada and other countries.
Employee Relations
As of December 31, 2007, we had approximately 9,400 employees and have experienced satisfactory labor relations. We have never had work stoppages due to labor disputes.
We have comprehensive benefit plans for substantially all of our employees, including retirement plans, savings plans, disability programs, group life programs and group healthcare programs. See Note J of the Consolidated Financial Statements included under Item 8 for further discussion of our benefit plans.

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Supplementary Insurance Data
The following table sets forth supplementary insurance data.
Supplementary Insurance Data
                         
Years ended December 31                        
(In millions)   2007     2006     2005  
Trade Ratios — GAAP basis (a)
                       
Loss and loss adjustment expense ratio
     77.7 %     75.7 %     89.4 %
Expense ratio
     30.0       30.0       31.2  
Dividend ratio
     0.2       0.3       0.3  
 
                  
 
Combined ratio
     107.9 %     106.0 %     120.9 %
 
                  
 
Trade Ratios — Statutory basis (preliminary) (a)
                       
Loss and loss adjustment expense ratio
     79.8 %     78.7 %     92.2 %
Expense ratio
     30.0       30.2       30.0  
Dividend ratio
     0.3       0.2       0.5  
 
                  
 
Combined ratio
     110.1 %     109.1 %     122.7 %
 
                  
 
Individual Life and Group Life Insurance Inforce
                       
Individual life
   $ 9,204     $ 9,866     $ 10,711  
Group life
     4,886       5,787       9,838  
 
                  
 
Total
   $ 14,090     $ 15,653     $ 20,549  
 
                  
 
Other Data — Statutory basis (preliminary) (b)
                        
Property and casualty companies’ capital and surplus (c)
   $ 8,511     $ 8,137     $ 6,940  
Life company’s capital and surplus
     471       687       627  
Property and casualty companies’ written premiums to surplus ratio
     0.8       0.9       1.0  
Life company’s capital and surplus-percent to total liabilities
     28.2 %     38.9 %     33.1 %
Participating policyholders-percent of gross life insurance inforce
     4.7 %     4.4 %     3.5 %
 
(a)  
Trade ratios reflect the results of our property and casualty insurance subsidiaries. Trade ratios are industry measures of property and casualty underwriting results. The loss and loss adjustment expense ratio is the percentage of net incurred claim and claim adjustment expenses and the expenses incurred related to uncollectible reinsurance receivables to net earned premiums. The primary difference in this ratio between accounting principles generally accepted in the United States of America (GAAP) and statutory accounting practices (SAP) is related to the treatment of active life reserves (ALR) related to long term care insurance products written in property and casualty insurance subsidiaries. For GAAP, ALR is classified as claim and claim adjustment expense reserves whereas for SAP, ALR is classified as unearned premium reserves. The expense ratio, using amounts determined in accordance with GAAP, is the percentage of underwriting and acquisition expenses (including the amortization of deferred acquisition expenses) to net earned premiums. The expense ratio, using amounts determined in accordance with SAP, is the percentage of acquisition and underwriting expenses (with no deferral of acquisition expenses) to net written premiums. The dividend ratio, using amounts determined in accordance with GAAP, is the ratio of policyholders’ dividends incurred to net earned premiums. The dividend ratio, using amounts determined in accordance with SAP, is the ratio of policyholders’ dividends paid to net earned premiums. The combined ratio is the sum of the loss and loss adjustment expense, expense and dividend ratios.
(b)  
Other data is determined in accordance with SAP. Life statutory capital and surplus as a percent of total liabilities is determined after excluding separate account liabilities and reclassifying the statutorily required Asset Valuation Reserve to surplus.
(c)  
Surplus includes the property and casualty companies’ equity ownership of the life company’s capital and surplus.

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The following table displays the distribution of gross written premiums for our operations by geographic concentration.
Gross Written Premiums
                         
    Percent of Total
Years ended December 31   2007   2006   2005
California
     9.1 %     9.6 %     9.0 %
Florida
     7.3       7.9       7.1  
New York
     6.8       7.3       7.9  
Texas
     5.9       5.9       5.7  
Illinois
     3.7       4.1       4.2  
New Jersey
     3.6       4.4       3.8  
Missouri
     3.4       3.0       2.8  
Pennsylvania
     3.2       3.4       4.2  
Massachusetts
     2.3       2.4       3.3  
All other states, countries or political subdivisions (a)
     54.7       52.0       52.0  
 
                  
 
                        
Total
     100.0 %     100.0 %     100.0 %
 
                  
 
(a)  
No other individual state, country or political subdivision accounts for more than 3.0% of gross written premiums.
Approximately 8.4%, 7.1% and 6.1% of our gross written premiums were derived from outside of the United States for the years ended December 31, 2007, 2006 and 2005. Premiums from any individual foreign country were not significant.
Property and Casualty Claim and Claim Adjustment Expenses
The following loss reserve development table illustrates the change over time of reserves established for property and casualty claim and claim adjustment expenses at the end of the preceding ten calendar years for our property and casualty insurance operations. The table excludes our life subsidiary(ies), and as such, the carried reserves will not agree to the Consolidated Financial Statements included under Item 8. The first section shows the reserves as originally reported at the end of the stated year. The second section, reading down, shows the cumulative amounts paid as of the end of successive years with respect to the originally reported reserve liability. The third section, reading down, shows re-estimates of the originally recorded reserves as of the end of each successive year, which is the result of our property and casualty insurance subsidiaries’ expanded awareness of additional facts and circumstances that pertain to the unsettled claims. The last section compares the latest re-estimated reserves to the reserves originally established, and indicates whether the original reserves were adequate or inadequate to cover the estimated costs of unsettled claims.
The loss reserve development table for property and casualty companies is cumulative and, therefore, ending balances should not be added since the amount at the end of each calendar year includes activity for both the current and prior years. Additionally, the development amounts in the table below are the amounts prior to consideration of any related reinsurance bad debt allowance impacts.

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Schedule of Loss Reserve Development
                                                                                         
Calendar Year Ended                                                                                        
(In millions)   1997     1998     1999 (a)     2000     2001 (b)     2002 (c)     2003     2004     2005     2006     2007  
Originally reported gross reserves for unpaid claim and claim adjustment expenses
   $ 28,731     $ 28,506     $ 26,850     $ 26,510     $ 29,649     $ 25,719     $ 31,284     $ 31,204     $ 30,694     $ 29,459     $ 28,415  
Originally reported ceded recoverable
     5,056       5,182       6,091       7,333       11,703       10,490       13,847       13,682       10,438       8,078       6,945  
 
                                                                  
Originally reported net reserves for unpaid claim and claim adjustment expenses
   $ 23,675     $ 23,324     $ 20,759     $ 19,177     $ 17,946     $ 15,229     $ 17,437     $ 17,522     $ 20,256     $ 21,381     $ 21,470  
 
                                                                  
 
                                                                                        
Cumulative net paid as of:
                                                                                        
One year later
   $ 5,954     $ 7,321     $ 6,547     $ 7,686     $ 5,981     $ 5,373     $ 4,382     $ 2,651     $ 3,442     $ 4,436     $ —  
Two years later
     11,394       12,241       11,937       11,992       10,355       8,768       6,104       4,963       7,022       —       —  
Three years later
     14,423       16,020       15,256       15,291       12,954       9,747       7,780       7,825       —       —       —  
Four years later
     17,042       18,271       18,151       17,333       13,244       10,870       10,085       —       —       —       —  
Five years later
     18,568       20,779       19,686       17,775       13,922       12,814       —       —       —       —       —  
Six years later
     20,723       21,970       20,206       18,970       15,493       —       —       —       —       —       —  
Seven years later
     21,649       22,564       21,231       20,297       —       —       —       —       —       —       —  
Eight years later
     22,077       23,453       22,373       —       —       —       —       —       —       —       —  
Nine years later
     22,800       24,426       —       —       —       —       —       —       —       —       —  
Ten years later
     23,491       —       —       —       —       —       —       —       —       —       —  
 
                                                                                        
Net reserves re-estimated as of:
                                                                                        
End of initial year
   $ 23,675     $ 23,324     $ 20,759     $ 19,177     $ 17,946     $ 15,229     $ 17,437     $ 17,522     $ 20,256     $ 21,381     $ 21,470  
One year later
     23,904       24,306       21,163       21,502       17,980       17,650       17,671       18,513       20,588       21,601       —  
Two years later
     24,106       24,134       23,217       21,555       20,533       18,248       19,120       19,044       20,975       —       —  
Three years later
     23,776       26,038       23,081       24,058       21,109       19,814       19,760       19,631       —       —       —  
Four years later
     25,067       25,711       25,590       24,587       22,547       20,384       20,425       —       —       —       —  
Five years later
     24,636       27,754       26,000       25,594       22,983       21,076       —       —       —       —       —  
Six years later
     26,338       28,078       26,625       26,023       23,603       —       —       —       —       —       —  
Seven years later
     26,537       28,437       27,009       26,585       —       —       —       —       —       —       —  
Eight years later
     26,770       28,705       27,541       —       —       —       —       —       —       —       —  
Nine years later
     26,997       29,211       —       —       —       —       —       —       —       —       —  
Ten years later
     27,317       —       —       —       —       —       —       —       —       —       —  
 
                                                                  
Total net (deficiency) redundancy
   $ (3,642 )   $ (5,887 )   $ (6,782 )   $ (7,408 )   $ (5,657 )   $ (5,847 )   $ (2,988 )   $ (2,109 )   $ (719 )   $ (220 )   $ —  
 
                                                                  
 
                                                                                        
Reconciliation to gross re-estimated reserves:
                                                                                        
Net reserves re-estimated
   $ 27,317     $ 29,211     $ 27,541     $ 26,585     $ 23,603     $ 21,076     $ 20,425     $ 19,631     $ 20,975     $ 21,601     $ —  
Re-estimated ceded recoverable
     7,221       7,939       10,283       11,047       16,487       15,846       14,257       13,112       10,505       8,230       —  
 
                                                                  
Total gross re-estimated reserves
   $ 34,538     $ 37,150     $ 37,824     $ 37,632     $ 40,090     $ 36,922     $ 34,682     $ 32,743     $ 31,480     $ 29,831     $ —  
 
                                                                  
 
                                                                                        
Net (deficiency) redundancy related to:
                                                                                        
Asbestos claims
   $ (2,367 )   $ (2,125 )   $ (1,549 )   $ (1,485 )   $ (713 )   $ (712 )   $ (71 )   $ (17 )   $ (7 )   $ (6 )   $ —  
Environmental claims
     (541 )     (533 )     (533 )     (476 )     (129 )     (123 )     (51 )     (51 )     (1 )     (1 )     —  
 
                                                                  
Total asbestos and environmental
     (2,908 )     (2,658 )     (2,082 )     (1,961 )     (842 )     (835 )     (122 )     (68 )     (8 )     (7 )     —  
Other claims
     (734 )     (3,229 )     (4,700 )     (5,447 )     (4,815 )     (5,012 )     (2,866 )     (2,041 )     (711 )     (213 )     —  
 
                                                                  
Total net (deficiency) redundancy
   $ (3,642 )   $ (5,887 )   $ (6,782 )   $ (7,408 )   $ (5,657 )   $ (5,847 )   $ (2,988 )   $ (2,109 )   $ (719 )   $ (220 )   $ —  
 
                                                                  

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(a)  
Ceded recoverable includes reserves transferred under retroactive reinsurance agreements of $784 million as of December 31, 1999.
(b)  
Effective January 1, 2001, we established a new life insurance company, CNA Group Life Assurance Company (CNAGLA). Further, on January 1, 2001 $1,055 million of reserves were transferred from CCC to CNAGLA.
(c)  
Effective October 31, 2002, we sold CNA Reinsurance Company Limited. As a result of the sale, net reserves were reduced by $1,316 million.
Additional information regarding our property and casualty claim and claim adjustment expense reserves and reserve development is set forth in the MD&A included under Item 7 and in Notes A and F of the Consolidated Financial Statements included under Item 8.
Investments
Information on our investments is set forth in the MD&A included under Item 7 and in Notes A, B, C and D of the Consolidated Financial Statements included under Item 8.
Available Information
We file annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934 (Exchange Act). The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers, including CNA, that file electronically with the SEC. The public can obtain any documents that we file with the SEC at http://www.sec.gov.
We also make available free of charge on or through our internet website (http://www.cna.com) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Copies of these reports may also be obtained, free of charge, upon written request to: CNA Financial Corporation, 333 S. Wabash Avenue, Chicago, IL 60604, Attn. Jonathan D. Kantor, Executive Vice President, General Counsel and Secretary.

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
             
    CNA Financial Corporation    
 
Dated: February 27, 2008
  By               /s/ D. Craig Mense
 
    
 
                 D. Craig Mense    
 
           Executive Vice President and    
 
              Chief Financial Officer    
 
      (Principal Financial & Accounting Officer)    

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