Regarding non-GAAP measures, reconciliations to the most comparable GAAP measures have also been provided in our most recent 10-K and 10-Q, as well as the financial supplement.This call is being recorded and webcast. During the next week, the call may be accessed on CNA's website. Now, I'll turn the call over to CNA's Chairman and CEO, Tom Motamed. Thomas F. Motamed Thank you, Nancy. Good morning, everyone, and thank you for joining us. Before Craig reviews our financial results, I would like to share a few highlights of the quarter and the year. CNA's 2011 net operating income was $614 million as compared to $660 million in 2010. Our operating results were influenced by lower net investment income, a higher level of catastrophes and reserve charges in our Life & Group runoff businesses. Craig will provide more detail in his remarks. We continued to be pleased and encouraged by our progress on improved underwriting profitability and premium growth in our core property casualty businesses. In Specialty, we continued to produce superior underwriting results with combined ratios of 77.8 in the fourth quarter and 89.9 for the year. In Commercial, we achieved more than 3 points of combined ratio improvement before the effect of catastrophes and development. While there's more work to do on our underwriting margins, we are encouraged by favorable rate trends and premium growth across both of our Property Casualty segments. In Specialty, rates increased 1% in the fourth quarter. Commercial rates continued to decline, reaching 3% in the fourth quarter with some lines clearly exceeding that level. Retention was solid in both segments throughout the year. We are pleased that the market is accepting rate increases after a long period of negative rates. Our Property & Casualty combined ratio continued to benefit from favorable prior year development, 7 points in 2011 and 10.6 points in 2010. We are also pleased to note that in the year of significant natural catastrophe losses for the industry, CNA's combined ratio included only 3.7 points from catastrophes, which reflects our disciplined cat management strategies.
Excluding the impacts of reserve development and catastrophe losses, our full year combined ratio improved 1.7 points to 101.7 from 103.4. This improvement was driven by a decrease of nearly 2 points in Commercial's non-cat accident year loss ratio.Property & Casualty net written premiums grew 5% in 2011, 7% in Specialty and 4% in Commercial. 2011 is the first year we have grown in both segments since 2006. Beyond the progress in our Property Casualty business, we took action on a number of fronts to improve our earnings power, financial stability and shareholder value. We completed the acquisition of a minority shares of CNA's Surety, increasing the scale of our profitable Specialty business. We sold our 50% ownership interest in First Insurance Company of Hawaii, continuing our efforts to simplify our organization and focus on core businesses. Finally, we increased our quarterly dividend to $0.15 from $0.10 per common share. With that, I'll now turn it over to Craig. Craig? D. Craig Mense Thanks, Tom. Good morning, everyone. In the fourth quarter, CNA's net operating income was $191 million and operating return on equity of 7%. Operating income available to the common shareholders was $0.71 per common share. Period-over-period comparisons were unfavorable, primarily as a result of the reserve charges in our runoff Life & Group business and lower net investment income. As you heard from Tom, we are encouraged by the momentum of our core P&C business. The results there reflect our focus on improved margins, scale and financial stability. We continue to sustain our disciplined reserving practices. In the fourth quarter, our core P&C businesses benefited from $250 million of pretax favorable prior year loss development. We now have had 20 consecutive quarters of favorable prior year reserve development. The major drivers of the favorable development in the fourth quarter were as follows: We recognized favorable development in our Commercial segment generalized liability lines, both primarily and umbrella, for accident years 2007 and prior, driven by improved claim outcomes and lower claim frequency. Read the rest of this transcript for free on seekingalpha.com