CNA: $1.8 Billion Net Loss As Reserve Charges Soar

NU Online News Service, Nov. 12, 4

The adjustment was made, CNA said, to cover $978 million forcore claims reserves and $517 million for asbestos, environmentalpollution and tort reserves. CNA also boosted its bad-debt reservesfor insurance and reinsurance receivables by $332 million.

The Chicago-based insurer's $1.76 billion third-quarter net losscontrasted with a net profit of $54 million for the period one yearago. Meanwhile, CNA's parent company Loews Corp. posted a net lossof $1.38 billion, compared with net profit of $239.1 millionreported last year.

CNA's announcement, made early this morning, triggered a ratingsdowngrade by Moody's Investors Service in New York, while Standard& Poor's Ratings Services, also in New York, said its ratingson New York-based Loews remain on CreditWatch with "negative"implications.

CNA stated this morning it has developed a capital plan,including "substantial support" from Loews, following its reservecharges.

The insurer stated that Loews has agreed to buy $750 million ofnew, CNA non-voting convertible preferred stock, with the proceedsdesigned to boost the statutory surplus of CNA's principalinsurance unit, Continental Casualty Company.

Loews has also committed up to $500 million of additionalcapital support by buying surplus notes of Continental Casualty,CNA stated.

CNA's capital plan also includes a number of other initiatives,including possible sales or other dispositions of businesses andassets, the company said.

"I am certainly disappointed with the actions necessary tostrengthen our balance sheet, but I remain very positive about thecurrent performance of our core businesses, particularlyproperty-casualty and group operations," said Stephen Lilienthal,chief executive officer at CNA insurance companies. Mr. Lilienthalsaid that the company has "re-underwritten, re-platformed,re-staffed and repositioned the business portfolio, and will berecapitalizing CNA."