CNA Expects 4Q Loss Of At Least $20 Million

By Susanne Sclafane

NU Online News Service, Jan. 25, 2:46 p.m. EST? CNA Financial Corp. in Chicago announced today that it expects a 2001 fourth-quarter net loss between $20 million and $35 million- part of it related to Enron surety coverage.

The company said it added a $69 million reserve strengthening charge to some previously?disclosed items.

The net loss projection compares with net income of $193 million for the same quarter in 2000.

Included in the 2001 fourth-quarter net loss figure are $125 million charges related to the restructuring of CNA's operations and a $52 million after-tax charge related to the company's surety bond coverage losses related to Enron, net of anticipated reinsurance recoveries. Both of these charges were announced on Dec. 5, 2001.

In the Dec. 5 announcement, CNA said the restructuring charges, at that time estimated to fall between $114 and $124 million after tax, were for restructuring its property-casualty and life operations, discontinuation of variable life and annuity business, consolidation of real estate locations and related corporate staff departments reductions.

This morning's announcement said that CNA has also recorded a $69 million after-tax reserve strengthening charge, primarily for the current accident year, in CNA's London-based primary commercial and marine operations.

CNA's total net operating loss, which excludes realized investment gains, for the 2001 fourth quarter is expected to be between $288 million and $303 million compared with net operating income of $114 million in the 2000 fourth quarter.

Total net realized investment gains for the 2001 fourth quarter were $268 million.

The 2001 fourth quarter net operating loss figure also includes a $160 million after-tax charge to strengthen the prior year loss reserves of its London-based reinsurance operation, CNA Reinsurance Company Limited. CNA announced that it was seeking a buyer for that operation last August.

For the year 2001, CNA's net loss is expected to be $1.6 billion compared with net income of $1.2 billion for 2000. The full-year figure includes a $2.1 billion after-tax charge recorded in the second quarter related to a change in estimate of prior year loss reserves and premium accruals, $304 million after-tax 9/11 losses, as well as the fourth-quarter charges.

CNA Financial Corporation is scheduled to issue its full quarterly earnings press release and financial supplement before the opening of the market on Feb. 14. CNA management will host its quarterly conference call and Webcast at 10:00 a.m. EST on the same day.

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CNA Expects 4Q Loss Of At Least $20 Million

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