A.M. Best Downgrades Rating of Continental Assurance Company; Places Rating of Valley Forge Life Under Review.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Feb. 5, 2004 A.M. Best Co. has downgraded the financial strength rating to A- (Excellent) from A (Excellent) of Continental Assurance Company (CAC See Consumer Advisory Council. ) (Chicago, IL). Concurrently, A.M. Best has placed the financial strength rating of A (Excellent) of CAC's wholly-owned subsidiary, Valley Forge Life Insurance Company (VFL VFl ventricular flutter. ) (Pennsylvania), under review with developing implications. The rating outlook for CAC is stable. Both companies are members of CNA Financial Corp., (NYSE NYSE See: New York Stock Exchange : CNA (Certified NetWare Administrator) See Novell certification. ) (Chicago, IL). These rating actions follow the announcement that CNA has entered into a definitive agreement to sell its individual life and annuity business to Swiss Re Life & Health America (Swiss Re) (Connecticut), a member of The Swiss Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Group, Inc., (Zurich). The anticipated closing of the proposed transaction is March 31, 2004, for a purchase price of approximately $690 million, which is in excess of $400 million over its statutory book carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. . Certain CNA businesses, including individual long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. and structured settlement, are excluded from the sale and will remain within the CNA organization. Given CNA's recent divestiture of its life and health operations, A.M. Best no longer views these operations as core to CNA. Additionally, the remaining life and health business at CAC will be managed in run-off mode. As such, CAC will no longer receive any uplift in its rating from its parent. VFL's rating will remain under review until the transaction is completed. A.M. Best will continue to monitor the transaction in the near term and upon the completion, will re-evaluate VFL's financial strength rating and outlook. Should the transaction not be completed, a downgrade of the rating to A- (Excellent) would be probable. The financial strength and debt ratings of CNA's property/casualty units remain unaffected as the asset sale is commensurate with A.M. Best's expectations regarding CNA's re-capitalization plan. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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