Fitch Ratings Affs CNA's P&C & Debt Rtgs; Off Rtg Watch Neg.Business Editors CHICAGO--(BUSINESS WIRE)--Feb. 13, 2002 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed the 'A' insurer financial strength rating of the Continental Casualty Company Pool (CCC CCC A very speculative grade assigned to a debt obligation by a rating agency. Such a rating indicates default or considerable doubt that interest will be paid or principal repaid. Also called Caa. ) and the 'BBB' senior debt rating of CNA Financial CNA Financial Corporation (NYSE: CNA) is a financial corporation based in Chicago, Illinois, United States, and noted for its 600 foot tall red headquarters building there. Its principal subsidiary, Continental Casualty Company (CCC) was founded in 1897. Corporation (CNA (Certified NetWare Administrator) See Novell certification. ). The ratings have been removed from Rating Watch Negative where they were placed in September 2001 following the events of September 11th (the '9/11 events'). The Rating Outlook is Stable. Fitch has also affirmed the 'AA-' insurer financial strength rating and 'F1+' short-term insurer financial strength rating for the Continental Assurance Company Pool (CAC See Consumer Advisory Council. Pool). The CAC Pool's Rating Outlook remains Stable. Today's rating actions reflect Fitch's opinion that CNA's losses from the 9/11 events will not materially increase from the company's current public disclosure of $304 million after tax and 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. recoverables. Factors supporting this decision include detailed conversations with management covering loss estimate methodology and that a reasonable amount of time has passed with current claims trends continuing to support loss estimates. Additional considerations include CNA's ground-up analysis, modest net exposure relative to the company's capital base and significant capacity remaining in its reinsurance programs. Some of the remaining reinsurance capacity relates to corporate cover reinsurance treaties. While these agreements do provide CNA with the ability to cede losses, it comes at an expense and this will negatively impact earnings in coming years through lower investment income. Favorably, the corporate cover reinsurance treaties do limit the immediate impact on CNA's capital position from the potential of higher losses. The company's exposure to traditional reinsurance recoveries related to 9/11 events is significant at over $1.1 billion. Fitch believes the reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. credit quality is good and the company has indicated there have been no collectibility issues to date. Fitch's primary focus for evaluating CNA's ratings during 2002 will be reviewing improvements in operating performance. Significant reserve charges, losses from 9/11 event, restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and surety bond surety bond An insurance fee required before a duplicate security is issued to replace one that has been lost. The fee is approximately 4% of the market value of the security to be replaced. losses caused dismal 2001 operating results.
Entity/Issue/Type Action Rating/Outlook
CNA Financial Corp.
--Long-term issuer Affirm 'BBB'/Stable;
--Senior debt Affirm 'BBB'/Stable.
Continental Casualty Company Pool
--Insurer financial strength Affirm 'A'/Stable.
--Members include: Continental Casualty Company, American Casualty
Company of Reading, Pennsylvania, CNA Casualty of California, CNA
Lloyd's of Texas, Columbia Casualty Company, National Fire Insurance
Company of Hartford, Transcontinental Insurance Company,
Transportation Insurance Company, and Valley Forge Insurance Company.
Continental Assurance Company Pool
--Insurer financial strength Affirm 'AA-'/Stable;
--S-T insurer financial strength Affirm 'F1+'.
--Members include: Continental Assurance Company and Valley Forge
Life Insurance Company.
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