Fitch Takes Rating Actions on CNA's Life Subs; No Change in Debt or P/C Ratings.Business Editors CHICAGO--(BUSINESS WIRE)--Feb. 5, 2004 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 lowered the insurer financial strength rating of Continental Assurance Company (CAC See Consumer Advisory Council. ) to 'A-' from 'A+' and removed the rating from Rating Watch Negative. Today's rating action follows 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's announcement that it plans to sell the individual life business and place the structured settlements and institutional markets business into run-off. Consistent with its affiliated property/casualty companies, CAC's Rating Outlook is Negative. In addition, Fitch has placed Valley Forge Valley Forge, on the Schuylkill River, SE Pa., NW of Philadelphia. There, during the American Revolution, the main camp of the Continental Army was established (Dec., 1777–June, 1778) under the command of Gen. George Washington. Life Insurance Company (VFLIC) on Rating Watch Positive. All other CNA (Certified NetWare Administrator) See Novell certification. ratings have been affirmed at current rating levels with a Negative Rating Outlook. A full rating list is shown below. Today's announcement includes the sale of VFLIC to Swiss Re Swiss Re is the world’s largest reinsurer, now that it has acquired GE Insurance Solutions (Ligi 2006). Founded in 1863, Swiss Re now operates in more than 30 countries. General Electric owns 8.9% of the firm. Life & Health America, Inc. (Swiss Re). The adjustment of VFLIC's Rating Watch status from Negative to Positive reflects Fitch's opinion that the transaction will likely close and that VFLIC's financial strength would benefit from being part of a higher rated organization. VFLIC's ultimate rating level will depend on various considerations, including Swiss Re's capital objectives and strategic plans. CAC's rating reflects that the entity will consist of run-off business, which often results in insurer financial strength ratings in the 'BBB' range. However, the entity will be well capitalized and maintains a credit enhancement Credit Enhancement A method whereby a company attempts to improve its debt or credit worthiness. Notes: Credit enhancements take many different forms. An example of a credit enhancement would be conversion rights added on to a debt instrument in order to lower the issuing from CNA's lead property/casualty subsidiary. The combination of these facts leads Fitch to rate CAC at the same level as the property/casualty operations. CNA reported a $1.9 billion net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the first nine months of 2003. To offset the balance sheet impact from the operating loss, CNA established a capital plan that will result in funds being replaced through support from the company's majority owner, Loews Corporation (Loews), and potential other asset sales. Major components of the capital plan include today's announcement of the planned individual life sale, the recent sale of the group life and health insurance and Loews Corporation's $750 million fourth quarter capital contribution. CNA's holding company debt and property/casualty insurer financial strength ratings are on Negative Outlook due to concerns related to the company's ability to generate stable, improving operating results. CNA's operating performance will be a key consideration in future reviews that could lead to rating and/or outlook adjustments. As the capital plan was considered in previous reviews given commitments from Loews, the execution of the capital plan, although positive, does not have a material impact on the current holding and property/casualty operating companies' ratings. Entity/Issue/Type Action Rating/Watch or Outlook CNA Financial Corp. -- Senior debt Affirm 'BBB-'/Outlook remains Negative; -- Long-term issuer Affirm 'BBB-'/Outlook remains Negative. The Continental Corporation -- Senior debt Affirm 'BBB-'/Outlook remains Negative; -- Long-term issuer Affirm 'BBB-'/Outlook remains Negative. Continental Casualty Company Group -- Insurer financial strength Affirm 'A-' /Outlook remains Negative. -- Members include: Continental Casualty Company, American Casualty Company of Reading, Pennsylvania Reading (IPA:/ˈrɛdɪŋ/) is the county seat of Berks County, Pennsylvania and the center of the Greater Reading Area. , 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 Insurance Company Group -- Insurer financial strength Affirm 'A-'/Outlook remains Negative. -- Members include: The Continental Insurance Company, Boston Old Colony Insurance Company, Buckeye buckeye: see horse chestnut. buckeye Any of about 13 trees and shrubs of the genus Aesculus (family Hippocastanaceae), native to North America, southeastern Europe, and eastern Asia. Union Insurance Company, Continental 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. Corporation, The Fidelity and Casualty Company of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Firemen's Insurance Company of Newark, New Jersey, Niagara Fire Insurance Company and Pacific Insurance Company. Continental Assurance Company -- Insurer financial strength Downgrade to 'A-' from 'A+'/Assigned a Negative Outlook. Valley Forge Life Insurance Company -- Insurer financial strength No Action 'A+'/Rating Watch changed to Positive from Negative. |
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