FEBRUARY 23, 2016 10:25 AM (EST)

A.M. Best Affirms Ratings of CNA Financial Corporation and Its Subsidiaries; Assigns Rating to New Senior Notes

 Michael Russo
Senior Financial Analyst
(908) 439-2200, ext. 5372

Jennifer Marshall
Assistant Vice President
(908) 439-2200, ext. 5327

Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK - FEBRUARY 23, 2016 10:25 AM (EST)
A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a” of the property/casualty subsidiaries of CNA Financial Corporation (CNAF) [NYSE: CNA], collectively known as CNA Insurance Companies (CNA). Concurrently, A.M. Best has affirmed the ICR of “bbb” and all existing issue ratings of CNAF and CNA Financial Capital I, II and III. The outlook for all ratings is stable. A.M. Best has also assigned an issue rating of “bbb” to the recently announced $400 million 4.5% senior unsecured notes due 2026 to be issued by CNAF. The outlook assigned to the rating is stable. All above named companies are headquartered in Chicago, IL. (See below for a detailed listing of the companies and ratings.)

Additionally, A.M. Best has affirmed the FSR of A (Excellent) and the ICRs of “a” of Western Surety Company and its subsidiaries, Surety Bonding Company of America and Universal Surety of America, collectively referred to as Western Surety Group (headquartered in Chicago, IL). The outlook for all ratings is stable.

The rating actions reflect CNA’s excellent level of risk-adjusted capitalization, consistent and profitable operating results and established position as a leading writer within the commercial lines segment of the U.S. property/casualty industry. In addition, the ratings recognize CNA’s robust operating platform which demonstrates considerable geographic and product line scope; strong service capabilities; diversified distribution channel with well-established agency relationships; its improved technological infrastructure, which has enhanced data collection and segment reporting tools; and its continued focus on enterprise risk management. The ratings also acknowledge the historical financial support provided by CNA’s ultimate parent, Loews Corporation (Loews).

Partially offsetting these positive rating factors is the adverse impact of CNA’s discontinued long-term care program on underwriting performance, which resulted in a $198 million after-tax charge (GAAP Basis) in 2015, due to the recognition of premium and claim reserves deficiencies. Additionally, the current competitive environment in its property/casualty markets will likely pressure underwriting margins over the near term.

Western Surety Group’s ratings reflect historically profitable underwriting and operating performance, a strong level of risk-adjusted capitalization and the group’s position as a market leader in the contract and miscellaneous surety bond markets.

Partially offsetting these positive rating factors are the relatively weak but improving construction market and the highly competitive environment in the surety market, which will continue to put pressure on underwriting margins over the near term.

At Dec. 31, 2015 CNAF’s adjusted debt to total tangible capital measured 17.8%, which is well within A.M. Best’s guidelines for its current rating level. In addition, CNAF has sound coverage ratios and solid liquidity with holding company cash of $482 million. Coupled with the availability of a $250 million credit facility, access to over $345 million of additional liquidity from Continental Casualty Company’s membership with the Federal Home Loan Bank of Chicago and operating company dividend capacity, the holding company has ample liquidity in the near term to meet its corporate obligations.

The FSR of A (Excellent) and the ICRs of “a” have been affirmed for the following property/casualty members of the CNA Insurance Companies:

  • American Casualty Company of Reading, Pennsylvania

  • Columbia Casualty Company

  • Continental Casualty Company

  • The Continental Insurance Company of New Jersey

  • The Continental Insurance Company

  • National Fire Insurance Company of Hartford

  • North Rock Insurance Company Limited

  • Transportation Insurance Company

  • Valley Forge Insurance Company

The FSR of A (Excellent) and the ICRs of “a” have been affirmed for the following property/casualty members of the Western Surety Group:

  • Western Surety Company

  • Surety Bonding Company of America

  • Universal Surety of America

The following issue rating has been assigned:

CNA Financial Corporation

— “bbb” on $400 million 4.5% senior unsecured notes, due 2026

The following issue ratings have been affirmed:

CNA Financial Corporation

— “bbb” on $350 million 6.5% senior unsecured notes, due 2016

— “bbb” on $150 million 6.95% senior unsecured notes, due 2018

— “bbb” on $350 million 7.35% senior unsecured notes, due 2019

— “bbb” on $500 million 5.875% senior unsecured notes, due 2020

— “bbb” on $400 million 5.75% senior unsecured notes, due 2021

— “bbb” on $250 million 7.25% senior unsecured debentures, due 2023

— “bbb” on $550 million 3.95% senior unsecured notes, due 2024

The following indicative ratings on securities available under the shelf registration have been affirmed:

CNA Financial Corporation

— “bbb” on senior unsecured debt

— “bbb-” on senior subordinated debt

— “bb+” on junior subordinated debt

— “bb+” on preferred stock

CNA Financial Capital I, II and III

— “bb+” on preferred securities

This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.

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