Press Release - JUNE 14, 2017

A.M. Best Affirms Credit Ratings of CNA Financial Corporation and Its Subsidiaries


CONTACTS:
 Gregory Dickerson
Senior Financial Analyst
+1 908 439 2200, ext. 5161
gregory.dickerson@ambest.com

Jennifer Marshall
Director
+1 908 439 2200, ext. 5327
jennifer.marshall@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - JUNE 14, 2017
A.M. Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term 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 Long-Term ICR of “bbb” and all existing Long-Term Issue Credit Ratings (Long-Term IR) of CNAF. The outlook for these Credit Ratings (ratings) 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 Long-Term 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 of these 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 U.S. commercial lines segment. 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.

Partially offsetting these positive rating factors is the adverse impact of CNA’s discontinued long-term care program that continues to pressure CNA’s statutory underwriting performance (10-year average reported combined ratio of 113.8%). 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 Western Surety Group’s narrow product focus and exposure to high severity losses that result in potentially volatile operating results, as well as the highly competitive environment in the surety market, which will continue to put pressure on underwriting margins over the near term.

At March 31, 2017, CNAF’s adjusted debt-to-total tangible capital measured 18.8%, 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 $487 million at year-end 2016. Coupled with the availability of a $250 million credit facility, access to over $390 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 Long-Term ICRs of “a” have been affirmed with a stable outlook 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 Long-Term ICRs of “a” have been affirmed with a stable outlook 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 Long-Term IRs have been affirmed with a stable outlook:

CNA Financial Corporation

— “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

— “bbb” on $500 million 4.5% senior unsecured notes, due 2026

The following indicative Long-Term IRs on securities available under the shelf registration have been affirmed with a stable outlook:

CNA Financial Corporation

— “bbb” on senior unsecured debt

— “bbb-” on senior subordinated debt

— “bb+” on junior subordinated debt

— “bb+” on preferred stock

This press release relates to Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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