AM Best

AM Best Affirms Credit Ratings of CNA Financial Corporation and Its Subsidiaries


Alan Murray
Associate Director
+1 908 439 2200, ext. 5535

Michael Lagomarsino
Senior Director
+1 908 439 2200, ext. 5810

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jeff Mango
Managing Director, Strategy & Communications
+1 908 439 2200, ext. 5204


OLDWICK - AUGUST 04, 2022 01:11 PM (EDT)
AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” (Excellent) of the property/casualty (P/C) subsidiaries of CNA Financial Corporation (CNAF) [NYSE: CNA], collectively known as CNA Insurance Companies (CNA). Concurrently, AM Best has affirmed the Long-Term ICR of “bbb+” (Good) and all existing Long-Term Issue Credit Ratings (Long-Term IR) of CNAF. Additionally, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) of the members of Western Surety Group. The outlook of 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.)

The ratings of CNA, which is considered the lead rating unit in the CNAF enterprise, reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM). The ratings also acknowledge the historical financial support provided by CNA’s diversified 89.6%-shareholder ultimate parent, Loews Corporation.

The ratings of the CNA Insurance Companies – whose lead member is Continental Casualty Company – recognize the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which the company maintains, the group’s consistently profitable operating results, and its firmly established position as a leading U.S. writer of commercial and specialty lines. In addition, the ratings recognize CNA’s favorable operating platform, which demonstrates considerable geographic and product line scope, strong service capabilities and diversified distribution channel with well-established agency relationships. The group’s specialty insurance segment remains the primary engine of profitability and internal capital generation, while commercial insurance operations have steadily improved through significant underwriting and expense management initiatives. The ratings also consider the group’s continued focus on ERM and acknowledge the historical implicit and explicit financial and organizational support provided by Loews Corporation.

Partially offsetting these positive rating factors are recent significant mark-to-market adjustments that have resulted in a significant cumulative decline in CNAF’s reported GAAP shareholders’ equity since year-end 2021, most notably in the second quarter of 2022. Also tempering the group’s otherwise positive credit characteristics are the intermittent adverse impacts of CNA’s discontinued long-term care program that continues to serve as a drag on CNAF’s overall profitability, and exposes its surplus and risk-adjusted capitalization to significant potential volatility. Additional factors affecting the group’s credit profile are its underwriting exposures to catastrophe losses, reserve uncertainties generally affecting litigation-sensitive casualty lines – which comprise the majority of CNA’s in-force business, cyber-related and other underwriting exposures. In sum, however, AM Best considers the impact of recent market-related volatility on CNAF’s financial position to be transient and already fully contemplated in the group’s fundamental credit profile. In AM Best’s view, the company and its subsidiaries are not meaningfully exposed to liability-based liquidity risk, and the investment portfolio is specifically managed to control the group’s exposure to long-term cash flow and earnings volatility arising from its discontinued long-term care portfolio, which AM Best views as a more significant economic exposure.

The ratings of Western Surety Group reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate ERM.

Western Surety Group’s ratings reflect its risk-adjusted capitalization at the strongest level, as measured by BCAR, consistently favorable loss reserve position and modest levels of underwriting leverage. Additionally, Western Surety Group has reported consistently profitable underwriting and operating performance, and a strong market position in the contract and miscellaneous surety bond markets. Slightly offsetting these positive rating factors is Western Surety Group’s narrow product focus in the highly competitive surety market environment, which may put pressure on underwriting margins over the near term.

The FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) have been affirmed with stable outlooks for the following P/C 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

and for the following members of the Western Surety Group:

  • Surety Bonding Company of America

  • Universal Surety of America

  • Western Surety Company

The following Long-Term IRs have been affirmed with stable outlooks:

CNA Financial Corporation —

— “bbb+” (Good) on $243 million 7.25% senior unsecured debentures, due 2023

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

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

— “bbb+” (Good) on $500 million 3.45% senior unsecured notes, due 2027

— “bbb+” (Good) on $500 million 3.9% senior unsecured notes, due 2029

— “bbb+” (Good) on 500 million 2.05% senior unsecured notes, due 2030

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

CNA Financial Corporation —

—“bbb+” (Good) on senior unsecured debt

—“bbb” (Good) on senior subordinated debt

—“bbb-” (Good) on junior subordinated debt

—“bbb-” (Good) on preferred stock

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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