CHICAGO, Jul 15, 2010 (BUSINESS WIRE) --
CNA Financial Corporation (NYSE: CNA) announced today that its principal
operating subsidiary, Continental Casualty Company, together with
several of its other insurance subsidiaries, have entered into an
agreement with National Indemnity Company (NICO), a subsidiary of
Berkshire Hathaway Inc., under which the CNA companies' legacy asbestos
and environmental pollution liabilities will be transferred to NICO.
Under the terms of the transaction, effective January 1, 2010 the CNA
companies will cede approximately $1.6 billion of net asbestos and
environmental pollution liabilities to NICO under a retroactive
reinsurance agreement with an aggregate limit of $4 billion. The
aggregate reinsurance limit will also cover credit risk on existing
third party reinsurance related to these liabilities.
The CNA companies will pay to NICO a reinsurance premium of $2 billion
and also transfer to NICO the right to collect billed third party
reinsurance receivables with a net book value of approximately $200
To secure its obligations, NICO will deposit $2.2 billion in a
collateral trust for the benefit of the CNA companies. In addition,
Berkshire Hathaway Inc. has guaranteed the payment obligations of NICO
up to the full aggregate reinsurance limit as well as certain of NICO's
performance obligations under the trust agreement.
NICO will assume responsibility for claims handling and collection from
third party reinsurers related to the CNA companies' asbestos and
environmental pollution claims.
"We believe this transaction is consistent with our focus on financial
stability and delivering improved levels of operating consistency as we
effectively eliminate a significant source of uncertainty from these
legacy liabilities" said Thomas F. Motamed, Chairman and Chief Executive
Officer of CNA Financial Corporation. "This transaction will allow us to
sharpen our focus even further on the execution of strategies to improve
and grow our on-going core businesses."
The closing of this transaction is subject to the receipt of required
regulatory approvals and the satisfaction of other closing conditions.
The closing is expected to occur in the third quarter of 2010 at which
time CNA expects to recognize an after-tax loss of approximately $375
Serving businesses and professionals since 1897, CNA is the country's
seventh largest commercial insurance writer and the 13th
largest property and casualty company. CNA's insurance products include
standard commercial lines, specialty lines, surety, marine and other
property and casualty coverages. CNA's services include risk management,
information services, underwriting, risk control and claims
administration. For more information, please visit CNA at www.cna.com.
CNA is a registered trademark of CNA Financial Corporation.
This press release may include statements which relate to anticipated
future events (forward-looking statements) rather than actual present
conditions or historical events. These statements are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995 and generally include words such as "believes", "expects",
"intends", "anticipates", "estimates", and similar expressions.
Forward-looking statements, by their nature, are subject to a variety of
inherent risks and uncertainties that could cause actual results to
differ materially from the results projected. Many of these risks and
uncertainties cannot be controlled by CNA and include the satisfaction
of the conditions to closing, including receipt of regulatory approvals,
whether the contemplated transaction will close, whether the other
parties to the contemplated transaction will fully perform their
obligations to CNA, the uncertainty in estimating loss reserves for
asbestos and environmental pollution claims and the possible continued
exposure of CNA to liabilities for asbestos and environmental pollution
claims. For a detailed description of other risks and uncertainties
affecting CNA, please refer to CNA's filings with the Securities and
Exchange Commission, available at www.cna.com.
Any forward-looking statements made in this press release are made by
CNA as of the date of this press release. Further, CNA does not have any
obligation to update or revise any forward-looking statement contained
in this press release, even if CNA's expectations or any related events,
conditions or circumstances change.
SOURCE: CNA Financial Corporation
CNA Financial Corporation
MEDIA CONTACT: Katrina Parker, 312-822-5167