CNA said renewal rights for "most of the treaty business" would be sold to Folksamerica, which is a subsidiary of White Mountains Insurance Corp, Ltd., of Hamilton, Bermuda.

CNA said CNA Re expects to write approximately $600 million in premium this year. It has been "a profitable book of reinsurance business," said Stephen W. Lilienthal, chairman and chief executive officer for CNA.

Under the terms of contract, CNA said Folksamerica would compensate the carrier based on the amount of premiums it renews over the next two contract periods. CNA said it is withdrawing from the assumed reinsurance business, but would manage the run-off of its retained liabilities.

In a separate release, Folksamerica said it plans to establish an underwriting office in Chicago staffed by CNA reinsurance professionals.

John Iten, director at Standard & Poor's in New York City, said CNA is following what a lot of other primary insurers have done, abandoning the reinsurance business because of the capital investment they would have to make in order to be "a factor" in the reinsurance arena.

"It's not a big surprise," he said.

He added that he did not believe there were too many primary p-c carriers left in the reinsurance business as companies look to consolidate their businesses "and play to their strengths."

Damien Magarelli, associate director at S&P, said for Folksamerica the transaction would have no affect on the company's rating in the near term, with the renewals not taking place until 2004. He would not speculate on the long-term affects, but he noted the renewals did fit in with the company's business model.

He too indicated that the move fit with a general strategy by primary insurers to refocus on their p-c business and get away from reinsurance business where they have less strength.

Alan Murray and Jim Bartie, both vice presidents and senior analysts with Moody's Investor Service based in New York City, said the move was positive for both companies. Mr. Murray said it was not unexpected, and fits with a general strategy of CNA to concentrate on its core commercial and commercial specialty lines.

"It will not de-leverage CNA dramatically, but it will help some with their risk base capital," observed Mr. Murray.

He said there has been some question about CNA remaining in the reinsurance business after it exited London and saw its credit rating drop.

Mr. Bartie said while he believed the move overall was a positive one for Folksamerica, he did not think the reinsurer would pick up a majority of the renewal business because it did not fit with their risk appetite.

Folksamerica has concentrated its business on property, venturing more into the casualty area. A good portion of CNA's reinsurance business is on the professional liability side.

He noted that Folksamerica has had a good look at the book and would not have gone along with the deal if it did not feel it would be able to pick up several hundred million dollars from the business.

"There is a fairly modest amount of business there that Folksamerica felt it would not be able to get or could only obtain if it competed on price," Mr. Bartie noted.

Fitch Rating issued a statement that CNA's move would "modestly strengthen CNA's operating leverage position." However, the rating service has all of the insurers' companies on rating watch. It went on to say that the move was not significant to the company's balance sheet.