CNA: $1.8 Billion Net Loss As Reserve Charges Soar
NU Online News Service, Nov. 12, 4
The adjustment was made, CNA said, to cover $978 million for core claims reserves and $517 million for asbestos, environmental pollution and tort reserves. CNA also boosted its bad-debt reserves for insurance and reinsurance receivables by $332 million.
The Chicago-based insurer's $1.76 billion third-quarter net loss contrasted with a net profit of $54 million for the period one year ago. Meanwhile, CNA's parent company Loews Corp. posted a net loss of $1.38 billion, compared with net profit of $239.1 million reported last year.
CNA's announcement, made early this morning, triggered a ratings downgrade by Moody's Investors Service in New York, while Standard & Poor's Ratings Services, also in New York, said its ratings on New York-based Loews remain on CreditWatch with "negative" implications.
CNA stated this morning it has developed a capital plan, including "substantial support" from Loews, following its reserve charges.
The insurer stated that Loews has agreed to buy $750 million of new, CNA non-voting convertible preferred stock, with the proceeds designed to boost the statutory surplus of CNA's principal insurance unit, Continental Casualty Company.
Loews has also committed up to $500 million of additional capital support by buying surplus notes of Continental Casualty, CNA stated.
CNA's capital plan also includes a number of other initiatives, including possible sales or other dispositions of businesses and assets, the company said.
"I am certainly disappointed with the actions necessary to strengthen our balance sheet, but I remain very positive about the current performance of our core businesses, particularly property-casualty and group operations," said Stephen Lilienthal, chief executive officer at CNA insurance companies. Mr. Lilienthal said that the company has "re-underwritten, re-platformed, re-staffed and repositioned the business portfolio, and will be recapitalizing CNA."
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