2009-11-10 16:42:02 -

A.M. Best Co. has assigned a debt rating of “bbb” to the forthcoming $350 million 7.35% senior unsecured notes due 2019 to be issued by CNA Financial Corporation (CNAF) (Delaware) (NYSE.

CNA). The assigned outlook is negative.

CNAF intends to use the net proceeds of the senior unsecured notes issuance to redeem $250 million of the $1.25 billion of cumulative senior

perpetual preferred stock it issued to its parent, Loews Corporation, in November 2008. CNAF plans to use the remaining proceeds for general corporate purposes.

At September 30, 2009, CNAF’s adjusted debt plus preferred-to-total capital was 18.0%, which compares with 25.8% at year-end 2008. CNAF’s lower financial leverage at September 30, 2009, as compared with year-end 2008, primarily reflects a substantial increase in the fair value of the company’s investments, which contributed significantly to improved comprehensive income and stockholders’ equity, particularly in the second and third quarters of 2009. Barring volatility in the financial markets, A.M. Best believes CNAF’s financial leverage will be maintained at approximately the September 30, 2009 level at year-end 2009, which is well within A.M. Best’s guidelines for the assigned rating level.

CNAF’s holding company liquidity appears adequate despite the above average risk and volatility of its investments, which the company has been actively reducing in recent quarters by repositioning its portfolio. During this repositioning process, CNAF has maintained substantial cash and short-term investments, which stood at $4.2 billion, 10.1% of total investments at September 30, 2009 and continued to generate positive cash flows. At the holding company level, CNAF had $414 million of short-term investments at September 30, 2009. The company believes it has sufficient liquidity to fund its preferred stock dividend and debt service payments through 2010. No debt matures before 2011. During the second and third quarters of 2009, CNAF’s interest and dividend coverage ratios again improved to satisfactory levels.

Given the excellent and improved level of risk-adjusted capitalization at CNA Insurance Companies in the first nine months of 2009, A.M. Best believes CNAF is well positioned to achieve its capital management plans for the year.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings : .

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology : .



Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com : .


A.M. Best Co.AnalystsW. Dolson Smith, CFA,

908-439-2200, ext. 5379 w.dolson.smith@ambest.com : mailto:w.dolson.smith@ambest.com orMichael
J . Lagomarsino, CFA, 908-439-2200, ext. 5810 michael.lagomarsino@ambest.com : mailto:michael.lagomarsino@ambest.com orPublic
RelationsJim Peavy, 908-439-2200, ext. 5644 james.peavy@ambest.com : mailto:james.peavy@ambest.com orRachelle
Morrow, 908-439-2200, ext. 5378 rachelle.morrow@ambest.com : mailto:rachelle.morrow@ambest.com