EXHIBIT 99.1
FOR IMMEDIATE RELEASE
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CONTACT:
MEDIA: ANALYSTS:
Charles M. Boesel, 312/822-2592 Robert V. Deutsch, 312/822-4242
Katrina W. Parker, 312/822-5167 Donald P. Lofe, Jr., 312/822-3993
CNA FINANCIAL SELLS $750 MILLION OF NEW
PREFERRED STOCK TO LOEWS CORPORATION
CHICAGO, IL, December 19, 2002 -- CNA Financial Corporation (NYSE:CNA)
reported today that it has completed its previously announced plan to sell
$750 million of a new issue of preferred stock, called Series H Cumulative
Preferred Stock, to Loews Corporation, the owner of 90% of CNA's
outstanding common stock. The terms of the new Series H Cumulative
Preferred Stock have been approved by a special committee of independent
members of CNA's Board of Directors. The principal terms of the Series H
Cumulative Preferred Stock are as follows:
o The new preferred stock will accrue cumulative dividends at an
initial rate of 8% per year. The dividend rate will be adjusted
quarterly to a rate equal to 400 basis points above the ten year
U.S. Treasury rate, beginning with the quarterly dividend after
the first to occur of the following two events: (i) an increase by
two intermediate ratings levels of the financial strength rating
of CNA's principal insurance subsidiary, Continental Casualty
Company, from its current rating by any of A. M. Best Company,
Standard & Poor's or Moody's Investor Services; or (ii) one year
following an increase by one intermediate ratings level of the
financial strength rating of Continental Casualty by any one of
such three rating agencies.
o Accrued but unpaid cumulative dividends cannot be paid on the
Series H Preferred Stock unless and until Continental Casualty's
financial strength rating has been increased by two intermediate
rating levels, or one year after Continental Casualty's financial
strength rating has been increased by one intermediate rating
level, if earlier, as described above. However beginning with the
quarter following an increase of one intermediate rating level in
Continental Casualty's financial strength rating, current
quarterly dividends (but not accrued cumulative dividends) can be
paid.
o The Series H Cumulative Preferred Stock will not be convertible
into any other securities of CNA and will be non-voting. The
preferred stock may be redeemed only upon the mutual agreement of
CNA and a majority of the holders of the new preferred stock.
o The new preferred stock will rank senior to CNA's common stock as
to the payment of dividends and amounts payable upon liquidation,
dissolution or winding up. No dividends may be declared on CNA's
common stock until all cumulative preferred dividends have been
paid in full. CNA may not issue any equity securities ranking
senior to or on par with the new preferred stock without the
consent of a majority of the holders of the Series H Cumulative
Preferred Stock.
CNA intends to use the $750 million of proceeds from the preferred stock to
repay debt, including prepayment of $250 million in bank debt prior to
December 31, 2002, to improve Continental Casualty Company's statutory
surplus and for other corporate purposes.
CNA is the country's fourth largest commercial insurance writer, the ninth
largest property and casualty company and the 51st largest life insurance
company. CNA's insurance products include standard commercial lines,
specialty lines, surety, reinsurance, marine and other property and
casualty coverages; life and accident insurance; group long term care,
disability and life insurance; and pension products. CNA services include
risk management, information services, underwriting, loss control and
claims administration. For more information, please visit CNA at
www.cna.com. CNA is a registered service mark, trade name and domain name
of CNA Financial Corporation.
FORWARD-LOOKING STATEMENT
The statements contained in this press release, which are not historical
facts, are forward-looking statements. When included in this press release,
the words "believes," "expects," "intends," "anticipates," "estimates," and
analogous expressions are intended to identify forward-looking statements.
Forward looking statements include expected developments in the insurance
business of CNA (the "Company"), including losses for asbestos,
environmental pollution and mass tort claims; the Company's expectations
concerning its revenues, earnings, expenses and investment activities;
expected cost savings and other results from the Company's restructuring
activities; and the Company's proposed actions in response to trends in its
business.
Such statements, and the financial condition and results of operations of
the Company and the price of the Company's common stock, are subject to a
variety of inherent risks and uncertainties. These risks and uncertainties
could cause actual results to differ materially from those projected. Such
risks and uncertainties include, among others: general economic and
business conditions, including inflationary pressures on medical care
costs, construction costs and other economic sectors that increase the
severity of claims; changes in financial markets such as fluctuations in
interest rates, long-term periods of low interest rates, credit conditions
and currency, commodity and stock prices; the effects of corporate
bankruptcies, such as Enron and WorldCom, on surety bond claims, as well as
on capital markets and on the markets for directors & officers and errors &
omissions coverages; changes in foreign or domestic political, social and
economic conditions; regulatory initiatives and compliance with
governmental regulations; judicial decisions and rulings, including
interpretation of policy provisions, decisions regarding coverage and
theories of liability, trends in litigation and the outcome of any
litigation involving the Company; changes in tax laws and regulations;
regulatory limitations and restrictions upon the Company and its insurance
subsidiaries; the impact of competitive products, policies and pricing and
the competitive environment in which the Company operates, including
changes in the Company's books of business; product and policy availability
and demand and market responses, including the level of ability to obtain
rate increases and decline or non-renew underpriced accounts, to achieve
premium targets and profitability and to realize growth and retention
estimates; development of claims and the impact on loss reserves, including
changes in claim settlement practices; the effectiveness of current
initiatives by claims management to reduce loss and expense ratio through
more efficacious claims handling techniques; the performance of reinsurance
companies under reinsurance contracts with the Company; results of
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financing efforts, including the availability of bank credit facilities;
changes in the Company's composition of operating segments; weather and
other natural physical events, including the severity and frequency of
storms, hail, snowfall and other winter conditions, as well as of natural
disasters such as hurricanes and earthquakes; man-made disasters, including
the possible occurrence of terrorist attacks and the effect of the absence
of applicable terrorism legislation on coverages; the occurrence of
epidemics; exposure to liabilities due to claims made by insureds and
others relating to asbestos remediation and health-based asbestos
impairments, and exposure to liabilities for environmental pollution and
other mass tort claims; the sufficiency of the Company's loss reserves and
the possibility of future increases in reserves; the level of success in
integrating acquired businesses and operations, and in consolidating
existing ones; the possibility of changes in the Company's ratings by
ratings agencies and changes in rating agency policies and practices; the
actual closing of contemplated transactions and agreements; and various
other matters and risks (many of which are beyond the Company's control)
detailed in the Company's Securities and Exchange Commission filings.
These forward-looking statements speak only as of the date of this press
release. The Company expressly disclaims any obligation or undertaking to
release any updates or revisions to any forward-looking statement contained
in this press release to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions or circumstances on
which any statement is based.
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