EXHIBIT 99.2
[CNA LOGO]
FOR IMMEDIATE RELEASE
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CONTACT:
MEDIA: ANALYSTS:
Charles M. Boesel, 312/822-2592 Dawn M. Jaffray, 312/822-7757
Katrina W. Parker, 312/822-5167
CNA FINANCIAL ANNOUNCES
4TH QUARTER AND YEAR-END 2003 RESULTS
CHICAGO, FEBRUARY 12, 2004 --- CNA Financial Corporation (NYSE: CNA) today
reported net income for the fourth quarter of 2003 of $174 million, or $0.67 per
share, as compared with net income of $50 million, or $0.21 per share, for the
same period in 2002. The net loss for the year ended December 31, 2003 was
$1,433 million, or $6.58 per share, compared with net income of $155 million, or
$0.68 per share, in 2002.
The increase in fourth quarter of 2003 results over the prior period is
primarily due to strong results in Property and Casualty Operations. Rate
increases, solid production of new business, continued underwriting discipline
and a focus on expense management all contributed to the 99.1% combined ratio
for Property and Casualty Operations in the fourth quarter of 2003.
The decrease in net results for the year ended December 31, 2003 over the prior
year was principally a result of unfavorable net prior year development of
$1,849 million after-tax and an increase in bad debt reserves for insurance and
reinsurance receivables of $396 million after-tax.
"A review of the strategic options for all of CNA's businesses was completed to
provide the greatest opportunity to maximize shareholder value and concentrate
efforts to focus solely on Property and Casualty Operations," said Stephen W.
Lilienthal, Chairman and Chief Executive Officer of the CNA insurance companies.
"Despite the actions that were taken in 2003 to strengthen the balance sheet,
CNA's Property and Casualty Operations have finished the year with solid
accident year results driven by strong support from our distribution network,
solid rate increases and excellence in underwriting and claims."
As part of the previously announced capital plan, in order to replenish
statutory capital of CNA's insurance subsidiaries adversely impacted by the 2003
charges discussed above, Loews Corporation (Loews), the 90% owner of CNA's
outstanding shares, purchased $750 million of a new series of CNA convertible
preferred stock in November of 2003. Loews committed additional capital support
of up to $500 million by February 27, 2004 through the purchase of surplus notes
of Continental Casualty Company (CCC), CNA's principal insurance subsidiary, in
the event certain additions to CCC's statutory capital are not achieved through
asset sales. In addition, Loews committed to an additional $150 million of
capital support by March 31, 2004, in a form to be determined.
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As a result of the sale of the Group Benefits business, CNA estimates that Loews
will purchase $45 million of CCC surplus notes pursuant to such commitment. In
addition, CNA has recently announced that it has entered into an agreement to
sell its individual life business and has estimated that this sale will result
in an addition to CCC's statutory surplus in excess of $400 million. However,
the sale of the individual life business, which is subject to customary closing
conditions and regulatory approvals, is not expected to be consummated by
February 26, 2004. As a result, Loews will be obligated to purchase $300 million
of additional CCC surplus notes. Following the consummation of the individual
life sale, CNA plans to seek approval from the insurance regulatory authority
for the repayment of the surplus notes purchased in relation to such sale,
although no assurance can be given that sale of the individual life business
will be consummated or that the regulatory approval will be obtained.
Realized investment results improved $42 million after-tax in the fourth quarter
of 2003 as compared with the same period in 2002. The increase was due primarily
to a reduction in impairment losses for other-than-temporary declines in fair
value for fixed maturity and equity securities, partially offset by a $130
million after-tax loss on the previously announced sale of the Group Benefits
business. After-tax investment related impairment losses were $12 million for
the fourth quarter of 2003 as compared with $232 million for the same period in
2002.
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NET INCOME
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RESULTS FOR THE RESULTS FOR THE
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
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($ MILLIONS) 2003 2002 2003 2002
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INCOME (LOSS) BEFORE NET REALIZED
INVESTMENT GAINS (LOSSES) $ 194 $ 112 $(1,718) $ 396
NET REALIZED INVESTMENT (LOSSES) GAINS (20) (62) 285 (149)
---------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS 174 50 (1,433) 247
LOSS FROM DISCONTINUED OPERATIONS (a) - - - (35)
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE (b) - - - (57)
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NET INCOME (LOSS) $ 174 $ 50 $(1,433) $ 155
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(a) During the first quarter of 2002, CNA Vida, a Chilean-based life insurance
company, was sold and reported as discontinued operations in accordance with
SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
(b) Represents the effect of the adoption of SFAS 142, which was a change in
accounting for goodwill and indefinite-lived intangible assets in 2002.
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PER SHARE RESULTS AVAILABLE TO COMMON STOCKHOLDERS
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RESULTS FOR THE RESULTS FOR THE
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
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2003 (a) 2002 2003 (a) 2002
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INCOME (LOSS) FROM CONTINUING OPERATIONS (b) $0.67 $0.21 $(6.58) $1.10
LOSS FROM DISCONTINUED OPERATIONS (c) - - - (0.16)
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE (d) - - - (0.26)
===========================================================================================
NET INCOME (LOSS) $0.67 $0.21 $(6.58) $0.68
===========================================================================================
(a) Included in the weighted average number of common shares for the three
months and year ended December 31, 2003 are the effects of additional
common stock equivalents related to the November of 2003 sale of $750
million of convertible preferred shares to Loews Corporation. The preferred
shares are convertible into 32,327,015 shares of CNA common stock. The
conversion is expected to occur in 2004.
(b) The three months and year ended December 31, 2003 per share results
available to common stockholders are reduced by $15 million and $60
million, or $0.06 per share and $0.27 per share, of accumulated but
undeclared preferred stock dividends. The three months and year ended
December 31, 2002 per share results available to common stockholders were
both reduced by $2 million, or $0.01 per share, of accumulated but
undeclared preferred stock dividends.
(c) During the first quarter of 2002, CNA Vida, a Chilean-based life insurance
company, was sold and reported as discontinued operations in accordance
with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived
Assets.
(d) Represents the effect of the adoption of SFAS 142, which was a change in
accounting for goodwill and indefinite-lived intangible assets in 2002.
===========================================================================================================================
SEGMENT RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2003
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STANDARD SPECIALTY P&C CNA P&C GROUP LIFE CORPORATE
($ MILLIONS) LINES LINES OPS. RE SEGMENTS OPS. OPS. & OTHER TOTAL
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INCOME (LOSS) BEFORE NET
REALIZED INVESTMENT GAINS
(LOSSES) $ 70 $ 81 $ 151 $ 16 $ 167 $ 30 $ 8 $ (11) $ 194
NET REALIZED INVESTMENT
GAINS (LOSSES) 66 34 100 12 112 (127) 17 (22) (20)
===========================================================================================================================
NET INCOME (LOSS) $ 136 $ 115 $ 251 $ 28 $ 279 $ (97) $ 25 $ (33) $ 174
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SEGMENT RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2002
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STANDARD SPECIALTY P&C CNA P&C GROUP LIFE CORPORATE
($ MILLIONS) LINES LINES OPS. RE SEGMENTS OPS. OPS. & OTHER TOTAL
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INCOME (LOSS) BEFORE NET
REALIZED INVESTMENT GAINS
(LOSSES) $ 42 $ 19 $ 61 $ 26 $ 87 $ 31 $ 5 $ (11) $ 112
NET REALIZED INVESTMENT
(LOSSES) GAINS (23) (20) (43) 68 25 (31) (33) (23) (62)
============================================================================================================================
NET INCOME (LOSS) $ 19 $ (1) $ 18 $ 94 $ 112 $ - $ (28) $ (34) $ 50
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SEGMENT RESULTS FOR THE YEAR ENDED DECEMBER 31, 2003
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STANDARD SPECIALTY P&C CNA P&C GROUP LIFE CORPORATE
($ MILLIONS) LINES LINES OPS. RE SEGMENTS OPS. OPS. & OTHER TOTAL
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(LOSS) INCOME BEFORE NET
REALIZED INVESTMENT GAINS
(LOSSES) $ (956) $(111) $(1,067) $ (27) $(1,094) $ 100 $ 45 $ (769) $(1,718)
NET REALIZED INVESTMENT GAINS
(LOSSES) 219 94 313 50 363 (131) 23 30 285
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NET (LOSS) INCOME $ (737) $ (17) $ (754) $ 23 $ (731) $ (31) $ 68 $ (739) $(1,433)
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The following table highlights the after-tax significant items for the year
ended December 31, 2003.
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AFTER-TAX SIGNIFICANT ITEMS (a)
YEAR ENDED DECEMBER 31, 2003
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STANDARD SPECIALTY P&C CNA P&C GROUP LIFE CORPORATE
($ MILLIONS) LINES LINES OPS. RE SEGMENTS OPS. OPS. & OTHER TOTAL
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NET PRIOR YEAR DEVELOPMENT (b) $ (905) $(279) $(1,184) $(97) $(1,281) $ - $ - $ (568) $ (1,849)
INCREASE IN BAD DEBT PROVISION
FOR REINSURANCE RECEIVABLES (36) (51) (87) (1) (88) - - (151) (239)
INCREASE IN BAD DEBT PROVISION
FOR INSURANCE RECEIVABLES (157) - (157) - (157) - - - (157)
INCREASE IN UNALLOCATED CLAIM
ADJUSTMENT EXPENSE (ULAE)
RESERVES (3) (18) (21) - (21) - - (44) (65)
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TOTAL $(1,101) $(348) $ (1,449) $(98) $(1,547) $ - $ - $ (763) $ (2,310)
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(a) Additional after-tax items not included in the above table that have an
adverse effect on the year ended December 31, 2003 results included a $48
million increase in certain insurance-related assessments, $30 million of
dividend reserve development, $27 million increase in individual long term
care reserves and $96 million of interest expense related to additional
cessions to corporate aggregate and other reinsurance contracts.
(b) Net prior year development for the year ended December 31, 2003 included
both premium development and claim and allocated claim adjustment expense
reserve development.
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SEGMENT RESULTS FOR THE YEAR ENDED DECEMBER 31, 2002
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STANDARD SPECIALTY P&C CNA P&C GROUP LIFE CORPORATE
($ MILLIONS) LINES LINES OPS. RE SEGMENTS OPS. OPS. & OTHER TOTAL
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INCOME (LOSS) BEFORE NET
REALIZED INVESTMENT GAINS
(LOSSES) $ 197 $ 28 $ 225 $ 65 $ 290 $ 104 $ 94 $ (92) $ 396
NET REALIZED INVESTMENT
(LOSSES) GAINS (56) (52) (108) 71 (37) (39) (74) 1 (149)
--------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS 141 (24) 117 136 253 65 20 (91) 247
LOSS FROM DISCONTINUED
OPERATIONS (a) - - - - - - (35) - (35)
CUMULATIVE EFFECT OF A
CHANGE IN ACCOUNTING
PRINCIPLE (b) - (48) (48) - (48) - (8) (1) (57)
===================================================================================================================================
NET INCOME (LOSS) $ 141 $ (72) $ 69 $ 136 $ 205 $ 65 $ (23) $ (92) $ 155
===================================================================================================================================
(a) During the first quarter of 2002, CNA Vida, a Chilean-based life insurance
company, was sold and reported as discontinued operations in accordance with
SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
(b) Represents the effect of the adoption of SFAS 142, which was a change in
accounting for goodwill and indefinite-lived intangible assets in 2002.
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PROPERTY & CASUALTY SEGMENTS GROSS WRITTEN PREMIUMS
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THREE MONTHS ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
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($ MILLIONS) 2003 2002 2003 2002
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STANDARD LINES $1,354 $1,010 $5,619 $5,027
SPECIALTY LINES 908 875 3,695 3,359
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TOTAL P&C OPERATIONS 2,262 1,885 9,314 8,386
CNA RE 44 154 572 732
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TOTAL P&C SEGMENTS $2,306 $2,039 $9,886 $9,118
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PROPERTY & CASUALTY SEGMENTS NET WRITTEN PREMIUMS
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THREE MONTHS ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
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($ MILLIONS) 2003 2002 2003 2002
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STANDARD LINES $ 974 $ 848 $3,802 $4,020
SPECIALTY LINES 745 643 2,809 2,383
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TOTAL P&C OPERATIONS 1,719 1,491 6,611 6,403
CNA RE 41 111 478 605
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TOTAL P&C SEGMENTS $1,760 $1,602 $7,089 $7,008
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GROUP AND LIFE OPERATIONS NET EARNED PREMIUMS
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THREE MONTHS ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
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($ MILLIONS) 2003 2002 2003 2002
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GROUP OPERATIONS (a) $ 330 $ 310 $1,312 $2,327
LIFE OPERATIONS 246 220 1,029 930
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(a) For the year ended December 31, 2002, net earned premiums included $1,151
million related to the National Postal Mail Handlers Union (Mail Handlers
Plan) contract, which was transferred on July 1, 2002.
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PROPERTY & CASUALTY CALENDAR YEAR LOSS RATIOS
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THREE MONTHS ENDED DECEMBER 31 YEAR ENDED DECEMBER 31
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2003 2002 2003 2002
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STANDARD LINES 67.7% 71.7% 102.5% 72.0%
SPECIALTY LINES 67.7 75.6 84.9 77.1
TOTAL P&C OPERATIONS 67.7 73.1 95.1 73.9
CNA RE 84.3 71.1 95.2 78.4
TOTAL P&C SEGMENTS 69.1 72.9 95.2 74.2
TOTAL P&C COMPANIES (a) 75.2% 78.8% 110.5% 79.4%
=============================================================================================
(a) P&C Companies includes Standard Lines, Specialty Lines, CNA Re and P&C
business written in Group Operations, Life Operations and Corporate and
Other, including asbestos, environmental pollution and mass tort exposures
(APMT). The P&C Companies ratios exclude the impact of commutation
transactions between CNA's property and casualty and life and group
companies.
=================================================================================================
PROPERTY & CASUALTY CALENDAR YEAR COMBINED RATIOS
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THREE MONTHS ENDED DECEMBER 31 YEAR ENDED DECEMBER 31
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2003 2002 2003 2002
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STANDARD LINES 101.8% 105.7% 150.7% 104.4%
SPECIALTY LINES 95.1 104.9 119.2 109.3
TOTAL P&C OPERATIONS 99.1 105.4 137.6 106.1
CNA RE 100.9 97.8 124.7 109.1
TOTAL P&C SEGMENTS 99.3 104.6 136.6 106.4
TOTAL P&C COMPANIES (a) 105.0% 111.1% 154.2% 109.6%
===============================================================================================
(a) P&C Companies includes Standard Lines, Specialty Lines, CNA Re and P&C
business written in Group Operations, Life Operations and Corporate and
Other, including APMT. The P&C Companies ratios exclude the impact of
commutation transactions between CNA's property and casualty and life and
group companies.
=========================================================================================================
PROPERTY & CASUALTY GROSS ACCIDENT YEAR LOSS RATIOS
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ACCIDENT YEAR 2003 ACCIDENT YEAR 2002 ACCIDENT YEAR 2002
EVALUATED AT EVALUATED AT EVALUATED AT
DECEMBER 31, 2003 DECEMBER 31, 2002 DECEMBER 31, 2003
- ---------------------------------------------------------------------------------------------------------
STANDARD LINES 65.8% 74.6% 67.5%
SPECIALTY LINES 64.4 68.1 70.0
TOTAL P&C OPERATIONS 65.2 72.1 68.5
CNA RE 64.3 64.2 61.4
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TOTAL P&C SEGMENTS 65.2% 71.5% 67.9%
=========================================================================================================
=======================================================================================================
PROPERTY & CASUALTY NET ACCIDENT YEAR LOSS RATIOS
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ACCIDENT YEAR 2003 ACCIDENT YEAR 2002 ACCIDENT YEAR 2002
EVALUATED AT EVALUATED AT EVALUATED AT
DECEMBER 31, 2003 DECEMBER 31, 2002 DECEMBER 31, 2003
- -------------------------------------------------------------------------------------------------------
STANDARD LINES 68.3% 75.3% 71.5%
SPECIALTY LINES 68.1 71.7 72.8
TOTAL P&C OPERATIONS 68.2 74.1 72.0
CNA RE 69.2 69.4 62.5
=======================================================================================================
TOTAL P&C SEGMENTS 68.3% 73.7% 71.2%
=======================================================================================================
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BUSINESS OPERATING HIGHLIGHTS
STANDARD LINES includes standard property and casualty coverages sold to small
and middle market commercial businesses primarily through an independent agency
distribution system, and excess and surplus lines, as well as insurance and risk
management products sold to large corporations.
o Net written premiums increased $126 million for the fourth quarter of 2003 as
compared with the same period in 2002. This increase was due primarily to
increased rate and retention across most of Standard Lines businesses.
o Standard Lines achieved average rate increases during the fourth quarter of
2003 of 12%.
o Net results for the fourth quarter of 2003 increased $117 million as compared
with the same period in 2002, primarily related to improved current net
accident year loss ratios and improved net investment results, including
increased limited partnership income.
SPECIALTY LINES provides a broad array of professional, financial and specialty
property and casualty products and services in the U.S. and abroad.
o Net written premiums increased $102 million for the fourth quarter of 2003 as
compared with the same period in 2002, due primarily to rate increases and
new business in professional liability lines.
o Specialty Lines achieved average rate increases during the fourth quarter of
2003 of 20%, primarily across most professional liability lines of business.
o Net results for the fourth quarter of 2003 increased $116 million as compared
with the same period in 2002, primarily related to improved current net
accident year loss ratios and improved net investment results, including
increased limited partnership income.
CNA RE operated globally as a reinsurer in the broker market for treaty products
and in the direct market for facultative products.
o In October of 2003, CNA sold the renewal rights for most of the treaty
business of CNA Re to Folksamerica Reinsurance Company, a wholly owned
subsidiary of White Mountains Insurance Group, Ltd. Concurrent with the sale,
CNA announced its withdrawal from the assumed reinsurance business and will
manage the run-off of its retained liabilities.
o Net written premiums decreased $70 million for the fourth quarter of 2003 as
compared with the same period in 2002 primarily due to the decision to
withdraw from the assumed reinsurance business.
o Net results for the fourth quarter of 2003 decreased $66 million as compared
to the same period in 2002, primarily related to a decrease in net investment
results.
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GROUP OPERATIONS provides group long term care and specialty medical products
and investment products and services to employers, affinity groups and other
entities that purchase insurance as a group.
o On December 31, 2003, CNA sold its Group Benefits business to Hartford
Financial Services Group, Inc. The business sold included group life and
accident, and short and long term disability insurance. CNA`s group long term
care and specialty medical businesses were excluded from the sale. CNA has
also announced the decision to cease new sales in its institutional markets
business.
o Net results for the fourth quarter of 2003 decreased $97 million as compared
with the same period in 2002, principally due to a decrease in net realized
investment results. This decrease was primarily due to the $130 million
after-tax loss recorded on the sale of the Group Benefits business during the
fourth quarter of 2003.
LIFE OPERATIONS provides financial protection to individuals through a full
product line of term life insurance, universal life insurance, individual long
term care insurance, annuities and other products.
o As previously announced, CNA has entered into a definitive agreement to sell
its individual life insurance business to Swiss Re Life & Health America Inc.
(Swiss Re) for approximately $690 million. The business sold includes term,
universal and permanent life insurance policies and individual annuity
products. CNA`s individual long term care and structured settlement
businesses are excluded from the sale. CNA has also announced the decision to
cease new sales in its structured settlement business.
o Net earned premiums increased $26 million for the fourth quarter of 2003 as
compared with the same period in 2002, due primarily to higher sales of
structured settlement annuities and a higher base of the inforce long term
care product.
o Net results for the fourth quarter of 2003 increased $53 million as compared
with the same period in 2002, primarily related to increased net realized
investment results, favorable life settlement results and favorable life
mortality, partially offset by unfavorable reserve strengthening for
individual long term care due to increased morbidity.
CORPORATE AND OTHER segment contains certain corporate expenses such as interest
on corporate debt and losses and expenses related to the centralized adjusting
and settlement of APMT. In addition, this segment includes the results of
certain run-off insurance and non-insurance operations.
o Net results for the fourth quarter of 2003 improved $1 million as compared
with the same period in 2002. The net results in the fourth quarter of 2003
include increased net investment income, including increased limited
partnership income.
NET INVESTMENT INCOME
Pretax net investment income of $436 million for the fourth quarter of 2003
decreased $2 million as compared with the same period in 2002. The change was
primarily due to increased holdings in lower yielding tax-exempt and short term
investment securities and the absence in 2003 of a $34 million pretax dividend
income from Canary Wharf Group plc. These declines were partially offset by a
$68 million pretax improvement in limited partnership income.
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ABOUT THE COMPANY
CNA is the country's fourth largest commercial insurance writer and the 11th
largest property and casualty company. CNA's insurance products include standard
commercial lines, specialty lines, surety, marine and other property and
casualty coverages. CNA 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 service mark, trade name
and domain name of CNA Financial Corporation.
CONFERENCE CALL AND WEBCAST INFORMATION:
A CONFERENCE CALL FOR INVESTORS AND THE PROFESSIONAL INVESTMENT COMMUNITY WILL
BE HELD FROM 10:00 A.M. TO 11:00 A.M. EST TODAY. ON THE CONFERENCE CALL WILL BE
STEPHEN W. LILIENTHAL, CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE CNA INSURANCE
COMPANIES, AND OTHER MEMBERS OF SENIOR MANAGEMENT. PARTICIPANTS CAN ACCESS THE
CALL BY DIALING 800-818-5264 OR FOR INTERNATIONAL CALLERS 913-981-4910. THE CALL
WILL ALSO BE BROADCAST LIVE ON THE INTERNET AT HTTP://INVESTORS.CNA.COM OR YOU
MAY GO TO THE INVESTOR RELATIONS PAGES OF THE CNA WEBSITE (WWW.CNA.COM) FOR
FURTHER DETAILS.
THE CALL IS AVAILABLE TO THE MEDIA, BUT QUESTIONS WILL BE RESTRICTED TO
INVESTORS AND THE PROFESSIONAL INVESTMENT COMMUNITY. A TAPED REPLAY OF THE CALL
WILL BE AVAILABLE FOR ONE WEEK UNTIL FEBRUARY 19, 2004 BY DIALING 888-203-1112
AND USING PASSCODE 254941 OR FOR INTERNATIONAL CALLERS 719-457-0820 AND USING
PASSCODE 254941. IT WILL ALSO BE ARCHIVED LATER IN THE DAY FOR REPLAY ON OUR
WEBSITE. FINANCIAL SUPPLEMENT INFORMATION RELATED TO THE FOURTH QUARTER RESULTS
IS AVAILABLE ON THE INVESTOR RELATIONS PAGES OF THE CNA WEBSITE OR BY CONTACTING
DAWN JAFFRAY AT 312-822-7757.
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FORWARD-LOOKING STATEMENT
The statements contained in this press release or made during the conference
call referenced above, which are not historical facts, are forward-looking
statements. When included in this press release or the conference call, 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 expense reduction and 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 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; whether a
national privately financed trust to replace litigation of asbestos claims with
payments to claimants from the trust will be established or approved through
federal legislation, or, if established and approved, whether it will contain
funding requirements in excess of the Company's established loss reserves or
carried loss reserves; 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, including
the inability to access certain markets or distribution channels and the
required collateralization of future payment obligations as a result of such
changes, 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
or of the conference call. The Company expressly disclaims any obligation or
undertaking to release any updates or revisions to any forward-looking statement
contained in this press release or made in the conference call 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.
This press release may also contain and the conference call may reference
financial measures that are not in accordance with generally accepted accounting
principles (GAAP). For reconciliations of non-GAAP measures to the most
comparable GAAP measures, refer to the text of this press release and the
financial supplement posted on the Company's website.
# # #
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