CNA Financial Corp. announced it has completed completion the sale of Continental Assurance Co. (CAC) to a subsidiary of Wilton Re Holdings. Additionally, Wilton Re Bermuda Limited will reinsure all of the run-off structured settlement annuities reinsured by a Bermuda-based subsidiary of CNA.
“This sale marks another important milestone for CNA, as we continue to simplify our operations and create a more focused P&C business capable of delivering consistent performance,” said Thomas F. Motamed, chairman and CEO of CNA.
With the completion of the transaction, CNA has effectively disposed of Life & Group Non-Core gross GAAP insurance reserves of $3.5 billion, or 23 percent, representing the vast majority of its payout annuity business.
As a result of the funds withheld basis used in the reinsurance transaction involving CNA’s Bermuda-based structured settlement annuities, CNA will recognize an after-tax charge of approximately $35 million in the third quarter. This amount represents the difference in market value and book value of the funds withheld assets at the reinsurance contract’s inception. In future periods, CNA will recognize income to the extent the funds withheld assets are sold or the market value of those assets reduces to the maturity value of the securities.
Morgan Stanley & Co. LLC served as financial advisor and Hogan Lovells US LLP served as legal counsel for CNA in this transaction.