Chicago-based commercial lines insurer CNA Financial Corp. reported a net loss for the third quarter of 2003 of $1.8 billion, or $7.94 per share, as compared with net income of $54 million, or 24 cents per share, for the same period in 2002. The net loss for the nine months ended Sept. 30, 2003 was $1.6 billion, or $7.39 per share, compared with net income of $105 million, or 47 cents per share, for the same period in 2002. The net prior year development consisted of $978 million after-tax related to core reserves and $517 million after-tax related to asbestos, environmental pollution and mass tort reserves.
The primary factors that led to the net prior year development were the previously announced third quarter of 2003 comprehensive reserve reviews, which included construction defect and other volatile exposures, and a ground up analysis of APMT exposures. The net prior year development also resulted in additional cessions to the company’s reinsurance contracts, including the corporate aggregate reinsurance treaties. These additional cessions resulted in $67 million of after-tax interest expense, which is recorded as a reduction in net investment income.
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