CNA Completes Sale of London Reinsurance Company

November 1, 2002

CNA Financial Corporation announced that it has completed the sale of its London reinsurance operation, CNA Reinsurance Company Limited (UK), to Tawa UK Ltd., a subsidiary of Artemis Group, the diversified French holding company, which controls the various operations of financier François Pinault’s empire.

CNA announced in 2001 that it would consolidate its reinsurance operations, operating solely out of the United States and, therefore, would seek a buyer for CNA Re UK. The company said, however, that it “remains committed to operating globally from its U.S.-based reinsurance operation,” offering treaty products through the broker market and facultative products direct to clients.

The company indicated that it had previously recorded an impairment loss in anticipation of the sale and “does not expect to record an additional loss under the terms of the agreement.”

“The final agreement includes business underwritten by CNA Reinsurance Company Limited (UK) since its inception and follows the completion of the formal review process and approval by the Financial Services Authority, the UK regulator, and the Illinois Insurance Department,” said the bulletin.

Curiously, CNA’s bulletin also went on to note that “Artemis has managed one of the world’s largest and most successful life insurance rehabilitations, Aurora National Life Assurance, in the US.” Aurora, formerly known as Executive Life, is at the heart of an ongoing controversy involving its purchase in 1991 by Altus Finance, a vehicle, that California’s Attorney General and its former Insurance Commissioner, Chuck Quackenbush, have both charged was controlled by the French Bank Credit Lyonnais. Pinault’s Artemis acquired a 67 percent stake in Aurora in 1993.

The allegations, however, charge that Credit Lyonnais broke both the Glass-Steagle Act, which at the time prohibited banks from participating in the management of insurance companies, and California laws which prohibit foreign governments (Credit Lyonnais was owned by the French government at the time) from investing in domestic insurers. Pinault allegedly participated in the scheme, and Artemis supposedly pocketed a good portion of the $2.5 billion in junk bond profits that California has been trying to recover; so far unsuccessfully.

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