CNA Financial Announces Preliminary 4thQ and Year-End Results

January 28, 2002

CNA Financial Corporation announced that it expects a 2001 fourth-quarter net loss between $20 million and $35 million, compared with net income of $193 million for the same quarter in 2000.

Included in the 2001 fourth quarter net loss are the previously disclosed restructuring and other related charges of $125 million after-tax and $52 million after-tax of Enron related losses, net of anticipated reinsurance recoveries. CNA has also recorded a $69 million after-tax reserve strengthening charge, primarily for the current accident year, in CNA’s London-based primary commercial and marine operations.

Total net operating loss, which excludes realized investment gains, for the 2001 fourth quarter is expected to be between $288 million and $303 million compared with net operating income of $114 million in the 2000 fourth quarter. Total net realized investment gains for the 2001 fourth quarter were $268 million compared with $79 million for the 2000 fourth quarter.

The 2001 fourth quarter net operating loss includes a $160 million after-tax charge to strengthen the prior year loss reserves of its London-based reinsurance operation, CNA Reinsurance Company Limited (CNA Re U.K.). Net realized investment gains for the 2001 fourth quarter includes a $160 million after-tax adjustment to reduce the second quarter $285 million after-tax estimated impairment losses related to the anticipated sale of CNA Re U.K. The fourth quarter adjustment is based on a revaluation of the estimated impairment losses and is reflected as an after-tax realized gain. There is no net effect on equity or net income from these two items.

Total net loss for the year ended Dec. 31, 2001 is expected to be $1.6 billion compared with net income of $1.2 billion for the year ended Dec. 31, 2000. Total net operating loss, which excludes realized investment gains, for the year ended Dec. 31, 2001 is expected to be $2.4 billion compared with net operating income of $544 million for the year ended Dec. 31, 2000.

Included in the Dec. 31, 2001 net operating loss is the $2.1 billion after-tax charge recorded in the second quarter related to a change in estimate of prior year loss reserves and premium accruals, $304 million after-tax losses from the September 11, 2001 World Trade Center attack and related events recorded in the third quarter, fourth quarter restructuring and other related charges, Enron related losses, and fourth quarter reserve strengthening discussed above.

Was this article valuable?

Here are more articles you may enjoy.