OLDWICK, NJ–(BUSINESS THREAD)–AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of ‘a+’ (Excellent) of property/casualty (P/C) subsidiaries of CNA Financial Corporation (CNAF) [NYSE: CNA], collectively known as CNA Insurance Companies (CNA). In parallel, AM Best has affirmed the long-term ICR of “bbb+” (Good) and all of CNAF’s long-term issuance credit ratings (IR long-term). In addition, AM Best has affirmed the FSR of A (Excellent) and the long-term ICRs of ‘a+’ (Excellent) of Western Surety Group members. The outlook for these credit ratings (ratings) is stable. All of the companies listed above are based in Chicago, IL. (See below for a detailed list of companies and qualifications.)
The ratings of CNA, which is considered the lead rating unit within CNAF, reflect its balance sheet strength, which AM Best rates as very strong, as well as its adequate operating performance, favorable business profile and adequate business risk management (ERM). . The ratings also recognize the historical financial support provided by CNA’s 89.6% diversified parent parent, Loews Corporation.
The ratings of CNA Insurance Companies, whose lead member is Continental Casualty Company, recognize the strongest level of risk-adjusted capitalization, as measured by the Best Capital Adequacy Ratio (BCAR), that the company maintains, the group’s consistently profitable operating results and its firmly established position as a leading American writer of commercial and specialty lines. In addition, the ratings recognize CNA’s favorable operating platform, which demonstrates considerable geographic and product line reach, strong service capability and a diversified distribution channel with well-established agency relationships. The group’s specialty insurance segment continues to be the main driver of profitability and internal capital generation, while commercial insurance operations have steadily improved thanks to significant underwriting and expense management initiatives. The ratings also take into account the group’s continued focus on ERM and recognize the historical implicit and explicit financial and organizational support provided by Loews Corporation.
Partially offsetting these positive rating factors are recent significant market valuation adjustments that have resulted in a significant cumulative decrease in CNAF’s GAAP shareholder equity since year-end 2021, primarily in the second quarter of 2022. The positive credit features are the intermittent adverse impacts of CNA’s long-term care program which continues to serve as a drag on CNAF’s overall profitability and exposes its surplus and risk-adjusted capitalization to significant potential volatility. Additional factors affecting the group’s credit profile are its catastrophe loss underwriting exposures, reserve uncertainties that generally affect litigation-sensitive claims lines, which comprise the majority of CNA’s current business exposures, related to cyber and other underwriting exposures. In summary, however, AM Best considers that the impact of recent market-related volatility on CNAF’s financial position is transitory and is already fully reflected in the group’s fundamental credit profile. According to AM Best, the company and its subsidiaries are not significantly exposed to liability-based liquidity risk, and the investment portfolio is specifically managed to control the group’s exposure to long-term cash flow and earnings volatility resulting from their discontinuous long-term care. portfolio, which AM Best considers a more important economic exposure.
Western Surety Group’s ratings reflect the strength of its balance sheet, which AM Best considers the strongest, as well as its strong operating performance, neutral business profile and adequate ERM.
Western Surety Group’s ratings reflect its strongest risk-adjusted capitalization as measured by BCAR, a consistently favorable loss reserve position and modest levels of underwriting leverage. In addition, Western Surety Group has reported consistently profitable underwriting and operating performance, and a strong market position in the contract and diverse surety bond markets. Slightly offsetting these positive rating factors is Western Surety Group’s narrow product focus in the highly competitive surety market environment, which may pressure underwriting margins in the near term.
FSR of A (Excellent) and Long-Term ICRs of ‘a+’ (Excellent) have been affirmed with a stable outlook for the following P/C members of CNA Insurance Companies:
American Casualty Company of Reading, Pennsylvania Columbia Casualty Company Continental Casualty Company The Continental Insurance Company of New Jersey The Continental Insurance Company National Fire Insurance Company of Hartford North Rock Insurance Company Limited Transportation Insurance Company Valley Forge Insurance Company
and for the following members of the Western Surety Group:
Universal Surety of America Western Surety Company
The following long-term IRs with a stable outlook have been confirmed:
CNA Financial Corporation –
— “bbb+” (Bo) on $243 million 7.25% senior unsecured notes due 2023
— “bbb+” (Good) on $550 million 3.95% senior unsecured notes due 2024
— “bbb+” (Good) on $500 million 4.5% senior unsecured notes due 2026
— “bbb+” (Good) on $500 million 3.45% senior unsecured notes due 2027
— “bbb+” (Good) on $500 million 3.9% senior unsecured notes due 2029
— “bbb+” (Good) on 500 million 2.05% senior unsecured notes due 2030
The following indicative long-term IRs on securities available under the shelf register have been confirmed with a stable outlook:
CNA Financial Corporation –
—“bbb+” (Bo) in senior unsecured debt
—“bbb” (Bo) in senior subordinated debt
—“bbb-” (Bo) in junior subordinated debt
—“bbb-” (Bo) in preferred shares
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