AM Best Revises Outlook to Positive for CNA

AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a+” (Excellent) of the property/casualty (P/C) subsidiaries of CNA Financial Corporation, collectively known as CNA Insurance Companies (CNA) and the members of Western Surety Group.

Concurrently, AM Best has revised the outlook to positive from stable and affirmed the Long-Term ICR of “bbb+” (Good) and all existing Long-Term Issue Credit Ratings (Long-Term IRs) of CNAF. All above named companies are headquartered in Chicago.

AM Best said the positive outlooks are reflective of the consistently positive operating performance of CNA underpinned by its positive underwriting and investment metrics, which compare favorably to its commercial casualty peers. Additionally, the outlooks reflect the supportive ownership of CNAF.

CNA, along with its Credit Ratings (ratings), is considered the lead rating unit in the CNAF enterprise. CNA’s credit ratings reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM). The ratings also acknowledge the historical financial support provided by CNA’s diversified 92%-shareholder ultimate parent, Loews Corporation.

The ratings of CNA—whose lead member is Continental Casualty Company—recognize the strongest level of risk-adjusted capitalization, AM Best said, as measured by Best’s Capital Adequacy Ratio (BCAR), the group’s consistently profitable operating results, as well as its well established position as a leading U.S. writer of commercial and specialty lines.

Additionally, the ratings recognize CNA’s favorable operating platform, which demonstrates considerable geographic and product line scope, strong service capabilities and its diversified distribution channel with well-established agency relationships.

The group’s specialty insurance segment remains the primary engine of profitability and internal capital generation, but its commercial insurance operations have demonstrated steady improvement as significant underwriting and expense management initiatives have taken hold. The ratings also consider CNA’s ERM structure, and the implicit and explicit financial and organizational support provided by the Loews Corporation.

AM Best noted intermittent adverse impacts of CNA’s discontinued long-term care program, which has at times served as a drag on CNA’s overall profitability and has exposed its surplus and risk-adjusted capitalization to potential volatility.

Additional factors affecting the group’s credit profile are its moderate underwriting exposures to catastrophe losses associated with its commercial property product lines, reserve uncertainties, which generally affect litigation-sensitive casualty lines, as well as cyber-related and other underwriting exposures, AM Best