A.M. Best Places Ratings of Continental Assurance Company under Review
OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has placed under review with developing implications the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Continental Assurance Company (CAC). CAC is the life/health subsidiary of CNA Financial Corporation (CNA). The above named companies are headquartered in Chicago, IL.
The rating actions follow the recent announced definitive agreement by CNA to sell all its common shares of CAC to a subsidiary of Wilton Re Holdings Limited (Wilton Re) (Hamilton, Bermuda). In addition to the sale of CAC, certain affiliates of CNA and Wilton Re have agreed to enter into a 100% reinsurance agreement and related transaction agreement pursuant to which Wilton Re will reinsure all of the run-off structured settlement annuities reinsured by a Bermuda-based subsidiary of CNA. The transactions, when completed, will reduce CNA’s non-core life and group gross GAAP insurance reserves by $3.4 billion, or 25%, and dispose of the vast majority of CNA’s payout annuity business.
The under review status reflects A.M. Best’s view that, although CAC is expected to benefit from being a part of an organization focused on the life and annuity market segments and will have access to additional financial and managerial resources, A.M. Best will assess the transaction’s likely effect on CAC’s prospective operating performance and risk-adjusted capitalization. The ratings will remain under review pending the completion of the transaction, during which time A.M. Best will conduct discussions with Wilton Re’s management regarding CAC’s strategic fit within the organization.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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