CHICAGO--(BUSINESS WIRE)--Aug. 7, 2003--Fitch Ratings has
downgraded various ratings of CNA Financial Corporation (CNA). Both
CNA's and The Continental Corporation's senior debt ratings were
downgraded to 'BBB-' from 'BBB'. Further, the insurer financial
strength ratings for members of The Continental Casualty Pool (CCC),
The Continental Insurance Company Pool (CIC) and the primary life
insurance subsidiaries were each downgraded one level. All Ratings
have been placed on Rating Watch Negative.

A full ratings coverage list is shown below.

The rating actions are related to two events announced today.
First, the downgrade is in response to a second quarter charge.
Second, the Rating Watch reflects further uncertainty related to the
reserve study that will be completed during the second half of 2003
and any potential capital actions that may occur as a result.
CNA announced a $308 million after-tax charge which includes
adverse development of prior accident year reserves. In addition, the
charge also addresses prior accident year claim expenses and potential
issues related to reinsurance recoverables.
Given the multiple charges taken in the past five years to
strengthen reserves, Fitch believes CNA's reserves have exhibited
levels of volatility inconsistent with the prior rating category. As
such, this continued reserve volatility was the main consideration in
the downgrade. Between 1998 and 2001, CNA incurred $2.7 billion in
after-tax adverse prior year reserve development. Favorably, the
current charge is not expected to impact capital as both current
accident year earnings and realized capital gains through the first
half of 2003 will offset the expense.
The Negative Rating Watch reflects the uncertainty related to the
announced reserve study. Resolution of the Rating Watch will depend on
the size of the resultant reserve charge, if any, and the steps taken
by CNA to replenish capital in the event of a material loss. Ultimate
rating actions could include a rating affirmation if Fitch becomes
comfortable that post-study reserves are adequate and overall
capitalization, including both operating company leverage and parent
company financial leverage, remain consistent with the organization's
recent past. Otherwise, the ratings could be lowered further.
CNA is a multi-line insurance organization with leading market
positions in commercial property/casualty insurance and various
segments in life insurance. The company is 90% owned by Loews
Corporation (Loews). CNA's strengths include a diverse operating
profile, large market presence in multiple insurance lines and
reasonable investment portfolio quality.
Loews ownership interest is an important consideration in the
rating as well, particularly given support provided to CNA over the
years. This support has been demonstrated by various actions that have
improved CNA's capitalization. Fitch currently rates Loews senior
unsecured debt 'A' with a Negative Rating Outlook.

Entity/Issue/Type Action Rating/Watch

CNA Financial Corp.

-- Senior debt Downgrade from 'BBB' to 'BBB-' / Placed on Rating
Watch Negative.

The Continental Corporation

-- Senior debt Downgrade from 'BBB' to 'BBB-' / Placed on Rating
Watch Negative.

Continental Casualty Company Pool

-- Insurer financial strength Downgrade from 'A' to 'A-' / Placed
on Rating Watch Negative.

-- Members include: Continental Casualty Company, American
Casualty Company of Reading, Pennsylvania, CNA Casualty of
California, CNA Lloyd's of Texas, Columbia Casualty Company,
National Fire Insurance Company of Hartford, Transcontinental
Insurance Company, Transportation Insurance Company, and
Valley Forge Insurance Company.

Continental Insurance Company Pool

-- Insurer financial strength Downgrade from 'A' to 'A-' / Placed
on Rating Watch Negative.

-- Members include: The Continental Insurance Company, Boston Old
Colony Insurance Company, Buckeye Union Insurance Company,
Continental Reinsurance Corporation, The Fidelity and Casualty
Company of New York, Firemen's Insurance Company of Newark,
New Jersey, Niagara Fire Insurance Company and Pacific
Insurance Company.

Continental Assurance Company Pool

-- Insurer financial strength Downgrade from 'AA-' to 'A+' /
Place on Rating Watch Negative;

-- S-T insurer financial strength Downgrade from 'F1+' to 'F1' /
Placed on Rating Watch Negative.

-- Members include: Continental Assurance Company and Valley
Forge Life Insurance Company.

CNA Group Life Assurance Company

-- Insurer financial strength Downgrade from 'A+' to 'A' / Placed
on Rating Watch Negative.