21175--3/8/2006--CNA_FINANCIAL

related topics

{loss, insurance, financial}

{regulation, change, law}

{loan, real, estate}

{competitive, industry, competition}

{capital, credit, financial}

{cost, contract, operation}

{debt, indebtedness, cash}

{control, financial, internal}

{regulation, government, change}

{condition, economic, financial}

Our key assumptions used to determine reserves and deferred acquisition costs for our long-term care product offerings could vary significantly. We continue to face exposure to losses arising from terrorist acts, despite the passage of the Terrorism Risk Insurance Extension Act of 2005. High levels of retained overhead expenses associated with business lines in run-off negatively impact our operating results. Our premium writings and profitability are affected by the availability and cost of reinsurance. We may not be able to collect amounts owed to us by reinsurers. We incur significant interest expense related to funds withheld from reinsurance arrangements. Rating agencies may downgrade their ratings of us and thereby adversely affect our ability to write insurance at competitive rates or at all. We are subject to extensive federal, state and local governmental regulations that restrict our ability to do business and generate revenues. We are subject to capital adequacy requirements and, if we do not meet these requirements, regulatory agencies may restrict or prohibit us from operating our business. Our insurance subsidiaries, upon whom we depend for dividends and advances in order to fund our working capital needs, are limited by state regulators in their ability to pay dividends. We are responding to subpoenas, interrogatories and inquiries relating to insurance brokers and agents, contingent commissions and bidding practices, and certain finite-risk insurance products. We have restated our financial results for prior years and identified material weaknesses in our internal control over financial reporting. Our investment portfolio, which is a key component of our overall profitability, may suffer reduced returns or losses, especially with respect to our equity investments in limited partnerships which are often subject to greater leverage and volatility. We may be adversely affected by the cyclical nature of the property and casualty business. We face intense competition in our industry. We may suffer losses from non-routine litigation and arbitration matters which may exceed the reserves we have established.

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21175--3/8/2006--CNA_FINANCIAL_CORP