(Bloomberg) – CNA Financial Corp. agreed to sell a life unit to Wilton Re Holdings Ltd. at a loss as the insurer majority-owned by Loews Corp. narrows its focus to property-casualty coverage.
Proceeds from the divestiture of Continental Assurance Co., which has liabilities tied to group annuities and structured settlements, will be about $615 million, the Chicago-based insurer said today in a statement. The deal will reduce earnings this quarter by about $220 million, CNA said.
CNA is among insurers retreating from life units as low interest rates limit returns. Allstate Corp. and Hartford Financial Services Group Inc. have struck deals to divest units as they increase their reliance on property-and-casualty sales. CNA primarily sells coverage to commercial clients.
“This transaction is another step in the execution of our strategy to create a more focused P&C business capable of delivering consistent performance,” Thomas Motamed, CNA’s chief executive officer, said in the statement.
Wilton Re, which is backed by Stone Point Capital LLC, is based in Bermuda and helps life insurers limit risk by taking on their policies. The company also acquires businesses that have stopped selling coverage.
Wilton Re will also assume liabilities tied to reinsurance deals in which CNA backed structured-settlement annuities, according to the statement. Loews, the New York-based company run by the Tisch family, controls about 90 percent of CNA’s common stock.
Morgan Stanley was CNA’s financial adviser and Hogan Lovells US LLP provided legal counsel.