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<SEC-DOCUMENT>0000950123-10-114495.txt : 20110222
<SEC-HEADER>0000950123-10-114495.hdr.sgml : 20110221
<ACCEPTANCE-DATETIME>20101217111914
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-10-114495
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20101217

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CNA FINANCIAL CORP
		CENTRAL INDEX KEY:			0000021175
		STANDARD INDUSTRIAL CLASSIFICATION:	FIRE, MARINE & CASUALTY INSURANCE [6331]
		IRS NUMBER:				366169860
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		CNA
		STREET 2:		333 S. WABASH
		CITY:			CHICAGO
		STATE:			IL
		ZIP:			60604
		BUSINESS PHONE:		3128225000

	MAIL ADDRESS:	
		STREET 1:		CNA
		STREET 2:		333 S. WABASH
		CITY:			CHICAGO
		STATE:			IL
		ZIP:			60604
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>corresp</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><IMG src="c61863c6186300.gif" alt="(CNA LOGO)">
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">333 South Wabash Avenue, Chicago, Illinois, 60604
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">December&nbsp;17, 2010
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities and Exchange Commission<BR>
Division of Corporation Finance<BR>
Washington, DC 20549-6010

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR></TR>
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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Attn:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jim B. Rosenberg</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Assistant Chief Accountant</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Re:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>CNA Financial Corporation</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Form&nbsp;10-Q for the Quarterly Period Ended September&nbsp;30, 2010</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>File No.&nbsp;001-05823</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">VIA EDGAR FILING AND U.S. MAIL
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Mr.&nbsp;Rosenberg:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We acknowledge receipt of the letter of comment dated December&nbsp;1, 2010 from the Commission (the
&#147;Comment Letter&#148;) with regard to the above-referenced filing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our responses to the Comment Letter are set forth below. For your convenience, the sub-comments
presented in the Comment Letter have been repeated herein and are followed directly by our
respective responses. In each instance, we have provided supplemental information to the Staff
herein which we believe is responsive to the Staff&#146;s comments. In those instances where we believe
expanded, revised disclosure should be provided in our Form 10-K for the fiscal year ended December
31, 2010, we provide our proposed disclosure at the end of the response. CNA Financial Corporation
and its subsidiaries are referred to as &#147;the Company,&#148; &#147;CNA,&#148; &#147;we,&#148; &#147;our&#148; or &#147;us.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Note G. Claim and Claim Adjustment Expense Reserve, page 36</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>AE&#038;P Reserves, page 37</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Based on the table presenting the impact of the Loss Portfolio Transfer on the
Condensed Consolidated Statement of Operations, it appears that the gross loss on the
retroactive reinsurance agreement with National Indemnity Company (NICO)&nbsp;is approximately
$550&nbsp;million. Please revise your disclosure to:</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Discuss the business reason for ceding these reserves to NICO when the transaction
appears to result in a loss.</B></TD>
</TR>





</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->1<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CNA Response</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Asbestos and environmental pollution (A&#038;EP) exposures have been a source of significant reserve
volatility to the property and casualty insurance industry. Accordingly, the Critical Accounting
Estimates disclosure of our Annual Report on Form 10-K for the year ended December&nbsp;31, 2009 and
prior years, included an extensive discussion of A&#038;EP reserving which highlighted the fact that our
experience in establishing reserves for casualty coverages relating to A&#038;EP claims and claim
adjustment expenses is subject to uncertainties that are greater than those presented by other
claims, and that estimating the ultimate cost of both reported and unreported A&#038;EP claims are
subject to a higher degree of variability. Furthermore, the disclosure indicated that traditional
actuarial methods and techniques employed to estimate the ultimate cost of claims for more
traditional property and casualty exposures are less precise in estimating claim and claim
adjustment reserves for A&#038;EP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Over the past two years (2008 and 2009), CNA incurred approximately $250&nbsp;million of adverse reserve
development on A&#038;EP reserves. Because of the factors discussed in our 2009 Annual Report on Form
10-K and prior reports, and as noted above, the potential for future adverse reserve development on
A&#038;EP reserves remains significant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To address this reserve risk, during 2010 CNA explored the cost of a loss portfolio transfer (LPT)
transaction with a highly-rated counterparty, which led to the subject LPT transaction with NICO.
The structure of the transaction with NICO, a subsidiary of Berkshire Hathaway, Inc., provided the
following substantial benefits to CNA:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>improves our earnings outlook and financial stability by significantly mitigating A&#038;EP
reserve risk going forward,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>effectively eliminates credit risk on $1.2&nbsp;billion of third party A&#038;EP reinsurance
recoverables,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>leverages the expertise of NICO which has claim handling responsibility for a
substantial portion of global A&#038;EP claims, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>eliminates an area of uncertainty from the perspective of rating agencies.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To clarify the business reasons for ceding these reserves to NICO when the transaction resulted in
a loss, we will add disclosure in our 2010 Annual Report on Form 10-K substantially as follows:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">To mitigate the risks posed by our exposure to A&#038;EP claims and claim adjustment expenses,
as further discussed in Note XX to the Consolidated Financial Statements included under
Item&nbsp;8, on August&nbsp;31, 2010 we completed a transaction with National Indemnity Company
(NICO), a subsidiary of Berkshire Hathaway, Inc., under which substantially all of our
legacy A&#038;EP liabilities were ceded to NICO effective January&nbsp;1, 2010. The transaction
resulted in a net loss attributable to CNA of $365&nbsp;million, which relates primarily to the
risk margin necessary to secure the $4&nbsp;billion of reinsurance protection on such a volatile
component of our reserves. However, we believe the benefits to CNA are compelling. The
benefits include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>improves our earnings outlook and financial stability by significantly mitigating
A&#038;EP reserve risk going forward,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>effectively eliminates credit risk on $1.2&nbsp;billion of third party A&#038;EP reinsurance
recoverables effective January&nbsp;1, 2010, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>eliminates an area of uncertainty from the perspective of rating agencies.</TD>
</TR>



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Staff Comment, continued</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Discuss why the loss is not an indication that the reserves ceded were under
accrued in previous periods.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CNA Response</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">While CNA recorded a loss in connection with the transaction, it is not appropriate to view that
loss as an indication that our A&#038;EP reserves were under accrued. We performed annual ground up
reserve reviews on our A&#038;EP exposures and adverse reserve development was recognized when the
review indicated reserve additions were necessary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The loss from the LPT relates primarily to the risk margin necessary to secure the $4&nbsp;billion of
reinsurance protection on such a volatile component of our reserves. In this context, it is
important to also consider that NICO is assuming the credit risk on $1.2&nbsp;billion of A&#038;EP third
party reinsurance receivables. This risk is additive to the reserve uncertainties noted above, and
this credit exposure would increase if future A&#038;EP reserve additions are required. In addition,
since NICO assumes responsibility for all unallocated claim adjustment costs, the uncertainty over
the required claim settlement period added to the risk premium required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Notwithstanding the LPT transaction, CNA maintains its responsibility to monitor the adequacy of
our gross A&#038;EP reserves and to record reserve additions when our reserve reviews indicate such
additions are necessary. To clarify the basis of the loss, we will add disclosure in our 2010
Annual Report on Form 10-K substantially as noted above in our response to the first staff comment,
which includes a sentence related to the risk margin.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Staff Comment, continued</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Describe how you calculated the loss on the transaction, including the amount of
the gross loss reserves ceded under the agreement. You disclose under the section
&#147;A&#038;EP Reserves&#148; that you paid a premium of $2&nbsp;billion, transferred net reinsurance
receivables of $215&nbsp;million to NICO and ceded $1.6&nbsp;billion of net A&#038;EP claim and
allocated claim adjustment expense reserves.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CNA Response</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At the enterprise level (continuing operations and discontinued operations), the pretax loss in the
third quarter related to the LPT was $550&nbsp;million. As noted in the Staff&#146;s comment, our disclosure
in Note G on page 37 of Form 10-Q for the period ended September&nbsp;30, 2010 referenced the most
significant components of the loss. A more detailed summary of the loss is supplementally provided
in the table below.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD align="left">(In millions)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">LPT reinsurance premium</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net reinsurance receivables transferred to NICO (net of
$100 allowance for bad debt)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net losses ceded to NICO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,555</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Release of reinsurance receivable bad debt reserves</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total pretax loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">550</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The allowance of $100&nbsp;million on the net reinsurance receivables transferred to NICO and the $100
million release of reinsurance receivable bad debt reserve reflected above comprise the $200
million reduction in the Company&#146;s allowance for uncollectible reinsurance receivables on billed
third party reinsurance receivables and ceded claim and allocated claim adjustment expense reserves
as disclosed on page 37 of our third quarter Form 10-Q. To clarify the calculation of the loss on
the transaction, we will add disclosure in our 2010 Annual Report on Form 10-K substantially as
follows (new language is indicated through the use of italics utilizing our third quarter 10-Q
disclosure):
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B><I>A&#038;EP Reserves</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">On August&nbsp;31, 2010, CCC together with several of the Company&#146;s insurance subsidiaries
completed a transaction with National Indemnity Company (NICO), a subsidiary of Berkshire
Hathaway Inc., under which substantially all of the Company&#146;s legacy A&#038;EP liabilities were
ceded to NICO.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Under the terms of the NICO transaction, effective January&nbsp;1, 2010 the Company ceded
approximately $1.6&nbsp;billion of net A&#038;EP claim and allocated claim adjustment expense
reserves to NICO under a retroactive reinsurance agreement with an aggregate limit of $4
billion (Loss Portfolio Transfer). Included in the $1.6&nbsp;billion of net A&#038;EP claim and
allocated claim adjustment expense reserves was approximately $90&nbsp;million of net claim and
allocated claim adjustment expense reserves relating to the Company&#146;s discontinued
operations. The $1.6&nbsp;billion of claim and allocated claim adjustment expense reserves ceded
to NICO is net of $1.2&nbsp;billion of ceded claim and allocated claim adjustment expense
reserves under existing third party reinsurance contracts. The NICO aggregate reinsurance
limit also covers credit risk on the existing third party reinsurance related to these
liabilities. However, unallocated claim adjustment expenses are not subject to the
aggregate reinsurance limit.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The Company paid NICO a reinsurance premium of $2&nbsp;billion and transferred to NICO billed
third party reinsurance receivables related to A&#038;EP claims with a net book value of $215
million <I>(net of an allowance of $100&nbsp;million for uncollectible reinsurance receivables on
billed third party reinsurance receivables, as discussed further below)</I>. As of August&nbsp;31,
2010, NICO deposited approximately $2.2&nbsp;billion in a collateral trust account as security
for its obligations to the Company. This $2.2&nbsp;billion will be reduced by the amount of net
A&#038;EP claim and allocated claim adjustment expense payments. In addition, Berkshire Hathaway
Inc. guaranteed the payment obligations of NICO up to the full aggregate reinsurance limit
as well as certain of NICO&#146;s performance obligations under the trust agreement. NICO is
responsible for claims handling and billing and collection from third party reinsurers
related to the Company&#146;s A&#038;EP claims.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The following table displays the impact of the Loss Portfolio Transfer on the Condensed
Consolidated Statement of Operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 2%"><B>Impact on Condensed Consolidated Statement of Operations</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt;MARGIN-LEFT:2%" cellspacing="0" border="0" cellpadding="0" width="98%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">(In millions)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">529</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">185</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from continuing operations, included in the
Corporate &#038; Other Non-Core segment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(344</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net loss attributable to CNA</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(365</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">In connection with the transfer of billed third party reinsurance receivables related to
A&#038;EP claims and the coverage of credit risk afforded under the terms of the Loss Portfolio
Transfer, the Company reduced its allowance for uncollectible reinsurance receivables on
billed third party reinsurance receivables and ceded claim and allocated claim adjustment
expense reserves by $200&nbsp;million. This reduction is reflected in Other operating expenses
presented above.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">At September&nbsp;30, 2010, the gross A&#038;EP claim and allocated claim adjustment expense reserves
were $2.5&nbsp;billion, which were ceded under the Loss Portfolio Transfer and other existing
third party reinsurance agreements. At September&nbsp;30, 2010, the remaining amount available
under the $4&nbsp;billion aggregate limit of the Loss Portfolio Transfer was $2.4&nbsp;billion on an
incurred basis. The net ultimate losses paid under the Loss Portfolio Transfer were $172
million through September&nbsp;30, 2010.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">* * * * * * *
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As requested in the Comment Letter, the Company acknowledges that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company is responsible for the adequacy and accuracy of the disclosure in the
filing;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Should you have any questions or require additional information, please call the undersigned at
(312)&nbsp;822-1222.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Very truly yours,
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>

    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
<TD width="48%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>

    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ D. Craig Mense
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>

    <TD colspan="3" align="left">D. Craig Mense&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>

    <TD colspan="3" align="left">Executive Vice President and<BR>

Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
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