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CNA eyes sale of life line
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March 8, 2000: 3:50 p.m. ET
Insurer seeks buyer for individual life, reinsurance unit; may fetch $1.1B
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NEW YORK (CNNfn) - CNA put its individual life insurance and reinsurance businesses up for sale Wednesday, aiming to sharpen its focus on business customers through a sale that analysts say could fetch up to $1.1 billion.
CNA, the insurance arm of CNA Financial (CNA: Research, Estimates) whose main business lines are in property and casualty insurance, said it has hired Donaldson Lufkin & Jenrette to seek a buyer for the life insurance and reinsurance lines. Reinsurance involves the sharing of risk among several insurers.
Shares of CAN Financial, which is majority owned by New York-based conglomerate Loews (LTR: Research, Estimates), were down 1/8 to 25 at around 2:30 p.m. on Wednesday. Shares of Loews were down 7/8 to 40-1/16.
Analysts said the business, which draws annual premiums of roughly $1.1 billion, could fetch about $1.5 billion, and would attract traditional life insurers such as MetLife (MET: Research, Estimates) and John Hancock Financial Services (JHF: Research, Estimates) as potential buyers.
CNA said the move was part of its strategy launched last year to focus on insuring businesses rather than individual consumers. Last year, CNA sold its personal auto and homeowners insurance business to rival Allstate (ALL: Research, Estimates) for about $1.2 billion.
"This initiative is the latest in a series of steps we've taken recently to make CNA the underwriter of choice in the business market," said CNA's chairman and chief executive officer, Bernard Hengesbaugh, in a statement. "We believe this strategy plays to our strengths at a time of tremendous change in the global financial services industry and is in the best interests of our customers, stockholders, employees, and business partners."
Asked whether CNA would use the proceeds of a sale to buy other commercial lines businesses, Hengesbaugh told Reuters, "We're going to keep all options open."
The life business was one of only two profitable CNA businesses last year, making a $145 million profit.
"The business could fetch 60 to 80 percent of its $2.5 billion book value -- probably in the $1.5 billion range," said Michael Paisan, insurance analyst at Keefe Bruyette & Woods. 
-- from staff and wire reports
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