549,000,000
CNA FINANCIAL CORPORATION
5.85% NOTES DUE 2014
UNDERWRITING AGREEMENT
December 8, 2004
December 8, 2004
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center
New York, New York 10080
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
CNA Financial Corporation, a
Delaware corporation (the "COMPANY"), proposes to issue and sell to the several Underwriters named in Schedule I hereto (the "UNDERWRITERS") $549,000,000 principal amount of its 5.85% Notes due December 15, 2014 (the "SECURITIES") to be issued pursuant to the provisions of an Indenture dated as of March 1, 1991, between the Company and J. P. Morgan Trust Company, National Association (formerly known as The First National Bank of Chicago), as Trustee (the "TRUSTEE"), which was supplemented by the first supplemental indenture dated as of October 15, 1993 (as so supplemented, the "BASE INDENTURE"), as supplemented by the second supplemental indenture to be dated as of December 15, 2004 between the Company and the Trustee (the "SUPPLEMENTAL INDENTURE" and together with the Base Indenture, the "INDENTURE").
1. Representations and Warranties. The Company represents and warrants to and agrees with each of the Underwriters that:
(a) A registration statement on Form S-3 with respect to
various securities of the Company (collectively, the "SHELF
SECURITIES"), has (i) been prepared by the Company in conformity in all
material respects with the requirements of the Securities Act of 1933,
as amended (the "SECURITIES ACT"), and the rules and regulations (the
"RULES AND REGULATIONS") of the Securities and Exchange Commission (the
"COMMISSION") thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities Act. The
registration statement includes a prospectus relating to the Shelf
Securities. In addition, the Company has filed, or will file within the
applicable time period set forth in the Rules and Regulations, with the
Commission, a prospectus supplement specifically relating to the
Securities pursuant to Rule 424 of the Rules and Regulations. The term
"REGISTRATION STATEMENT" means the registration statement as amended to
the date of this Agreement. The term "BASIC PROSPECTUS" means the
prospectus included in the Registration Statement. The term
"PROSPECTUS" means the Basic Prospectus together with the prospectus
supplement (other than a preliminary prospectus supplement)
specifically relating to the Securities (the "PROSPECTUS SUPPLEMENT"),
in the form first used to confirm sales of the Securities. The term
"PRELIMINARY PROSPECTUS" means a preliminary prospectus supplement
specifically relating to the Securities, together with the Basic
Prospectus. As used herein, the terms "REGISTRATION STATEMENT", "BASIC
PROSPECTUS", "PROSPECTUS" and "PRELIMINARY PROSPECTUS" shall include,
in each case, the material, if any, incorporated or deemed to be
incorporated by reference therein; "EFFECTIVE TIME" means the date and
time as of which the Registration Statement, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission; "EFFECTIVE DATE" means the date of the Effective Time; and
the terms "SUPPLEMENT", "AMEND" and "AMENDMENT", as used in this
Agreement with respect to the Registration Statement or the Prospectus,
shall include all documents subsequently filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), that are deemed to be incorporated by reference
in the Prospectus. If the Company has filed an abbreviated registration
statement to register additional Securities pursuant to Rule 462(b)
under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then
any reference herein to the term "REGISTRATION STATEMENT" shall be
deemed to include such Rule 462 Registration Statement. The Commission
has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
(b) As of the date hereof, when the Prospectus is first filed
pursuant to Rule 424 under the Securities Act, when, prior to the
Closing Date (as hereinafter defined), any amendment to the
Registration Statement becomes effective (including the filing of any
document incorporated by reference in the Registration Statement)
(unless the term "Basic Prospectus," "Preliminary Prospectus" or
"Prospectus", as the case may be, refers to a "Basic Prospectus",
"Preliminary Prospectus" or "Prospectus", as the case may be, which has
been provided to the Underwriters by the Company for use in connection
with the offering of the Securities and which differs from the
prospectus on file at the Commission at the time the Registration
Statement becomes effective, in which case at the time it is first
provided to the Underwriters for such use), when any supplement to the
Prospectus is filed with the Commission and at the Closing Date, (i)
the Registration Statement, as amended as of any such time, and the
Prospectus, as amended or supplemented as of any such time, complied
and will comply in all material respects with the applicable
requirements of the Securities Act, and the Exchange Act and the
2
respective Rules and Regulations thereunder and (ii) neither the
Registration Statement, as amended as of any such time, nor the
Prospectus, as amended or supplemented as of any such time, contained
or will contain any untrue statement of a material fact or omitted or
will omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that the Company makes no representations or warranties as to
(i) that part of the Registration Statement which shall constitute the
Statement of Eligibility (Form T-1) under the Trust Indenture Act of
1939, as amended (the "TRUST INDENTURE Act"), of the Trustee or (ii)
the information contained in or omitted from the Registration Statement
or the Prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of any Underwriter through you
specifically for use in connection with the preparation of the
Registration Statement and the Prospectus.
(c) The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3 under the Securities Act, at the date
hereof and the Closing Date, complied and will comply in all material
respects with the requirements of the Exchange Act and the Rules and
Regulations thereunder; and any documents deemed to be incorporated by
reference in the Prospectus, at the date hereof and the Closing Date,
complied and will comply in all respects with the requirements of the
Exchange Act and the Rules and Regulations thereunder.
(d) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(e) Each subsidiary of the Company set forth on Schedule II
hereto (each, a "DESIGNATED SUBSIDIARY" and, collectively, the
"DESIGNATED SUBSIDIARIES") has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole; all
3
of the issued shares of capital stock of each Designated Subsidiary
owned directly or indirectly by the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims; for purposes of this Agreement,
Schedule II hereto includes each subsidiary of the Company that is a
"significant subsidiary" (as such term is defined in Rule 1-02 of
Regulation S-X promulgated by the Commission).
(f) The authorized capital stock of the Company conforms as to
legal matters in all material respects to the description thereof
contained in the Prospectus.
(g) This Agreement has been duly authorized, executed and
delivered by the Company.
(h) The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended (the "TRUST INDENTURE ACT"), and has
been duly authorized, executed and delivered by the Company and is a
valid and binding agreement of the Company, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general
principles of equity. The Base Indenture conforms, and the
Supplemental Indenture, when executed and delivered, will conform, in
all material respects to the description thereof in the Registration
Statement and Prospectus.
(i) The Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be valid and binding obligations of
the Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally and general principles of equity. The Securities, when
issued, authenticated and delivered, will conform in all material
respects to the description thereof in the Registration Statement and
Prospectus.
(j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with,
any
4
governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as have
been obtained under the Securities Act and such as may be required by
the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Securities.
(k) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (i) there has been no material adverse change
in the condition (financial or other), earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, and (ii)
there have been no transactions entered into by the Company or any of
its subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its subsidiaries,
taken as a whole.
(l) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, threatened, against or affecting
the Company or any of its subsidiaries, which is required to be
disclosed in the Registration Statement or the Prospectus (other than
as disclosed therein), or which might, singly or in the aggregate,
materially and adversely affect the properties or assets thereof or
which is reasonably likely to materially and adversely affect the
consummation of the transactions contemplated by this Agreement.
(m) Each prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder.
(n) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(o) The Company is not, and after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus will not be, required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(p) The Company and its subsidiaries possess all licenses,
certificates, authorities or permits issued by the appropriate
governmental or regulatory agencies or bodies necessary to own, lease
and operate their respective properties and to carry on their
respective businesses as
5
presently conducted and which are material to the Company and its
subsidiaries considered as one enterprise.
(q) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company or to
require the Company to include such securities with the Securities
registered pursuant to the Registration Statement.
(r) The Company and its Designated Subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole; and any real property and buildings
held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases except such as are
described in the Prospectus or would not, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(s) The Company and its Designated Subsidiaries own or
possess, or can acquire on reasonable terms, all material patents,
patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks and trade names currently employed by them in connection with the
business now operated by them, except where the failure to so own,
possess or be able to acquire on reasonable terms would not, singly or
in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole, and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing
which, singly or in the aggregate, would have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(t) No labor dispute with the employees of the Company or any
of its subsidiaries exists, except as described in the Prospectus, or,
to the knowledge of the Company, is imminent, except where such
dispute would not, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(u) Each Designated Subsidiary of the Company that is engaged
in the business of insurance or reinsurance (each an "INSURANCE
SUBSIDIARY", collectively the "INSURANCE SUBSIDIARIES") is licensed or
6
authorized to conduct an insurance or reinsurance business, as the
case may be, under the insurance statutes of each jurisdiction in
which the conduct of its business requires such licensing or
authorization, except for such jurisdictions in which the failure of
the Insurance Subsidiary to be so licensed or authorized would not,
singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole. The Company and the
Insurance Subsidiaries have made all required filings under applicable
insurance statutes in each jurisdiction where such filings are
required, except for such filings the failure of which to make would
not, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole. Each of the Insurance
Subsidiaries has all other necessary authorizations, approvals,
orders, consents, certificates, permits, registrations and
qualifications ("AUTHORIZATIONS"), of and from all insurance
regulatory authorities necessary to conduct their respective existing
businesses as described in the Prospectus, except where the failure to
have such Authorizations would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as
a whole, and no Insurance Subsidiary has received any notification
from any insurance regulatory authority to the effect that any
additional Authorizations are needed to be obtained by any Insurance
Subsidiary in any case where it could reasonably be expected that the
failure to obtain such additional Authorizations or the limiting of
the writing of such business would have a material adverse effect on
the Company and its subsidiaries, taken as a whole, and, except as
described in the Prospectus, no insurance regulatory authority having
jurisdiction over any Insurance Subsidiary has issued any order or
decree impairing, restricting or prohibiting (i) the payment of
dividends by any Insurance Subsidiary to its parent, other than those
restrictions applicable to insurance or reinsurance companies under
such jurisdiction generally or imposed in connection with the
Reorganization and contemplated in the Prospectus, or (ii) the
continuation of the business of the Company or any of the Insurance
Subsidiaries in all material respects as presently conducted, in each
case except where such orders or decrees would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(v) Except as described in the Prospectus, (i) all ceded
reinsurance and retrocessional treaties, contracts, agreements and
arrangements ("REINSURANCE Contracts") to which the Company or any
Insurance Subsidiary is a party and as to which any of them reported
recoverables, premiums due or other amounts in its most recent
statutory financial statements are in full force and effect, except
where the failure of such Reinsurance Contracts to be in full force
and effect would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole,
and (ii) neither the Company nor any
7
Reinsurance Subsidiary has received any notice from any other party to
any Reinsurance Contract that such other party intends not to perform
such Reinsurance Contract in any material respect, and the Company has
no knowledge that any of the other parties to such Reinsurance
Contracts will be unable to perform its obligations thereunder in any
material respect, except where (A) the Company or the Insurance
Subsidiary has established reserves in its financial statements which
it deems adequate for potential uncollectible reinsurance or (B) such
nonperformance would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(w) Except as described in the Prospectus, the Company has no
knowledge of any threatened or pending downgrading of the Company's or
any of its subsidiaries' claims-paying ability rating or financial
strength rating by A.M. Best Company, Inc., Standard & Poor's Rating
Group, Moody's Investor Service, Inc., Fitch Ratings, Ltd. or any
other "nationally recognized statistical rating organizations," as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act, which currently has publicly released a rating of the
claims-paying ability or financial strength of the Company or any
subsidiary.
(x) The Company and each of its Designated Subsidiaries
maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(y) The statements set forth in the Basic Prospectus under
the caption "Description of the Debt Securities" and set forth in the
Prospectus Supplement under the caption "Description of Notes", insofar
as they purport to constitute a summary of the terms of the Securities,
in each case insofar as they purport to describe the provisions of the
laws and documents referred to therein, fairly summarize in all
material respects the matters described therein.
(z) Deloitte & Touche LLP, whose report is included in the
Prospectus, is an independent certified public accountant with respect
to the Company and its combined subsidiaries within the meaning of the
Securities Act and the rules and regulations adopted by the Commission
thereunder. The financial statements of the Company and its combined
subsidiaries (including the related notes and supporting schedules)
8
included in the Registration Statement and the Prospectus present
fairly in all material respects the financial condition, results of
operations and cash flows of the entities purported to be shown
thereby at the dates and for the periods indicated and have been
prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis throughout the
periods indicated and conform in all material respects with the Rules
and Regulations under the Securities Act; and the supporting schedules
included in the Registration Statement present fairly in all materials
respects the information required to be stated therein.
(aa) The statutory financial statements of the Insurance
Subsidiaries, from which certain ratios and other statistical data
included or incorporated by reference in the Registration Statement
have been derived have for each relevant period been prepared in
conformity with statutory accounting practices required or permitted by
the insurance laws of their respective states of domicile, and the
rules and regulations promulgated thereunder, and such statutory
accounting practices have been applied on a consistent basis throughout
the periods involved, except as may otherwise be indicated therein or
in the notes thereto.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell to the several Underwriters, and each Underwriter, upon the basis of the representations and warranties her ...