S&P: Loews remains on watch negative

Standard & Poor's said the ratings of New York-based Loews Corp., including its A senior unsecured debt and A- subordinated debt, remain on CreditWatch with negative implications where they were placed Aug. 7, after the company's subsidiary announced a new capital plan.

The original CreditWatch listing followed insurance subsidiary CNA Financial Corp.'s announcement that it recorded charges in the second quarter to strengthen its reserves and that it was undertaking a further comprehensive review of its reserves. S&P was concerned that Loews would potentially make a significant capital contribution to CNA as it has done in the past.

Wednesday, CNA announced a new capital plan that could include as much as $1.4 billion of capital contributions from Loews. The plan includes a $750 million permanent capital contribution from Loews to CNA to be made before Dec. 31.

Additionally, Loews has committed another $150 million of capital by March 31, and $500 million of surplus notes to be issued to CNA in the event that CNA is unable to sell non-core assets to fulfill the total $1.4 billion capital plan.

S&P said the ratings on Loews will remain on CreditWatch with negative implications until the completion of the capital plan announced by CNA and until Loews has raised additional capital to finance the $500 million of surplus notes, if they become necessary.

S&P said it believes additional sources of capital could include a combination of asset sales at CNA, or the issuance of equity by Loews as it has done in the past.

Upon successful completion of this plan, S&P said it will affirm its ratings on Loews with a negative outlook.

If Loews ultimately has to source more than $900 million of capital for CNA from its own cash balances and/or is required to make any additional capital contributions to CNA beyond the plan announced today, S&P said it will lower its ratings on Loews by one notch and take a more consolidated analytical approach to the Loews/CNA rating relationship.

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