Robert Glasspiegel - Langen McAlenney Daniel Johnson - Citadel Investment Group Jeffrey Payne - Private Management Group Richard L. Greenberg - Donald Smith & Co.

Good day and welcome to the CNA Financial Corporation’s first quarter 2009 earnings conference call. Today’s call is being recorded. At this time I’d like to turn the conference over to Nancy Bufalino.

Good morning and welcome to the discussion of CNA’s first quarter 2009 financial results. Hopefully everyone has had an opportunity to review the press release and financial supplement which were released earlier this morning and can be found on the CNA website. With us this morning are Tom Motamed our Chairman and CEO and Craig Mense our CFO. Tom and Craig will provide some prepared remarks about our first quarter results, and Tom will followup with some comments about CNA’s strategy going forward. We will then open it up for questions. Before we get started, I’d like to advise everyone that during this call there may be forward-looking statements made and references to non-GAAP financial measures. Please see the sections of the earnings release headed financial measures and forward-looking statements for further detail. In addition, the forward-looking statements speak only as of today, May 4, 2009. CNA expressly disclaims any obligation to update or revise any forward-looking statements made during this call. This call is being recorded and webcast. During the next week the call may be accessed again on CNA’s website at www.cna.com. With that, I’ll turn the call over to CNA’s Chairman and CEO, Tom Motamed.

Good morning everyone and thank you for joining us. CNA delivered another quarter of steady performance driven by solid results from our core business. Rate trends were favorable, renewal retention improved, and the combined ratio again came in under 100. The investment side of our business reflects the effect of turmoil in the financial and credit markets, hence the net loss for the quarter. So, I am pleased to note that our unrealized loss portion improved from year end 2008. GAAP equity and book value per common share also improved. Our statutory capital position remains strong and we continue to hold substantial cash and short-term assets at the holding company level. Overall, after 4 months of CNA, I am more confident than ever in our company’s financial strength and our franchise in both the specialty and standard lines markets. Today, we will be covering three major topics. First, CNA’s first quarter results, next a review and update on our investment portfolio by Chief Financial Officer, Craig Mense, and finally I will come back on the line after Craig and provide some detail on CNA strategies going forward. As you read in our press release, our first quarter net operating income was $149 million in 2009 or $0.44 per common share compared to $221 million or $0.82 per common share in 2008. Our operating earnings reflected solid underlying performance in a highly competitive environment, but were dampened by a lower level of net investment income. The net loss for the quarter of $195 million or $0.84 per common share was driven by after tax impairment losses of $399 million. Turning to our core business, property and casualty operations delivered a first quarter combined ratio of 98.2 compared with 98.1 in the first quarter of 2008. Favorable development improved the first quarter…

Good morning everyone. As Tom outlined, CNA delivered steady operating performance in the first quarter with solid results from our core P&C business. Continuing to deliver a solid operating income is the key financial priority for CNA and one that we feel we are well positioned to achieve. Equally important to us are two additional financial priorities reducing the overall risk and volatility of our investment portfolio and maintaining a strong level of capital adequacy. CNA performed well against all three of these priorities in the first quarter despite the continuing turmoil in the financial market. With respect to our first quarter operating results, steady underlying operating performance was dampened by lower investment income and higher expenses. First quarter pre-tax investment income was $420 million compared with $434 million in the prior year period. Excluding trading portfolio losses of $77 million in 2008, net investment income declined $91 million period over period. This decrease was primarily driven by our large short-term position which stood at $4.7 billion at quarter end coupled with low short-term yields as well as losses from limited partnerships. Limited partnership losses were $70 million or a negative 4% return during the quarter compared with LP losses of $39 million or negative 2% return in the first quarter of 2008. The LP losses are largely a carry-over from last year’s fourth quarter. You will recall from our last call that approximately 85% of our LPs as measured by reported values report results on a one-month lag or less. This quarter’s LP losses were primarily associated with later reporting partnerships. The partnerships on a current or one-month lag basis reported relatively flat results for the quarter. The decline in net earned premium and the recognition of a higher level of non-cash pension expense has put pressure on our…

In our last conference call I told you that I would be thorough and thoughtful in the assessment of CNA and our direction for the future. So, today I will begin to outline our strategies as they relate to growing the top and bottom lines. To put all of this in context, I have visited 18 branch offices, met with a great many agents and brokers, and spent considerable time with our employees and managers to get a balanced view of our strengths and capabilities. We are now going forward with a set of strategies to drive top and bottom line growth and optimize our property and casualty portfolio. First, further develop and deepen industry-specific technical expertise while maintaining a broad appetite. Second, manage our mix of business to improve profitability. Third, extend our geographic reach with an expanded US footprint and more focus on international opportunities. I would now like to walk through these strategies one at a time. With regard to technical expertise and appetite, CNA today has a very strong franchise in several industry segments, including construction and healthcare among others. In these industry segments, we have demonstrated to our agents, brokers, and clients that we have deep expertise in underwriting, risk control, and claim. This approach has translated into strong profitability and market presence which gives us confidence to venture more deeply into other underwriting segments where we have expertise. We believe that our approach to risk in our strongest businesses is a core competency that can be expanded into other industry segments. Therefore, in addition to the industries in which we already have an edge, like construction and healthcare, we will be focusing on the following core industries; technology, manufacturing, retail, wholesale distributors, business services, commercial real estate, education, financial institutions, and professional services. For…

(Operator Instructions). We’ll take our first question from Robert Glasspiegel - Langen McAlenney.

A question for Craig and a question for Tom. My question for Craig; thank you for your April commentary; that was a pre-tax or after-tax number, on the gain, the $550 million?

That’s pre-tax Bob.

You said $1.8 billion of your topical assets mature in ’09, the MBS/CMO/ABS/CDO?

Yes, principal payments were $1.8 billion in ’09.

What are the unrealized losses on that segment; ballpark?

Of that $1.8 billion, I am not sure; why don’t you go onto Tom’s question, while I look that up.

I am interested in basically any data of what the duration of your underwater assets are and how much of it will we see that you actually did a pretty good job on your asset selection in a relatively quick time period; any data that would report that?

Here are a couple of things you can keep in mind. First, the weighted average life of the entire structured portfolio is something around 3 years, and this quarter as an example, you saw the book value to that portfolio go down $500 million or $600 million, $465 million was principal repayment and some of that was just market value changes.

It if goes by maturing, it’s good; if it goes down by declines, it’s less good.

That’s right. I would also tell you that $150 million of that $465 million was from sub-prime in all day. So, all this stuff was paying off relatively quickly and is in something you want to see emerge fairly quickly over time.

If you could get back to me on the number on the $1.8 billion, that would be great. Tom, any key hires that you’ve made; you’ve been on board for 4 months officially. Typically new management brings in new people at key spots.

I would say first of all Bob, we’re going to be continually upgrading talent where it’s needed. We did hire a new leader in our wholesale, excess, surplus lines area by the name of John Angerami who has a long experience in the P&C industry and in particular did run a wholesale excess surplus lines operations for another carrier, and we’re looking to build that out pretty quickly. We will in that area as you probably know hire teams of people because that’s the way that business operates. So we are very actively in the marketplace looking for teams to build out our excess surplus lines capability today, but we are looking to upgrade where necessary and we have a lot of searches underway.

You are pleased with the overall financial systems talents with the company?

Yes. More detail that I could choke a horse. There’s lots of information here and a lot of our decisions obviously going forward on strategy are based on the ability to do deep dives and surgical cuttings of the business so that we have pretty good confidence that the areas that we have picked out are going to be profitable for us going forward.

We’ll go next to Daniel Johnson - Citadel Investment Group.

Two question, one on the business and one on the portfolio. On the business, within the standard lines, if you can look out over the next year or so, looking at pricing, expectations, looking at competitive environment, looking at at-loss inflation scenarios; what’s the realistic timeframe for getting the combined back down below 100 and given the trend that is on, does it have a better chance of hitting 110?

I guess to start we wouldn’t even mention 110 around here. You’re going in the wrong direction. Clearly, we’re looking at what we call our standard lines portfolio. There are certain areas of the portfolio that are underperforming and we are either taking action in the form of non-renewal or significant rate increases and if that business leaves, so be it, but we’re not going to tolerate under-pricing on our portfolio. So, you’ve seen rate improvement in the quarter over last year’s first quarter and improved over year-end 2008; so we continue to push rate. As I said there is no deterioration in terms and conditions which we believe will help us on the loss side over time if we can maintain the portfolio the way we see it. So, we’ll continue to push rate in the standard lines. We wrote a lot of new business. New business in the first quarter of ’09 was 13% higher than new business in the first quarter of ’08. So, we’re pretty pleased that we’re in the marketplace; we’re getting treated favorably in standard lines as well as specialties. So we continue to write new business to replace some of that business we’re running off, but quite honestly is not profitable. We believe that the business that we’re writing today is priced quite sufficiently to have an underwriting profit well below 100.

The business you’re dropping obviously is not that acceptable in profitability, but for a decent part of the business, aren’t we still looking at an upside down gap between most pricing trends and most loss cost trends to drive that backward?

Actually frequency is down, mid single digits; so we view that as a favorable trend. Yes, there is loss cost inflation, but frequency down is a good thing because typically when frequency is up that also breeds severity. So we’re optimistic that the decline in frequency will help us over time as we grow the business at I’d say better rates than historic rates.

One last one on this and then onto the investment question; when you look at the book of business today and segregate it between stuff that you think has got a good chance of what you want to stick with, and again this is just within the standard, and compare that to the book where you’re not quite so sure that rates or terms or whatever will change sufficient enough to help with the combined; how big is that second book that we’re more apt to get out of than try to price up?

It’s really not a premium issue as much as it is a loss severity issue. We think any shortfall in premium by running this stuff up, we can make up, and we think we get a much better return by getting rid of this stuff because on the loss ratio side it’s considerably higher than what our combined ratio is than what we report. So, we’ll be shedding bad business and we’ll be adding better business, and from a premium standpoint we don’t see a decline because of that run-off.

The question on the asset side for Craig; would you point out if you would an asset class or two you think that performed very well for you in the first quarter; those of us on the outside who deal with aggregated statistics or high-level indices numbers might not fully have appreciated the performance of CNA’s relative to such an index?

Let me offer some comments. We also have with us here today Richard Scott who is our new Chief Investment Officer; so when I finish here, for a second, I’d ask Richard if he would like to add any comments, but the two big areas that performed particularly were what I said in my remarks were tax exempts and corporates, particularly high-yield corporate. So, would you like to add anything to that Richard?

Yes, I think when you look at the dynamics of what was going on in the market in the first quarter, municipals which had really been hammered going into the end of last year staged a very strong recovery. Their pricing much more than offset the backup and treasury rates. Corporates rallied in dramatically in terms of spread and in price performance, the lower rated you were, almost invariably the better your price performance was. Rate movement offset the spread movement with regard to most of the very long duration stuff. So the dollar prices didn’t change much on that part of the corporate book, but realistically spreads came in quite dramatically during the first quarter. As Craig mentioned, high yield of all types including our relatively significant bank loan portfolio performed quite well and we used frankly the rallying bank loans to make fairly significant sales out of that portfolio during the first quarter.

How would you say the non-agency prime portfolio performed?

Non-agency prime was probably an underperformer for the quarter relative to the rest of the book.

Down a couple percent or something bigger would you say?

That’s probably fair.

We’ll go next to Jeffrey Payne - Private Management Group.

You somewhat answered my question in that last call there. I was trying to get an understanding of the dynamics where you have the realized losses in the quarter, but such a good improvement in the OCI there. Just the dynamics where you have the realized losses in the quarter, but OCI actually showed pretty good improvement.

You do remember that the investments were carried out and we’ve been very disciplined about always carrying our investments at actual prices and market value. So, those investments were already carried at those lower market values when we decided to recognize the impairment. So, they really had no impact on OCI and the recognition and they had limited impact on regulatory capital because they were also carried as the market values from the regulatory standpoint.

We’ll go next to Richard L. Greenberg - Donald Smith & Co. Richard L. Greenberg - Donald Smith & Co.: Craig, you filed a $2 billion mix security shelf which included everything including common stock and warrants; I’m just wondering what was the reasoning behind that and could you tell us the scenario barring a further major decline in your credit portfolio, your investment portfolio; under what situation would you possibly issue common stock, convertible stock, warrants, anything dilutive to the current book value?

The reason for the registration was just simply to keep fresh our shelves so that we could in the event that the market conditions improve go to the market for either debt or equity. At this point in time I don’t really foresee any circumstances that are going to lead us, again barring as you said a significant decline in assets or asset values, going to the market for additional equity.

At this time we have no further questions. I would like to turn the conference back over to Nancy Bufalino for any additional or closing remarks.

Thank you, Jessica, and thank you all, for joining us today. Once again, I call your attention to the disclosures concerning forward-looking statements and non-GAAP measures. A taped replay of today’s conference call will be available for one week immediately following this call until May 11th. You can see the replay details in our earnings release. We appreciate your participation in today’s call. Thank you again for joining us.

That does conclude today’s conference. We thank you for your participation.