CNA Financial Corporation (NYSE:CNA), a leading insurance entity, announced today its intentions to partially transfer defined benefit pension obligations through the purchase of a group annuity contract. This strategic move is expected to be finalized in the fourth quarter of 2024, subject to the completion of a commitment agreement with an insurer and other customary closing conditions.
The company's subsidiary, as the sponsor of the CNA Employee Retirement Plan Trust, is currently evaluating potential insurers for this transaction. The prospective deal aims to shift approximately $800 million to $1 billion of the plan's obligations to the insurer. This represents about 50% to 60% of the total obligations and will affect between 6,000 to 8,000 plan participants and beneficiaries.
The group annuity contract would ensure that the insurer undertakes the responsibility to pay the pension benefits of the transferred participants from January 1, 2025, onward. Importantly, this transaction is designed to maintain the current benefit amounts payable to those participants.
CNA Financial anticipates that the purchase of the group annuity contract will be funded directly by the plan's assets, negating the need for additional company cash or asset contributions. However, the company projects that it will recognize a one-time non-cash pretax pension settlement charge estimated between $300 million to $400 million ($235 to $315 million net of tax) in the last quarter of 2024.
This charge is attributed to the accelerated recognition of the company's actuarial pension loss into net income, which is not expected to affect shareholders' equity or the company's non-GAAP core income or cash flow for the third and fourth quarters, or the full year of 2024.
The company's forward-looking statements indicate that actual results may differ due to inherent risks and uncertainties. CNA Financial has made it clear that further updates will be provided as necessary.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.