CNA Financial Corp. (CNA:US), the insurer controlled by Loews Corp., is looking to sell its payout annuities business to focus on property and casualty coverage, three people with knowledge of the matter said.
CNA is working with Morgan Stanley to find buyers for the unit, which makes payments to retirees and people injured in accidents, said the people, who asked not to be identified because the matter is not public. The business could fetch about $500 million, two people said.
Insurers are exiting businesses including life coverage and annuities that are struggling when interest rates are low. Allstate Corp. said in July that it will stop issuing fixed annuities at the end of this year, and Sun Life Financial Inc. in August sold its U.S. annuity business for $1.35 billion.
Jennifer Martinez-Roth, a spokeswoman for Chicago-based CNA, declined to comment on the potential sale as did Mary Claire Delaney, a spokeswoman for Morgan Stanley.
The unit had net reserves of about $2.6 billion at the end of June, according to CNA’s second-quarter report. It hasn’t been adding new business for at least 9 years, D. Craig Mense, CNA’s chief financial officer, said during an investor conference in May, according to a transcript of the event.
“Performance had been a drag on the results,” Mense said.
Apollo Global Management LLC, Guggenheim Partners LLC are among private-equity firms have been seeking to buy annuities in recent years, betting they can wring more profits from them than the insurers.
Loews, the New York company run by the Tisch family that controls insurance, energy and hospitality businesses, owns (CNA:US) about 90 percent of CNA’s common stock, according to data compiled by Bloomberg.
CNA climbed 3 cents to $38.21 at 12:59 p.m. in New York, after falling as much as 31 cents earlier in the day. Loews advanced 0.9 percent.
To contact the reporter on this story: Matthew Monks in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Jeffrey McCracken at email@example.com