================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K

[x]           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                  For the Fiscal Year Ended December 31, 1993

                                       OR

[ ]            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From  ____________  to _____________

Commission File Number 1-6541


                               LOEWS CORPORATION
             (Exact name of registrant as specified in its charter)

         Delaware                                                13-2646102
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

                 667 Madison Avenue, New York, N.Y. 10021-8087
              (Address of principal executive offices) (Zip Code)

                                 (212) 545-2000
              (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(b) of the Act:

                                                        Name of each exchange on
 Title of each class                                        which registered
 -------------------                                    ------------------------

Common Stock, par value $1.00 per share                  New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act: None

  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x].
  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                Yes    X                         No
                    --------                        --------

  As at February 25, 1994, 61,519,700 shares of Common Stock of the Registrant
were outstanding and the aggregate market value of voting stock held by non-
affiliates was approximately $4,080,845,000.

                      Documents Incorporated by Reference:

  Portions of the Loews Corporation Notice of Annual Meeting of Stockholders and
Proxy Statement dated March 24, 1994 are incorporated by reference into Part
III. (Registrant intends to file a definitive proxy statement with the
Commission prior to April 30, 1994.)

================================================================================

                               LOEWS CORPORATION

                           INDEX TO ANNUAL REPORT ON
                            FORM 10-K FILED WITH THE
                       SECURITIES AND EXCHANGE COMMISSION

                      For the Year Ended December 31, 1993


Item                                                                        Page
 No.                                PART I                                   No.
- ----                                                                        ----

  1   BUSINESS ............................................................   2
          CNA Financial Corporation .......................................   2
          Lorillard, Inc. .................................................  17
          Loews Hotels Holding Corporation ................................  21
          Bulova Corporation ..............................................  22
          Diamond Offshore Drilling, Inc. .................................  23
          Other Interests .................................................  25
  2   PROPERTIES ..........................................................  26
  3   LEGAL PROCEEDINGS ...................................................  26
  4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .................  29
      EXECUTIVE OFFICERS OF THE REGISTRANT ................................  29


                                    PART II

  5   MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
       MATTERS ............................................................  30
  6   SELECTED FINANCIAL DATA .............................................  30
  7   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
       RESULTS OF OPERATIONS ..............................................  31
  8   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .........................  40
  9   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
       FINANCIAL DISCLOSURE ...............................................  41


                                    PART III

        Information called for by Part III has been omitted as Registrant
      intends to file with the Securities and Exchange Commission not later
      than 120 days after the close of its fiscal year a definitive Proxy
      Statement pursuant to Regulation 14A.

                                    PART IV

 14   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
       ON FORM 8-K ........................................................  41

                                       1


                                     PART I


Item 1. Business.

  Loews Corporation is a holding company. Its subsidiaries are engaged in the
following lines of business: property, casualty and life insurance (CNA
Financial Corporation, an 83% owned subsidiary); the production and sale of
cigarettes (Lorillard, Inc., a wholly owned subsidiary); the operation of hotels
(Loews Hotels Holding Corporation, a wholly owned subsidiary); the distribution
and sale of watches and the production and sale of other timing devices (Bulova
Corporation, a 97% owned subsidiary); and the operation of oil and gas drilling
rigs (Diamond Offshore Drilling, Inc., a wholly owned subsidiary). In addition,
a wholly owned subsidiary owns approximately 20% of the outstanding common stock
of CBS Inc.

  Unless the context otherwise requires, the terms "Company" and "Registrant" as
used herein mean Loews Corporation and its subsidiaries, on a consolidated
basis.

  Information relating to the major business segments from which the Company's
consolidated revenues and income are derived is contained in Note 17 of the
Notes to Consolidated Financial Statements in Part II Item 8 of this Form 10-K.

                           CNA FINANCIAL CORPORATION

  CNA Financial Corporation ("CNA") and its consolidated subsidiaries constitute
the ninth largest insurance company in the United States as measured by 1992
statutory premium volume. CNA was incorporated in 1967 as the parent company of
Continental Casualty Company ("CCC"), incorporated in 1897, and Continental
Assurance Company ("CAC") incorporated in 1911. In 1975, CAC became a wholly
owned subsidiary of CCC. CNA's property and casualty insurance operations are
conducted by CCC and its property and casualty insurance affiliates, and its
life insurance operations are conducted by CAC and its life insurance
affiliates. CNA's principal business conducted through its insurance
subsidiaries is insurance. As multiple-line insurers, the insurance companies
underwrite property, casualty, life, and accident and health coverages. Their
principal market for insurance is the United States. Foreign operations are not
significant.

  The following provides information regarding CNA's property and casualty
insurance and life insurance operations.

                        PROPERTY AND CASUALTY INSURANCE

  CNA's property and casualty operations market commercial and personal lines of
property and casualty insurance through independent agents and brokers.

  CCC and its property and casualty insurance subsidiaries write primarily
commercial lines coverages. Customers include large national corporations, small
and medium-sized businesses, groups and associations, and professionals.
Coverages are written primarily through traditional insurance contracts, under
which risk is transferred to the insurer. Many commercial account policies are
written under retrospectively-rated contracts, which are experience-rated.
Premiums for such contracts may be adjusted, subject to limitations set by
contract, based on loss experience of the insureds. Other experience-rated
policies include provisions for adjustments to dividends based on loss
experience. Experience-rated contracts reduce risk to the insurer. Approximately
40% of CNA's property and casualty insurance is written on an experience-rated
basis.

  CNA also provides loss control, policy administration and claim administration
services under service contracts for fees. Such services are provided primarily
in the workers' compensation market, where retention of risk through self
insurance or high deductible programs has become increasingly prevalent.

                                       2

  Commercial business includes such lines as workers' compensation, general
liability, professional and specialty, multiple peril, and accident and health
coverages. Professional and specialty coverages include liability coverage for
architects and engineers, lawyers, accountants, medical and dental
professionals; directors and officers liability; and other specialized
coverages. CNA also assumes commercial risks from other insurers. CNA's primary
lines are workers' compensation, general liability and professional and
specialty coverages, which accounted for 29%, 18% and 13%, respectively, of 1993
premiums earned, including premiums for involuntary risks. Premiums for
involuntary risks result from mandatory participation in residual markets. CNA
is required by the various states in which it does business to provide coverage
for risks that would not otherwise be considered under CNA's underwriting
standards. CNA's share of involuntary risks is generally a function of its share
of the voluntary market by line of insurance in each state.

  CNA also markets personal lines of insurance, primarily automobile and
homeowners coverages sold to individuals under monoline and package policies.

  The following table sets forth supplemental data for the property and casualty
business:


<TABLE>
<CAPTION>
                                                Years Ended December 31,
                                         ---------------------------------------
                                            1993          1992          1991
                                         ---------------------------------------
                                                (In millions of dollars)

<S>                                       <C>           <C>           <C>
Commercial Premiums Earned:
  Workers' compensation ..............    $ 1,501.5     $ 1,669.2     $ 1,920.4
  General liability ..................      1,154.5       1,176.0       1,292.6
  Professional and specialty .........        798.9         741.5         763.9
  Reinsurance and other ..............        712.2         556.0         482.0
  Accident and health ................        428.3         352.6         294.2
  Multiple peril .....................        368.5         374.9         397.2
                                          --------------------------------------
                                          $ 4,963.9     $ 4,870.2     $ 5,150.3
                                          ======================================
Personal Premiums Earned:
  Personal lines packages ............    $   510.7     $   447.3     $   335.6
  Monoline automobile and property
   coverages .........................        343.5         395.0         470.7
  Accident and health ................         85.6          88.6          88.8
                                          -------------------------------------
                                          $   939.8     $   930.9     $   895.1
                                          =====================================
Involuntary Risks Premiums Earned (a):
  Workers' compensation ..............    $   292.3     $   451.4     $   499.5
  Commercial passenger ...............         50.3          44.9          66.6
  Private passenger ..................         23.2          52.5          39.2
  Property and multiple peril ........          5.5           3.7           4.6
                                          -------------------------------------
                                          $   371.3     $   552.5     $   609.9
                                          =====================================
Net Investment Income and Other Income:
  Commercial .........................    $   979.8     $ 1,087.3     $ 1,131.3
  Personal ...........................        156.1         165.3         160.1
  Involuntary risks ..................         75.7          83.6          78.5
                                          -------------------------------------
                                          $ 1,211.6     $ 1,336.2     $ 1,369.9
                                          =====================================
Underwriting Income (Loss):
  Commercial .........................    $(1,535.6)    $(2,505.9)    $  (707.1)
  Personal ...........................        (99.7)       (152.8)       (172.1)
  Involuntary risks ..................       (156.5)       (340.9)       (345.5)
                                          -------------------------------------
                                          $(1,791.8)    $(2,999.6)    $(1,224.7)
                                          =====================================

                                       3

<CAPTION>
                                                Years Ended December 31,
                                         --------------------------------------
                                            1993          1992          1991
                                         --------------------------------------
                                                (In millions of dollars)

<S>                                      <C>           <C>            <C>
Trade Ratios (b):
  Loss ratio  ........................       96.8%        116.7%          88.1%
  Expense ratio ......................       27.3%         26.2%          25.8%
  Combined ratio (before policyholder
   dividends) ........................      124.1%        142.9%         113.9%
  Policyholder dividend ratio ........        2.3%          1.9%           2.4%

Trade Ratios-Statutory Basis (b):
  Loss ratio .........................       96.4%        116.3%          88.2%
  Expense ratio ......................       27.1%         25.6%          25.6%*
  Combined ratio (before policyholder
   dividends) ........................      123.5%        141.9%         113.8%*
  Policyholder dividend ratio ........        3.1%          2.4%           2.7%

Other Data-Statutory Basis (c):
  Statutory capital and surplus ......   $3,598.4      $3,135.8       $3,927.5
  Written to surplus ratio ...........        1.7           2.0            1.7*

- ----------------

  * In 1991, CNA changed its statutory method of accounting for property and
casualty written premium on indeterminate premium products (policies subject to
exposure audits). This new method defers the recognition of written premium and
acquisition expenses generally until billed. The effect of this change in 1991
was a one-time reduction in written premium and related acquisition expenses of
$864 and $78 million, respectively. In order to provide comparability, the Other
Data and Trade Ratios for 1991 shown above do not reflect the one-time impact of
this statutory accounting change.

  (a) Property and casualty involuntary risks include mandatory participation in
residual markets, statutory assessments for insolvencies of other insurers and
other involuntary charges.

  (b) Trade ratios reflect the results of CCC and its property and casualty
insurance subsidiaries. Trade ratios are industry measures of property and
casualty underwriting results. The loss ratio is the percentage of incurred
claims and claims adjustment expenses to premiums earned. Under generally
accepted accounting principles, the expense ratio is the percentage of
underwriting expenses, including the change in deferred acquisition costs, to
premiums earned. Under statutory accounting principles, the expense ratio is the
percentage of underwriting expenses (with no deferral of acquisition costs) to
premiums written. The combined ratio is the sum of the loss ratio and the
expense ratio. The policyholder dividend ratio is the ratio of dividends
incurred to premiums earned.

  (c) Other data is determined on the basis of statutory accounting principles
and reflects capital contributions from CNA of $475 million in 1993. In
addition, dividends of $150, $100 and $130 million were paid to CNA by CCC in
1993, 1992 and 1991, respectively. Property and casualty insurance subsidiaries
have received, or will receive, reimbursement from CNA for general management
and administrative expenses, unallocated loss adjustment expenses and investment
expenses in the amounts of $167.5, $141.1 and $133.8 million in 1993, 1992, and
1991, respectively.
</TABLE>


                                       4

  The following table displays the distribution of domestic written premium by
state:


<TABLE>
<CAPTION>
                           State                       Years Ended December 31,
                           -----                      -------------------------
                                                           1993         1992
                                                      -------------------------

<S>                                                       <C>          <C>
California .........................................       12.1%        11.8%
New York ...........................................        8.4          8.0
Pennsylvania .......................................        5.9          6.1
Texas ..............................................        6.2          5.7
Illinois ...........................................        5.1          5.1
Florida ............................................        4.1          3.3
New Jersey .........................................        3.3          3.1
All other states (a) ...............................       43.1         41.5
Reinsurance assumed:
  Voluntary ........................................        6.9          7.9
  Involuntary ......................................        4.9          7.5
                                                          -----        -----
                                                          100.0%       100.0%
                                                          =====        =====

  (a) No other state accounts for more than 3.0% of direct written premium.
</TABLE>


  The growth and profitability of CNA's property and casualty insurance business
is dependent on many factors, including competitive and regulatory influences,
the efficiency and costs of operations, underwriting quality, the level of
natural disasters, and investment results.

  In recent years, CNA's growth and earnings have been impacted by a prolonged
cycle of inadequate commercial lines pricing, particularly in the workers'
compensation market. CNA has intensified efforts in the political sphere on
behalf of a more predictable and equitable insurance marketing climate. CNA has
taken a leadership role in seeking workers' compensation reform in several
states. Among CNA's marketing strategies during this difficult time are to
emphasize responsible pricing over premium growth and to aggressively adapt to
changes in certain markets such as those in which self insurance has become
important. CNA has also initiated wide-scale cost management measures. CNA has
continued actions to reduce or stabilize the costs of doing business, including
costs of health care, fraud and tort liability. Programs include managed health
care programs and formation of a department devoted exclusively to fighting
fraud.

  Workers' compensation has been a difficult line of business during the past
several years. Despite rapidly escalating loss costs, state regulators have been
unwilling to allow premium rate increases sufficient for insurers to earn a
profit. Unlike other insurance carriers, CNA has remained in this market in most
states. It continues to believe that workers' compensation is a critical product
to its customers, and with its proven expertise in this line, that there is a
profit potential over the long term.

  During this current industry downcycle, CNA has restricted its exposure to
workers' compensation and has taken other steps to mitigate the underwriting
losses in workers' compensation. These steps include increasing conservatism of
underwriting standards, continuing migration of guaranteed cost policies to
experience-rated contracts, and as mentioned previously, aggressive cost
containment programs geared to reduce frequency and severity of claims. During
1993, 65% of workers' compensation insurance was written on an experience-rated
basis. As a result of these steps, the past year's experience has been
encouraging as accident year loss ratios have improved slightly. After factoring
in the investment income related to projected cash flows, this line of business
produced a positive economic return in the 1992 and 1993 accident years. CNA
believes that further improvement in workers' compensation results will occur as
its many efforts toward this objective continue.

  The state of California is CNA's largest market, accounting for 12% of its
premium volume in 1993. Workers' compensation is the largest line of business in
California accounting for approximately 40% of premiums written in 1993. As
noted in the discussion of countrywide strategies for workers' compensation,
approximately 87% of California's workers' compensation business was written via
loss sensitive contracts.

                                       5

Profitability trends are slightly more favorable in this state than countrywide
primarily as a result of recently enacted major workers' compensation reform
legislation which included improved benefit provisions and open premium rating.
As a result, favorable profitability trends in workers' compensation are
expected to continue. Other major lines of business in California, including
commercial multiple peril, commercial automobile and general liability, are
producing less favorable results than countrywide. CNA is aggressively seeking
adequate premium rates for these lines within the confines of the current
regulatory constraints.

  Property/Casualty Claims and Claims Expense: Property/casualty claims and
claims expense reserves, except reserves for structured settlements, workers'
compensation lifetime claims and accident and health disability claims are based
on (a) case basis estimates for losses reported on direct business, adjusted in
the aggregate for ultimate loss expectations, (b) estimates of unreported losses
based upon past experience, (c) estimates of assumed insurance, (d) estimates of
future expenses to be incurred in settlement of claims and (e) estimates of
claim recoveries. Loss reserve calculations are based on quantitative techniques
which utilize historical trends to project future payments. Other factors,
including mix of business, the anticipated effects of inflation, and other
current conditions and trends, are implicit in the estimation process. The
schedule on page 3 provides information on mix of business.

  Structured settlements have been negotiated for certain liability claims under
commercial automobile, personal automobile, workers' compensation, professional
liability and other liability coverages. Structured settlements are agreements
to provide periodic payments to claimants, which are fixed and determinable as
to the amount and time of payment. Certain structured settlements are funded by
annuities purchased from CAC. Related annuity obligations are carried in future
policy benefits reserves. Obligations for structured settlements not funded by
annuities are carried at discounted values which approximate the alternative
cost of annuity purchases. Such reserves, discounted at interest rates ranging
from 6.3% to 7.5%, totaled $749, $663 and $555 million at December 31, 1993,
1992 and 1991, respectively. Ultimate payouts under all existing contracts at
December 31, 1993 will approximate $2.2 billion.

  In 1992 CNA changed its accounting for claim reserves related to workers'
compensation lifetime claims and accident and health disability claims.
Reserving practices under both statutory and generally accepted accounting
principles allow discounting of reserves for fixed and determinable claim
obligations. Reserve discounting for these types of claims is common industry
practice. These claim reserves are discounted at interest rates ranging from
3.5% to 5.5% with mortality and morbidity assumptions reflecting current
industry experience. At December 31, 1993, such discounted reserves totaled $970
million; ultimate payouts for these claims are estimated to be $1.4 billion.

  Claims and claims expense reserves are based on estimates and the ultimate
liability may vary significantly from such estimates. Any adjustments that are
made to the reserves are reflected in operating income in the year such
adjustments are made.

  In 1993, CNA adopted Statement of Financial Accounting Standards ("SFAS") No.
113 which requires that balances pertaining to reinsurance transactions be
reported "gross" on the balance sheet rather than as reductions of reserves for
claims and claims expenses. As a result of this change in reporting, the reserve
balances reported in the financial statements prepared in accordance with
generally accepted accounting principles and those prepared under statutory
accounting practices differ by the amount of ceded reserves of $2.9 and $2.5
billion at December 31, 1993 and 1992, respectively.

  The retention limits of CNA's property/casualty business vary by type of
coverage and are based on individual risks underwritten. In general, retention
limits have been increased with the growth in underwriting capacity. There have
been no reinsurance transactions, such as portfolio reserve transfers or swaps
of reserves, that have had a material impact on net income.

                                       6

Asbestos-related and environmental pollution claims

  Reserves include estimated amounts for exposures to asbestos-related and
environmental pollution claims. Reserving for such claims involves significant
uncertainties for both CNA and the industry, characterized by complex and costly
litigation and further compounded by the tendency of the courts to broadly
reinterpret contracts beyond their original intent.

  A summary of asbestos-related and environmental pollution claims and claims
expense activity follows:


<TABLE>
<CAPTION>

                                            Claims and Claims Expense
                              --------------------------------------------------
                                Reserves, Net of
                                  Reinsurance               Payments
                                  December 31,             Years Ended
                              --------------------   ---------------------------
                                1993        1992       1993     1992      1991
                              --------------------   ---------------------------
                                                 (In millions)

<S>                            <C>         <C>         <C>      <C>        <C>
Asbestos-related............   $2,080      $1,683      $204     $112       $39
Environmental pollution.....      433          59        72       38        49
                               -----------------------------------------------
  Total ....................   $2,513      $1,742      $276     $150       $88
                               ===============================================

</TABLE>


  A major portion of CNA's asbestos-related claim exposure involves litigation
with Fibreboard Corporation, as discussed in Note 16 of Notes to Consolidated
Financial Statements. Adverse reserve developments for asbestos-related claims
totaled $601, $1,689 and $48 million in 1993, 1992 and 1991, respectively.

  Potential exposures also exist for claims involving environmental pollution,
including toxic waste clean-up. Environmental pollution clean-up is the subject
of both federal and state regulation. By some estimates there are thousands of
potential waste sites subject to clean-up. The insurance industry is involved in
extensive litigation regarding coverage issues. Judicial interpretations in many
cases have expanded the scope of coverage and liability beyond the original
intent of the policies.

  Reserve development for environmental pollution claims totaled $446, $48 and
$47 million in 1993, 1992 and 1991, respectively, including litigation costs of
$28, $25 and $21 million. Adverse development for 1993 primarily resulted from
the allocation of approximately $340 million of reserves for unreported claims.
The results of operations in future years may continue to be adversely affected
by environmental pollution claims and claims expenses. Management will continue
to monitor potential liabilities and make further adjustments as warranted. See
Note 16 of Notes to Consolidated Financial Statements.

Reserves for property/casualty claims and claims expense

  The following table provides a reconciliation between beginning and ending
claims and claims expense reserve balances for 1993, 1992 and 1991. In 1992,
beginning and ending reserve balances were restated to retroactively reflect the
accounting change for discounting discussed previously. Not included in the
following table is premium development related to certain insurance policies
subject to retroactive premium adjustments, based on various factors including
loss experience. As a result, CNA also recorded premium and dividend related
development to prior years of $(127), $50 and $(43) million in 1993, 1992 and
1991, respectively.

                                       7


<TABLE>
<CAPTION>

                                                Changes in Reserves for
                                                   Property/Casualty
                                               Claims and Claims Expense
                                                Years Ended December 31,
                                          -------------------------------------
                                            1993          1992          1991
                                          -------------------------------------
                                                     (In millions)

<S>                                        <C>           <C>           <C>
Reserves at beginning of year:
  Gross ..............................     $20,034       $17,712       $16,530
  Ceded reinsurance ..................       2,867         3,297         3,440
                                           -----------------------------------
    Net ..............................      17,167        14,415        13,090
                                           -----------------------------------

Net incurred claims and claims expense:
  Provision for insured events of
   current year ......................       5,388         5,708         5,811
  Increase (decrease) in provision for
   insured events of prior years .....         590         1,617          (106)
  Amortization of discounts ..........          94           104            89
                                           -----------------------------------
    Total net incurred ...............       6,072         7,429         5,794
                                           -----------------------------------

Net payments:
  Attributable to current year events        1,202         1,260         1,177
  Attributable to prior year events ..       3,706         3,411         3,285
  Amortization of discounts ..........          10             6             7
                                           -----------------------------------
    Total net payments ...............       4,918         4,677         4,469
                                           -----------------------------------

Net reserves at end of year ..........     $18,321       $17,167       $14,415
                                           ===================================

Gross reserves at beginning of year ..     $20,034       $17,712       $16,530
                                           -----------------------------------
Gross incurred claims and claims expense:
  Provision for insured events of
   current year ......................       5,817         6,382         6,320
  Increase (decrease) in provision for
   insured events of prior years .....         305         1,487          (174)
  Amortization of discounts ..........          94           104            89
                                           -----------------------------------
    Total gross incurred .............       6,216         7,973         6,235
                                           -----------------------------------

Gross payments:
  Attributable to current year events        1,278         1,348         1,245
  Attributable to prior year events ..       4,150         4,297         3,801
  Amortization of discounts ..........          10             6             7
                                           -----------------------------------
    Total gross payments .............       5,438         5,651         5,053
                                           -----------------------------------

Gross reserves at end of year ........     $20,812       $20,034       $17,712
                                           ===================================
</TABLE>


                                       8

  The following table displays the development of financial statement claims and
claims expense reserves for 1983 through 1993. In this table, development of
reserves is included in each calendar year between the date of loss and the date
of reestimation. Therefore, the deficiencies of the original estimates of
required reserves that are reflected below are cumulative and should not be
summed. All reserve data has been restated to retroactively reflect the
accounting change for discounting discussed previously.


<TABLE>
<CAPTION>

                                      Schedule of Property/Casualty Loss Reserve Development
                                                      Years Ended December 31,
                        1983    1984     1985    1986    1987    1988    1989    1990    1991    1992    1993
- -------------------------------------------------------------------------------------------------------------
                                                      (In millions of dollars)

<S>                    <C>     <C>     <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
Gross reserves for
 unpaid claims and
 claims expense  ....      -       -        -       -       -       -       -  16,530  17,712  20,034  20,812
Ceded recoverable ...      -       -        -       -       -       -       -   3,440   3,297   2,867   2,491
                      ---------------------------------------------------------------------------------------
Net reserves for
 unpaid claims and
 claims expense .....  3,309   3,931    4,873   6,243   8,045   9,552  11,267  13,090  14,415  17,167  18,321

Net Paid
  (Cumulative) as of:
  One year later ....  1,074   1,330    1,594   1,335   1,763   2,040   2,670   3,285   3,411   3,706       -
  Two years later ...  1,624   1,936    2,932   2,383   2,961   3,622   4,724   5,623   6,024       -       -
  Three years later .  2,066   2,493    3,022   3,197   4,031   4,977   6,294   7,490       -       -       -
  Four years later ..  2,469   2,963    3,642   3,963   5,007   6,078   7,534       -       -       -       -
  Five years later ..  2,759   3,407    4,175   4,736   5,801   6,960       -       -       -       -       -
  Six years later ...  3,084   3,766    4,735   5,339   6,476       -       -       -       -       -       -
  Seven years later .  3,330   4,156    5,233   5,880       -       -       -       -       -       -       -
  Eight years later .  3,625   4,512    5,668       -       -       -       -       -       -       -       -
  Nine years later ..  3,914   4,901        -       -       -       -       -       -       -       -       -
  Ten years later ...  4,243       -        -       -       -       -       -       -       -       -       -

Net Reserves
 Reestimated as of:
  End of initial year  3,309   3,931    4,873   6,243   8,045   9,552  11,267  13,090  14,415  17,167  18,321
  One year later ....  3,367   3,985    5,047   6,642   8,086   9,737  11,336  12,984  16,032  17,757       -
  Two years later ...  3,477   4,122    5,573   6,763   8,345   9,781  11,371  14,693  16,810       -       -
  Three years later .  3,599   4,659    5,788   6,989   8,424   9,796  13,098  15,737       -       -       -
  Four years later ..  3,981   4,855    6,170   7,166   8,516  11,471  14,118       -       -       -       -
  Five years later ..  4,127   5,171    6,422   7,314  10,196  12,496       -       -       -       -       -
  Six years later ...  4,359   5,395    6,566   9,022  11,239       -       -       -       -       -       -
  Seven years later .  4,534   5,486    8,317  10,070       -       -       -       -       -       -       -
  Eight years later .  4,629   7,215    9,365       -       -       -       -       -       -       -       -
  Nine years later ..  6,351   8,270        -       -       -       -       -       -       -       -       -
  Ten years later ...  7,362       -        -       -       -       -       -       -       -       -       -
                      ---------------------------------------------------------------------------------------
Total net deficiency  (4,053) (4,339)  (4,492) (3,827) (3,194) (2,944) (2,851) (2,647) (2,395)   (590)      -
                      =======================================================================================

Reconciliation to
 Gross Reestimated
 Reserves:
Net reserves
 reestimated ........      -       -        -       -       -       -       -  15,737  16,810  17,757       -
Reestimated ceded
 recoverable ........      -       -        -       -       -       -       -   3,221   3,060   2,582       -
                      ---------------------------------------------------------------------------------------

Total gross
 reestimated reserves      -       -        -       -       -       -       -  18,958  19,870  20,339       -
                      =======================================================================================

Net Deficiency
 related to:
  Asbestos-related
   claims ........... (2,608) (2,606)  (2,640) (2,682) (2,635) (2,577) (2,476) (2,338) (2,290)   (601)      -
  Environmental .....   (595)   (601)    (599)   (597)   (582)   (577)   (550)   (539)   (493)   (446)      -
  Other .............   (850) (1,132)  (1,253)   (548)     23     210     175     230     388     457       -
                      ---------------------------------------------------------------------------------------
Total net deficiency  (4,053) (4,339)  (4,492) (3,827) (3,194) (2,944) (2,851) (2,647) (2,395)   (590)      -
                      =======================================================================================
</TABLE>


                                                                9

  As the above table illustrates, most of the unfavorable reserve development is
due to asbestos claims. A discussion of CNA's litigation with Fibreboard
Corporation regarding asbestos-related bodily injury claims can be found in Note
16 of the Notes to Consolidated Financial Statements in Item 8.

  In addition to the asbestos and environmental reserve developments noted on
page 8, the unfavorable reserve developments relate primarily to accident years
1986 and prior and are comprised of the following lines of business: product
liability, medical malpractice, other liability, professional liability,
reinsurance, and workers' compensation. In the early to mid-1980's, frequency
and severity trends exceeded expectations, resulting in reserve deficiencies in
1986 and prior accident years. For accident years 1987 and subsequent, frequency
and severity trends have noticeably moderated. In calendar year 1993, positive
severity experience in professional liability lines and improvement in
involuntary workers' compensation experience resulted in favorable development
in accident years 1987 through 1992.

                                 LIFE INSURANCE

  CNA's life insurance operations markets individual and group insurance
products through licensed agents, most of whom are independent contractors, who
sell life insurance for CNA and for other companies on a commission basis.
Individual insurance products include life, accident and health and annuity
products, and are sold to individuals and small businesses.

  The individual life products currently being marketed consist primarily of
term, universal life and participating policies.  Included in the universal life
category is a salary allotment product marketed through employers as a
supplement to employers' benefit plans. Premiums are collected from employees
through payroll deduction. The individual accident and health product currently
being marketed is long-term disability. Individual annuity products are
primarily periodic payment plans.

  Group insurance products include life, accident and health and pension
products, and are sold to employers, employer associations and trusts ranging in
size from small local employers to large multinational corporations. The group
accident and health plans are primarily major medical and hospitalization. Most
of the major medical and hospitalization plans are written under experience-
rated contracts or contracts to provide claim administrative services only.

  CNA's products are designed and priced using assumptions CNA management
believes to be reasonably conservative for mortality, morbidity, persistency,
expense levels and investment results. Underwriting practices that CNA
management believes are prudent are followed in selecting the risks that will be
insured. Further, actual experience related to pricing assumptions is monitored
closely so that adjustments to these assumptions may be implemented as
necessary. CNA mitigates the risk related to persistency by including surrender
charge provisions in its ordinary life and annuity policies in the first five to
ten years, thus providing for the recovery of acquisition expenses. Investment
portfolios supporting interest sensitive products, including universal life and
individual annuities, are segregated from other investments and managed so as to
minimize the liquidity and interest rate risks.
  Profitability in the life insurance business has decreased over the past two
years as a result of declining investment income, reflecting lower interest
rates and a large investment in short-term investments. Further, results
continue to be impacted by intense competition and rising medical costs. CNA has
aggressively pursued expense reduction through increases in automation and other
productivity improvements. Increasing costs of health care have resulted in a
continued market shift away from traditional forms of health coverage toward
managed care products and experience-rated plans. CNA's ability to compete in
this market will be increasingly dependent on its ability to control costs
through managed care techniques, innovation, and quality customer-focused
service in order to properly position CNA in the evolving health care
environment.

  The federal government's initiative to control health care costs and provide
universal access to health care was presented in 1993. The impact of potential
health care reform cannot be determined at this time. Such reform may

                                       10

affect both CNA's individual and group accident and health business. CNA has
urged a meaningful role for the private sector in any proposed plan. The present
health care system is clearly in need of reform, and CNA has emphasized that the
competitive strengths of the insurance industry must be an integral part of a
workable solution.

  The following table sets forth supplemental data for the life insurance
business:


<TABLE>
<CAPTION>                                       Years Ended December 31,
                                          -------------------------------------
                                            1993          1992          1991
                                          -------------------------------------
                                                (In millions of dollars)

<S>                                       <C>           <C>           <C>
Individual Premiums:
  Life and annuities .................    $  312.1      $  294.7      $  287.9
  Accident and health ................        30.9          27.1          24.3
                                          ------------------------------------
                                          $  343.0      $  321.8      $  312.2
                                          ====================================

Group Premiums:
  Life ...............................    $  107.2      $  100.7      $   90.8
  Accident and health (a) ............     1,983.0       1,957.5       1,887.0
  Annuities ..........................         9.0          57.7          24.3
                                          ------------------------------------
                                          $2,099.2      $2,115.9      $2,002.1
                                          ====================================

Net Investment Income and Other Income:
  Individual .........................    $  154.2      $  163.0      $  162.5
  Group ..............................       142.8         156.6         185.4
                                          ------------------------------------
                                          $  297.0      $  319.6      $  347.9
                                          ====================================

Income Excluding Realized Capital
 Gains, Before Income Tax:
   Individual ........................    $   14.5      $   22.5      $   13.8
   Group .............................        51.9          56.1          76.0
                                          ------------------------------------
                                          $   66.4      $   78.6      $   89.8
                                          ====================================

Gross Life Insurance in Force:
  Individual (c) .....................    $ 76,835      $ 75,569      $ 71,539
  Group ..............................      35,413        29,643        27,139
                                          ------------------------------------
                                          $112,248      $105,212      $ 98,678
                                          ====================================
Other Data (b):
  Statutory capital and surplus ......    $1,022.0      $1,003.0      $  968.4
  Statutory capital and surplus-
   percent of total liabilities ......        30.1%         33.4%         29.9%
  Participating policyholders'-percent
   of gross life insurance in force ..         1.1%          1.2%          1.6%

- --------------

 (a) Group accident and health premiums include contracts involving U.S.
Government employees and their dependents amounting to approximately $1.7, $1.6
and $1.5 billion in 1993, 1992 and 1991, respectively.

 (b) Other Data is determined on the basis of statutory accounting principles.
Life insurance subsidiaries have received, or will receive, reimbursement from
CNA for general management and administrative expenses and investment expenses
in the amounts of $25.6, $24.5 and $25.7 million in 1993, 1992 and 1991,
respectively. Statutory capital and surplus as a percent of total liabilities is
determined after excluding Separate Account liabilities and reclassifying the
Asset Valuation and Interest Maintenance Reserves as surplus.

 (c) Lapse ratios as measured by surrenders and withdrawals as a percentage of
average ordinary life insurance in force were 9.7%, 8.6%, and 10.4% in 1993,
1992, and 1991, respectively.
</TABLE>


                                       11

Annuities and guaranteed investment contracts

  CAC writes the majority of its annuities and guaranteed investment contracts
("GIC's") in a fixed or non-variable Separate Account, which is permitted by
Illinois Insurance statutes. This treatment affords the contractholders
additional security, in the form of CAC's general account surplus, which
supports any principal and/or guaranteed interest payment shortfalls of the
Separate Account.

  CNA manages the liquidity and interest rate risks on the GIC portfolio by
matching the GIC assets and liabilities on the basis of duration and maintaining
market value surrender adjustments on the majority of the contracts.

  The following table illustrates the matching of the duration of assets and
liabilities for the GIC portfolio, the investment yield, the weighted average
interest crediting rates and withdrawal characteristics.


<TABLE>
<CAPTION>

                                                      December 31,
                                          -----------------------------------
                                            1993          1992          1991
                                          -----------------------------------

<S>                                        <C>            <C>           <C>
Duration in years:
  Assets .............................     2.68           3.04          2.85
  Liabilities ........................     2.73           2.69          2.54
                                           ---------------------------------
     Mismatch ........................     (.05)           .35           .31
                                           =================================
Weighted average investment yield ....     7.11%          8.05%         9.38%
                                           =================================
Weighted average interest crediting
 rates ...............................     7.74%          8.32%         8.84%
                                           =================================
Withdrawal Characteristics:
  With market value adjustment .......       81%            83%           85%
  Non-withdrawable ...................       13             12            11
  Without market value adjustment ....        6              5             4
                                           ---------------------------------
     Total ...........................      100%           100%          100%
                                           =================================

</TABLE>


  As shown above, the investment yield at December 31, 1993 and 1992 was less
than the average crediting rate. However, this occurred because of security
sales resulting in realized capital gains. Although the sales proceeds were
invested at lower yields, the asset base was increased. At December 31, 1993 and
1992, the GIC estimated market value of assets exceeded the estimated market
value of contract liabilities and expenses.

                                  INVESTMENTS

  CNA's general account investment portfolio is managed to maximize after-tax
investment return, while minimizing credit risks with investments concentrated
in high quality securities to support its insurance underwriting operations. At
December 31, 1993, approximately 20% of CNA's general account portfolio is
invested in long-term state and municipal bonds in order to maximize after-tax
yield and provide for a more stable yield on the portfolio with a higher quality
of investment than may otherwise be available.

  CNA has the capacity to hold its fixed income portfolio to maturity. However,
securities may be sold as part of CNA's asset/liability strategies or to take
advantage of investment opportunities generated by changing interest rates,
prepayments, tax and credit considerations, or other similar factors.
Accordingly, the fixed income securities are classified as available for sale.
CNA's portfolio is managed based on the following investment strategies: (i)
diversification is used to limit exposures to any one issue or issuer, and (ii)
in general, the public market is used in order to provide liquidity.

                                       12

  Historically, CNA has maintained short-term assets at a level that provided
for liquidity to meet its short-term obligations, principally anticipated claim
payout patterns. Throughout 1992 and 1993 the level of short-term investments
increased beyond that needed for short-term liquidity. This resulted in a
decline in investment income in 1993. Management believes, however, that the
increased concentration in short-term investments will reduce the impact that a
rise in interest rates would have on its fixed income portfolio.

  The following summarizes CNA's distribution of general account investments:


<TABLE>
<CAPTION>

                                                             December 31,
                                                       ------------------------
                                                         1993            1992
                                                       ------------------------
                                                             (In millions)

<S>                                                     <C>            <C>
Fixed maturities (1):
  Tax exempt bonds ................................     $ 5,015        $ 9,502
  Taxable bonds ...................................      12,145          7,286
  Redeemable preferred stocks .....................         448            568
Equity securities:
  Common stocks ...................................         508            348
  Non-redeemable preferred stocks .................                          9
Mortgage loans ....................................          58             85
Policy loans ......................................         174            179
Short-term investments ............................       6,944          4,444
Real estate and other invested assets .............          71             57
                                                        ----------------------
  Total investments at carrying value .............     $25,363        $22,478
                                                        ======================

  (1) Fixed maturity securities are reported at fair value in 1993.

</TABLE>


  As noted in Management's Discussion and Analysis of Financial Condition and
Results of Operations, in 1993 CNA began a program of realigning its portfolio
which resulted in realizing substantial gains. For the year ended December 31,
1993, CNA's property and casualty insurance subsidiaries sold approximately
$35.4 billion of fixed income and equity securities realizing pre-tax net gains
of $741.3 million. Of the securities sold, approximately $5.8 billion was from
the tax-exempt municipal bond portfolio. Most of the proceeds from those sales
have been invested in short-term securities, primarily U.S. Treasury bills and
high-grade commercial paper. In addition to reducing the impact that a rise in
interest rates would have on the fixed income portfolio, the increase in taxable
short-term securities and the decrease in tax-exempt investments will allow CNA
to minimize additional alternative minimum tax credit generated in 1992 and
1993.

  CNA's general account fixed income portfolio has consistently been of high
quality as illustrated in the following table using the Standard & Poor's
ratings convention (see note).


<TABLE>
<CAPTION>

                                                             December 31,
                                                        -----------------------
                                                         1993             1992
                                                        -----------------------

<S>                                                      <C>               <C>
AAA ...............................................       77%               73%
AA ................................................        8                10
A .................................................        7                10
BBB ...............................................        5                 3
Below BBB .........................................        3                 4
                                                         ---------------------
     Total ........................................      100%              100%
                                                         =====================
</TABLE>


                                       13
  CNA's Separate Account investment portfolio is managed to specifically support
the underlying insurance products (see the discussion of annuities and GIC's in
"Life Insurance" above). Approximately 86% or $5.6 billion of Separate Account
investments are used to fund GIC's; the remaining investments are funding
variable products. Approximately 97% of the GIC investment portfolio is
comprised of taxable fixed income securities. The quality of the GIC fixed
income portfolio using the Standard & Poor's ratings convention (see note) is as
follows:


<TABLE>
<CAPTION>
                                                             December 31,
                                                        -----------------------
                                                         1993             1992
                                                        -----------------------

<S>                                                      <C>               <C>
AAA ...............................................       44%               50%
AA ................................................        6                 9
A .................................................       18                18
BBB ...............................................       13                10
Below BBB .........................................       19                13
                                                         ---------------------
     Total ........................................      100%              100%
                                                         =====================

</TABLE>


  Note: The bond ratings shown in the two tables above are primarily from
Standard & Poor's (94% of the general account portfolio and 93% of the GIC
portfolio in 1993). In the case of private placements and other unrated
securities, comparable internal ratings are developed by CNA. These ratings are
derived by management using available information on the issuer to assess the
credit risk. Reference also may be made to similar instruments of the issuer
that are rated by Standard & Poor's. In the case of unrated municipal bonds, a
AAA rating may be assigned to issues with financial guarantee insurance.

  CNA actively manages its high yield bonds and maintains the level of such
investments at prudent levels, as illustrated above. In 1993, the level of high
yield investment increased $261 million to $1,068 million at year end. This
increase is a result of the relative attractiveness of the high yield investment
market in comparison to other investment opportunities during the year. Although
the level of high yield investments has increased, the components of the high
yield portfolio have shifted toward lower risk issues, with B and BB rated bonds
comprising 91% of the high yield portfolio at December 31, 1993, compared to 82%
at the end of 1992. High yield securities generally involve a greater degree of
risk than that of investment grade securities. Expected returns should, however,
compensate for the added risk. The risk is also considered in the interest rate
assumptions in the underlying insurance products. Further, CNA's investment in
real estate and mortgage loans amounted to less than one-half of one percent of
its total assets, substantially below industry averages.

  Included in CNA's 1993 AAA-rated fixed income securities (general and GIC
portfolios) are $4.4 billion of asset-backed securities, consisting of
approximately 47% in collateralized mortgage obligations ("CMO's"), 47% in U.S.
Government agency pass through certificates and 6% in corporate asset-backed
obligations. The majority of CMO's held are U.S. Government agency pass-through
certificates, are actively traded in liquid markets and are priced monthly by
broker-dealers. At December 31, 1993, market value exceeded amortized cost by
approximately $87 million. CNA limits the risks associated with interest rate
fluctuations and prepayments by concentrating its CMO investments in early
planned amortization classes with wide bands and relatively short principal
repayment windows.

                                     OTHER

  Competition: All aspects of the insurance business are highly competitive.
CNA's insurance operations compete with a large number of stock and mutual
insurance companies and other entities for both producers and customers and must
continuously allocate resources to refine and improve insurance products and
services. Based on net statutory premiums written in 1992, CCC is ranked as the
sixth largest property/casualty insurance organization among approximately 3,900
companies writing property and casualty insurance in the United States, about
900 of which operate in all or most states. CAC is ranked as the seventeenth
largest consolidated life

                                       14

insurance organization among approximately 2,000 companies selling life
insurance (including health insurance and pension products) in the United
States, based on statutory premium revenue in 1992.

  Dividends by Insurance Subsidiaries: The payment of dividends to CNA by its
insurance affiliates without prior approval of the Illinois Insurance Department
("IID") is limited to formula amounts determined in accordance with the
accounting practices prescribed or permitted by the IID. The current formula
limits dividends, without approval of the insurance commissioner, to the greater
of 10% of prior year statutory surplus or prior year statutory net income
(excluding realized gains in excess of 20% of the cumulative unrealized gains
position). For 1994, approximately $360 million in dividends could be paid to
CNA by its insurance affiliates without prior approval. The National Association
of Insurance Commissioners ("NAIC") Financial Regulation Standards and
Accreditation Committee approved the Illinois dividend formula as complying with
the NAIC Model Dividend Law. All dividends must be reported to the insurance
department within five business days of declaration and ten days prior to
payment.

  Regulation: The insurance industry is subject to comprehensive and detailed
regulation and supervision throughout the United States. Each state has
established supervisory agencies with broad administrative power relative to
licensing insurers and agents, approving policy forms, establishing reserve
requirements, maintaining guarantee funds, fixing minimum interest rates for
accumulation of surrender values and maximum interest rates of policy loans,
prescribing the form and content of statutory financial reports and regulating
solvency and the type and amount of investments permitted. Regulatory powers
also extend to premium rate regulation which require that rates not be
excessive, inadequate or unfairly discriminatory. In addition to regulation of
dividends by insurance subsidiaries discussed above, intercompany transfers of
assets may be subject to prior notice or approval, depending on the size of such
transfers and payments in relation to the financial position of the insurance
affiliates making the transfer.

  The trend for legislation and voter initiatives continues, particularly for
personal lines products, directly impacting insurance rate development, rate
application and the ability of insurers to cancel or renew insurance policies.
Restrictions on the consideration of certain expenses, limits on services
provided by advisory organizations, and politically suppressed workers'
compensation rates in certain states continue to be of concern.

  Insurers are also required by the states to provide coverage to risks which
would not otherwise be considered eligible by the insurers. Each state dictates
the types of insurance and the level of coverage which must be provided to such
involuntary risks. CNA's insurance subsidiaries share of these involuntary risks
is generally a function of its share of the voluntary market, by line of
insurance, in each state.

  In recent years, insolvencies of a few large insurers previously believed to
be on solid financial ground by many rating agencies and state regulators have
led to increased scrutiny of state regulated insurer solvency requirements by
members of the U.S. Congress. Legislation has been introduced which, if passed,
would subject insurers to federal solvency regulation. In response to this
challenge the NAIC has developed new industry minimum Risk Based Capital ("RBC")
requirements, established a formal state accreditation process designed to
minimize the diversity of approved statutory accounting and actuarial practices,
and has increased the annual statutory statement disclosure requirements.

  RBC requirements are effective for life insurers in 1993 and for property and
casualty insurers in 1994. The RBC formulas were designed to identify an
insurer's minimum capital requirements based upon the inherent risks (e.g.,
asset default, credit and insurance) of its operations. In addition to the
minimum capital requirements, the RBC formula and related regulations identify
various levels of capital adequacy and corresponding action that the state
insurance departments should initiate. The highest such level of capital
adequacy above which insurance departments would take no action is defined as
the Company Action Level. As of December 31, 1993, CNA's life insurance
affiliates, Continental Assurance Company and Valley Forge Life Insurance
Company, had adjusted capital amounts in excess of NAIC Company Action Levels.
The new property/casualty RBC formula was adopted in December, 1993. Absent
significant changes in the industry experience components of the formula,

                                       15

CNA's property/casualty domestic insurers have adjusted capital amounts in
excess of NAIC Company Action Levels.

  In addition to the newly established minimum capital requirements, the NAIC
still maintains the Insurance Regulatory Information System ("IRIS"), which
assists the state insurance departments in overseeing the financial condition of
both life and property/casualty insurers. These tests are in the form of ratios,
and have a range of results characterized as "usual" by the NAIC. The NAIC IRIS
user guide regarding these ratios specifically states that "Falling outside the
usual range is not considered a failing result..." and "...in some years it may
not be unusual for financially sound companies to have several ratios with
results outside the usual range." It is important, therefore, that IRIS ratio
test results be reviewed carefully in conjunction with all other financial
information.

  CCC had three IRIS ratios with unusual values in 1993, four in 1992 and none
in 1991. The three ratios with unusual values in 1993 were the two year overall
operating, investment yield, and the two year reserve development ratios. The
four IRIS ratios with unusual values in 1992 were the two year overall
operating, the change in surplus, and both the one and two year reserve
development ratios. Catastrophe losses and reserve increases associated with
potential exposure to asbestos-related bodily injury cases recognized in 1992
triggered all the unusual values generated in 1992. These same events were
primarily responsible for the unusual values for the two year overall operating
and development ratios in 1993. Additionally, lower interest rates in the
capital markets in 1993, coupled with the maintenance of a large short term
investment portfolio, triggered the unusual value for the investment yield
ratio.

  CAC had two IRIS ratios with unusual values in 1993, net gain to total income
and change in net written premium. CAC had one unusual value for IRIS ratios in
1992, net gain to total income, and none in 1991. CAC's reported statutory net
income was adversely affected in both 1993 and 1992 by the transfer of
significant realized capital gains to the Interest Maintenance Reserve (IMR) and
depressed investment earnings. The unusual value for the change in premium ratio
primarily relates to decreases in the Separate Account annuity products fund
deposits.

  Federal measures which may significantly affect the insurance business include
proposals for directly regulating insurance company solvency as well as repeal
of the McCarran-Ferguson Act, which exempts certain aspects of insurance from
federal regulation to the extent regulated by the states. The potential for
federal health care reform has been widely publicized and debated over the past
year. Although legislative reforms could come as soon as 1994, the impact of
such reforms are as yet unknown. Among the options discussed has been a single
comprehensive health care program that would provide access for all Americans,
while attempting to reduce cost via enactment of various cost containment
measures and tort reforms. If implemented, such reforms may impact both
individual and group accident and health, workers' compensation, automobile
liability and medical malpractice lines of business currently underwritten by
CNA.

  Although courts and legislatures are often asked to expand liability, there is
a growing trend among business and professional organizations to wage campaigns,
which in several instances have been successful, aimed at limiting their
liability risks. Several states have adopted and some are considering "tort
reform" measures which, among other things, limit non-economic and punitive
damages and otherwise limit damage awards in product liability and malpractice
cases.

  Reinsurance: CNA's insurance subsidiaries assume and cede insurance with other
insurers and reinsurers and members of various reinsurance pools and
associations. CNA utilizes reinsurance arrangements to limit its maximum loss,
to provide greater diversification of risk and to minimize exposures on larger
risks. The reinsurance coverages are tailored to the specific risk
characteristics of each product line with CNA's retained amount varying by type
of coverage. Generally, reinsurance coverage for property risks is on an excess
of loss, per risk basis. Liability coverages are generally reinsured on a quota
share basis in excess of CNA's retained risk. In addition, CNA has catastrophe
coverage for certain types of losses over stipulated amounts arising from any
one occurrence or event.

                                       16

  The ceding of insurance does not discharge the primary liability of the
original insurer. It had been the practice of insurers to account for the
portion of the risks which have been reinsured with other companies as though
they were risks for which the original insurer is not liable. In December 1992,
the Financial Accounting Standards Board issued SFAS No. 113, "Accounting and
Reporting for Reinsurance of Short-duration and Long-duration Contracts." SFAS
No. 113 sets forth new requirements for accounting and reporting of reinsurance
contracts. The provisions of this statement are effective in 1993 and did not
have a material impact on the income or stockholders' equity of CNA as all
material reinsurance arrangements are prospective and provided for the transfer
of risk.

  CNA places reinsurance with other carriers only after careful review of the
nature of the contract and a thorough assessment of the reinsurers' credit
quality and claim settlement performance. Further, for carriers that are not
authorized reinsurers in Illinois, CNA receives collateral primarily in the form
of bank letters of credit securing a large portion of the recoverables.

  Reinsurance recoverables on paid and unpaid claims were $2.9, $3.2, and $3.7
billion at year end 1993, 1992 and 1991, respectively. Of the $2.9 billion
recoverable at December 31, 1993, approximately $351 million was due from
unauthorized reinsurers, approximately $155 million of which was collateralized
by letters of credit. Despite best efforts to ensure collection of reinsurance
recoverables, the long-tail nature of many of these recoverables inevitably
results in some credit risk. In estimating CNA's allowance for doubtful
accounts, reinsurance recoverables are carefully analyzed.

  CNA's largest recoverable at December 31, 1993 was $484 million due from
Lloyd's of London. The recoverable from Lloyd's of London is dispersed among
thousands of individual members who have unlimited liability, many of which are
Illinois authorized reinsurers. Although Lloyd's of London has recently reported
large underwriting losses, it continues to carry substantial reserves, including
$9 billion in premium trust funds, $6 billion in member trust funds and
policyholder surplus of $381 million. Accordingly, the credit risk associated
with these recoverable balances appears to be minimal. Premiums of $58 million
were ceded to Lloyd's of London in 1993.

  Properties: CNA Plaza, owned by CAC, is a 1,097,000 square foot office complex
located at 333 S. Wabash, Chicago, Illinois. The forty-five story office
building serves as the home office for CNA and its insurance subsidiaries. CNA
Plaza and the adjacent building (a 454,000 square foot building located at 55 E.
Jackson Blvd.) are partially situated on grounds under leases expiring in 2058
and 2067. Approximately 35% of the adjacent building is rented to non-
affiliates.

  CNA also maintains four regional offices and forty branch offices in major
cities throughout the United States. This office space is leased except for
offices located in four CNA owned buildings.

                                LORILLARD, INC.

  The Company's wholly owned subsidiary, Lorillard, Inc. ("Lorillard"), is
engaged, through its subsidiaries, in the production and sale of cigarettes. The
principal cigarette brand names of Lorillard are Newport, Kent and True.
Lorillard's largest selling brands are the Newport and Kent brands, which
accounted for approximately 69% and 15%, respectively, of Lorillard's sales in
1993. Substantially all of Lorillard's sales are in the United States.
Lorillard's major trademarks outside of the United States were sold in 1977.
Lorillard accounted for 13.95%, 15.96%, and 14.75% of the Company's total
revenue for the fiscal years ended December 31, 1993, 1992 and 1991,
respectively.

  Smoking and Health and Related Matters: For a number of years reports of the
alleged harmful health effects of cigarette smoking have engendered significant
adverse publicity for the cigarette industry, have caused a decline in the
social acceptability of cigarette smoking and have resulted in the
implementation of numerous restrictions on the marketing, advertising and use of
cigarettes. Along with significant increases in federal and

                                       17

state excise taxes on cigarettes, these actions have, and are likely to continue
to have, an adverse effect on cigarette sales.

  The Federal Comprehensive Smoking Education Act, which became effective in
1985, requires the use on cigarette packaging and advertising of one of the
following four warning statements, on a rotating basis: (1) "SURGEON GENERAL'S
WARNING: Smoking Causes Lung Cancer, Heart Disease, Emphysema, and May
Complicate Pregnancy." (2) "SURGEON GENERAL'S WARNING: Quitting Smoking Now
Greatly Reduces Serious Risks to Your Health." (3) "SURGEON GENERAL'S WARNING:
Smoking By Pregnant Women May Result in Fetal Injury, Premature Birth, and Low
Birth Weight." (4) "SURGEON GENERAL'S WARNING: Cigarette Smoke Contains Carbon
Monoxide." Four shortened versions of these statements are required, on a
rotating basis, for use on billboards. This law also requires that each person
who manufactures, packages or imports cigarettes shall annually provide to the
Secretary of Health and Human Services a list of the ingredients added to
tobacco in the manufacture of cigarettes. Such list of ingredients may be
submitted in a manner which does not identify the company which uses the
ingredients or the brand of cigarettes which contains the ingredients.

  Prior to the effective date of the Comprehensive Smoking Education Act,
federal law had, since 1965, required that cigarette packaging bear a warning
statement which from 1971 to 1985 was as follows: "Warning: The Surgeon General
Has Determined That Cigarette Smoking Is Dangerous To Your Health." In addition,
in 1972 Lorillard and other cigarette manufacturers had agreed, pursuant to
consent orders entered into with the Federal Trade Commission ("FTC"), to
include this health warning statement in print advertising, on billboards and on
certain categories of point-of-sale display materials relating to cigarettes. In
addition, advertising of cigarettes has been prohibited on radio and television
since 1971.

  Studies with respect to the alleged health risk to nonsmokers of environmental
tobacco smoke ("ETS") have received significant publicity. In 1986, the Surgeon
General of the United States and the National Academy of Sciences reported that
ETS puts nonsmokers at an increased risk of lung cancer and respiratory illness.
In January 1993, the United States Environmental Protection Agency released a
report (the "EPA Risk Assessment") concluding that ETS is a human lung
carcinogen in adults, and causes increased respiratory tract disease and middle
ear disorders and increases the severity and frequency of asthma in children.

  In recent years, many federal, state, local and municipal governments and
agencies, as well as private businesses, have adopted legislation or regulations
which prohibit or restrict, or are intended to discourage, smoking, including
legislation or regulations prohibiting or restricting smoking in various places
such as public buildings and facilities, stores and restaurants, on domestic
airline flights and in the workplace, and the sale of cigarettes in vending
machines. This trend has increased significantly since the release of the EPA
Risk Assessment. Additional laws, regulations and policies intended to prohibit,
restrict or discourage smoking are being proposed or considered by various
federal, state and local governments, agencies and private businesses with
increasing frequency.

  A 1984 federal law established a Technical Study Group to conduct a study and
report to the Congress regarding the technical and commercial feasibility of
developing cigarettes that will have a minimum propensity to ignite upholstered
furniture or mattresses. The Technical Study Group concluded in 1987 that it was
technically feasible and may be commercially feasible to develop such
cigarettes. In accordance with a 1990 federal law the Consumer Product Safety
Commission issued a report in August 1993, concluding that, while it is
practicable to develop a performance standard to reduce cigarette ignition
propensity, it is unclear that such a standard will effectively address the
number of cigarette ignited fires. Several states also are considering
legislation in this area.

  From time to time, bills have been introduced in Congress, among other things,
to end or limit the price supports for leaf tobacco; to prohibit all tobacco
advertising and promotion; to require new health warnings on cigarette packages
and advertising; to subject cigarettes to regulation in various ways by the U.S.
Department of Health and Human Services; to subject cigarettes generally to
regulation under the Consumer Products Safety Act; to authorize the
establishment of various anti-smoking education programs; to provide that
current federal smoking legislation should not be construed to relieve any
person of liability under common or state law; to

                                       18

permit state and local governments to restrict the sale and distribution of
cigarettes and the placement of billboard and transit advertising of tobacco
products; to provide that cigarette advertising not be a deductible business
expense; to tax cigarettes on the basis of their "tar" and nicotine content; to
require the FTC to promulgate standards establishing maximum acceptable levels
of "tar," nicotine and "other incriminated agents" in cigarettes; to prohibit
the mailing of unsolicited samples of cigarettes; to impose an additional excise
tax on cigarettes; and to require that cigarettes be manufactured in a manner
that will cause them, under certain circumstances, to be self-extinguishing.

  Additional laws, regulations and policies intended to prohibit, restrict or
discourage smoking being proposed or considered by various federal, state and
local governments and agencies could, if adopted, have a material adverse effect
on the financial condition and results of operations of the Company. The Company
does not believe there are any additional such laws, regulations or policies
likely to be adopted in the next year which would have such a material adverse
effect.

  As a result of the growing concern over the asserted health effects of
smoking, in recent years the number of lawsuits against tobacco companies
seeking damages related to health effects alleged to have resulted from
cigarette smoking or exposure to cigarette smoking has increased. For additional
discussion of legal proceedings relating to Lorillard and the tobacco industry,
see Item 3 below.

  Advertising and Sales Promotion: Lorillard's principal brands are advertised
and promoted extensively. Introduction of new brands, brand extensions and
packings require the expenditures of substantial sums for advertising and sales
promotion, with no assurance of consumer acceptance. The advertising media
presently used by Lorillard include magazines, newspapers, out-of-home
advertising and point-of-sale display materials. Sales promotion activities are
conducted by distribution of samples and store coupons, point-of-sale display
advertising, advertising of promotions in print media, and personal contact with
distributors, retailers and consumers.

  Distribution Methods: Lorillard distributes its products through direct sales
to distributors, who in turn service retail outlets, and through chain store
organizations and vending machine operators, many of whom purchase their
requirements directly, and by direct sales to the U.S. Armed Forces. Lorillard's
tobacco products are stored in public warehouses throughout the country to
provide for rapid distribution to customers.

  Lorillard has approximately 1,700 direct customers and is not dependent on any
one customer or group of customers. Lorillard does not have any backlog orders.

  Tobacco and Tobacco Prices: The two main classes of tobacco grown in the
United States are flue-cured tobacco, grown mostly in Virginia, North Carolina,
South Carolina, Georgia and Florida; and burley, grown mostly in Kentucky and
Tennessee. Lorillard purchases flue-cured tobacco and burley tobacco for use in
cigarettes. Most of the tobacco of these classes used by Lorillard is purchased
by commission buyers at tobacco auctions. Lorillard also purchases various types
of Near Eastern tobacco, grown in Turkey and eight other Near Eastern countries.
In addition, Lorillard purchases substantial quantities of aged tobacco from
various sources, including cooperatives financed under the Commodity Credit
Corporation program, to supplement tobacco inventories.

  Due to the varying size and quality of annual crops and other economic
factors, tobacco prices in the past have been subject to fluctuation. Among the
economic factors are federal government control of acreage and poundage in the
flue-cured producing areas and poundage control in the burley areas. These
controls together with support prices have substantially affected the market
prices of tobacco. Pursuant to authorizations contained in federal legislation
enacted in 1986, the price support levels were reduced in 1986 with the intent
of making U.S.-produced tobacco more competitive. The approximate average
auction prices per pound for flue-cured tobacco was $1.728 in 1992 and $1.687 in
1993 and for burley tobacco was $1.815 in 1992 and $1.817 in 1993. The prices
paid by Lorillard have generally been consistent with this trend. Lorillard
believes that its current leaf inventories are adequately balanced for its
present production requirements. Because the process of aging tobacco

                                       19

normally requires approximately two years, Lorillard at all times has on hand
large quantities of leaf tobacco. See Note 1 of the Notes to Consolidated
Financial Statements, under Item 8 below, for inventory costing method.

  Prices: During 1993, the wholesale price of Lorillard's king size and 100/120
millimeter cigarettes decreased by the net amount of $13.05 and $14.55 per
thousand, respectively. On January 1, 1993 the wholesale price was increased
$2.10 per thousand cigarettes in relation to the increase in the federal excise
tax. For additional information on changes in cigarette pricing see Item 7,

Management's Discussion and Analysis of Financial Condition and Results of
Operations.

  Taxes: Federal excise taxes included in the price of cigarettes were increased
from $10.00 to $12.00 per thousand cigarettes effective January 1, 1993. Excise
taxes, which are levied upon and paid by the distributors, are also in effect in
the fifty states, the District of Columbia and many municipalities. The state
taxes generally range from 2.5 cents to 75 cents per package of twenty
cigarettes.

  Properties: The properties of Lorillard are employed principally in the
processing and storage of tobacco and in the manufacture and storage of
cigarettes. Its principal properties are owned in fee. With minor exceptions,
all machinery used by Lorillard is owned by it. All properties are in good
condition. Lorillard's manufacturing plant is located on approximately 79 acres
in Greensboro, North Carolina. This 942,600 square foot plant contains modern
high speed cigarette manufacturing machinery. Lorillard also has facilities for
receiving, processing and storing leaf tobacco in Danville, Virginia, containing
approximately 1,500,000 square feet. A modern research facility containing
approximately 82,000 square feet is also located at Greensboro.

  Lorillard leases a corporate office in Orangeburg, New York, an executive
office in New York City and sales offices in major cities throughout the United
States.

  Competition: Substantially all of Lorillard's products are sold within the
United States in highly competitive markets where its principal competitors are
the five other major U.S. cigarette manufacturers (Philip Morris, R.J. Reynolds
("RJR"), Brown & Williamson, American Brands and Liggett Group). For the
calendar year 1993, Lorillard ranked fourth in the industry with a 7.1% share of
the market based upon the Maxwell Consumer Report, a quarterly statistical
survey of the cigarette industry. Philip Morris and RJR account for
approximately 42.2% and 30.6%, respectively, of the U.S. cigarette market,
according to the Maxwell Consumer Report.

  The following table sets forth cigarette sales in the United States by the
industry and by Lorillard, as reported in the Maxwell Consumer Report. This
table indicates the relative position of Lorillard in the industry:


<TABLE>
<CAPTION>
                                                                   Lorillard to
                                          Industry    Lorillard      Industry
              Calendar Year                 (000)       (000)
- --------------------------------------------------------------------------------
<S>                                      <C>          <C>               <C>
1993 .................................   461,180,000  32,650,000        7.1%
1992 .................................   506,950,000  36,540,000        7.2%
1991 .................................   509,100,000  36,940,000        7.3%
</TABLE>


- ---------------

  The Bureau of Alcohol, Tobacco and Firearms reports Lorillard's share of total
taxable factory removals of all cigarettes to be 7.2% and 7.5% for 1992 and
1991, respectively. Data for 1993 is not currently available.

  The Maxwell Consumer Report divides the cigarette market into two price
segments, the premium price segment and the discount or reduced price segment.
According to the Maxwell Consumer Report the reduced price segment increased in
1993 to approximately 37% from approximately 30% of the market. Virtually all of
Lorillard's sales are in the premium price segment where Lorillard's share
increased from 10.0% in 1992 to 10.7% in 1993, according to the Maxwell Consumer
Report.

                                       20

                        LOEWS HOTELS HOLDING CORPORATION

  The subsidiaries of Loews Hotels Holding Corporation ("Loews Hotels"), a
wholly owned subsidiary of the Company, presently operate the following 14
hotels:


<TABLE>
<CAPTION>

                                                         Number of
                                                        Rooms (Year
    Name and Location                  Type               Opened)                 Owned,Leased or Managed
- -----------------------------------------------------------------------------------------------------------------
<S>                               <C>                    <C>              <C>
Loews Anatole                     Luxury                   1,620          Management contract expiring 2000 (3)
 Dallas, Texas                    Convention Hotel         (1979)

Loews Annapolis                   Luxury Hotel               217          Owned
 Annapolis, Maryland                                      (1986(2))

Loews Coronado Bay Resort         Luxury Hotel               450          Management contract expiring 2011,
 San Diego, California                                      (1991)        with renewal options for 10 years (3)

Loews Giorgio                     Luxury Hotel               197          Owned
 Denver, Colorado                                         (1986(2))

Howard Johnson Hotel (1)          Commercial Hotel           300          Owned
 New York, New York                                         (1962)

Loews Le Concorde                 Luxury Hotel               424          Land lease expiring 2069
 Quebec City, Canada                                      (1974(2))

Loews L'Enfant Plaza              Luxury Hotel               372          Management contract expiring 2003 (3)
 Washington, D.C.                                          (1973)

Loews Monte Carlo                 Resort Hotel               622          Lease expiring 2002, with renewal
 Monte Carlo, Monaco                                        (1975)        options for 20 years (4)

Loews New York                    First Class Hotel          765          Owned
 New York, New York                                        (1961)

Days Hotel (1)                    Commercial Hotel           366          Owned
 New York, New York                                        (1962)

Regency                           Luxury Hotel               496          Land Lease expiring 2013, with
 New York, New York                                        (1963)         renewal options for 47 years.

Loews Santa Monica Beach          Luxury Hotel               350          Management contract expiring 2007,
 Santa Monica, California                                  (1989)         with renewal options for 10 years.

Loews Vanderbilt Plaza            Luxury Hotel               342          Owned
 Nashville, Tennessee                                     (1984(2))

Loews Ventana Canyon Resort       Resort Hotel               398          Management contract expiring 2004,
 Tucson, Arizona                                           (1984)         with renewal options for 10 years (3)

- -------------
  (1) Operated by Loews Hotels under license agreements pursuant to which Loews
Hotels pays royalty fees on sales, as defined in the agreements, for the use of
the respective trade names, trademarks and other rights.
  (2) The Le Concorde, Giorgio, Vanderbilt Plaza and Annapolis Hotels were
acquired by Loews Hotels in 1987, 1989, 1989 and 1990, respectively.
  (3) These management contracts are subject to termination rights.

                                       21

  (4) An arbitration proceeding is pending concerning this lease in relation to,
among other things, rent payable under the lease and a contention by the ground
lessor that the lease was not properly renewed for periods subsequent to 1990.

</TABLE>


  The Monte Carlo hotel includes a casino in which coin operated gaming devices
are operated by a joint venture in which Loews Hotels is a co-venturer. In
addition, the hotels which are operated by Loews Hotels contain shops, a variety
of restaurants and lounges, and some contain parking facilities, swimming pools,
tennis courts and access to golf courses.

  The hotels owned by Loews Hotels (including those owned and leased to third
parties) are subject to mortgage indebtedness aggregating approximately
$72,653,000 at December 31, 1993 with interest rates ranging from 8.1% to 11%,
and maturing between 1996 and 1999. In addition, certain hotels are held under
leases which are subject to formula derived rental increases, with rentals
aggregating approximately $9,300,000 for the year ended December 31, 1993.

  Loews Hotels has leased to a joint venture the Sheraton New York and the
Sheraton Manhattan, in New York City, for terms expiring in 2002 and 2000,
respectively. The leases, which contain purchase options on the part of lessees,
are guaranteed by American Airlines, Inc. and Sheraton Corporation and provide
for payment of fixed aggregate annual rent and a percentage rental with
provisions for maximum fixed annual and percentage rents.

  Competition from other hotels, motor hotels and inns, including facilities
owned by local interests and by national and international chains, is vigorous
in all areas in which Loews Hotels operates. The demand for hotel rooms in many
areas is seasonal and dependent on general and local economic conditions. Loews
Hotels properties also compete with facilities offering similar services in
locations other than those in which the company's hotels are located.
Competition among luxury hotels is based primarily on location and service.
Competition among resort and commercial hotels is based on price as well as
location and service. However, the current oversupply of hotel rooms and the
reduced demand for hotel rooms due to weak economic conditions has intensified
the level of competition in all hotel categories, particularly with respect to
price. Because of the competitive nature of the industry, hotels must
continually make expenditures for updating, refurnishing and repairs and
maintenance, in order to prevent competitive obsolescence.

  Loews Hotels accounted for 1.35%, 1.47% and 1.48% of the Company's total
revenue for the fiscal years ended December 31, 1993, 1992 and 1991,
respectively.

                               BULOVA CORPORATION

  Bulova Corporation ("Bulova") is engaged in two lines of business. Bulova's
consumer products segment distributes and sells watches, clocks and watch parts
for consumer use. Its industrial and defense products segment manufactures and
sells electronic and mechanical time fuzes and electronic mine sensors for
national defense, as well as certain industrial products. Bulova accounted for
1.12%, 1.32%, and 1.21% of the Company's total revenue for the fiscal years
ended December 31, 1993, 1992 and 1991, respectively.
  Consumer Products: Bulova distributes and sells analog and analog-digital
quartz crystal watches, jewelry and various types of clocks. All watch movements
and cases and other components and all clocks are purchased from foreign and
domestic suppliers. Watches are sold by Bulova principally in the United States
and Canada. In most other areas of the world Bulova has appointed licensees who
market watches under Bulova's trademarks in return for a royalty. The consumer
products business is seasonal, with the greatest sales coming in the third and
fourth quarters in expectation of the holiday selling season. The consumer
products business is intensely competitive. The principal methods of competition
are price, styling, aftersale service, warranty and product performance.

  Defense Products: Defense sales account for approximately 84% of this
segment's sales and approximately 24% of Bulova's total sales in 1993. The
principal products of this segment are precision mechanical, electronic and
electro-mechanical timing devices. Approximately 68% of these sales were made to
the United States

                                       22

government and approximately 16% of sales were made to foreign governments. The
Department of Defense continued to purchase mechanical fuzes during 1993,
however, Bulova understands that the Department of Defense has made the decision
to phase out mechanical time fuzes, which had been this segment's principal
product for many years. Competition for contracts to produce electronic fuzes is
expected to be intense. Accordingly, no assurance can be given as to whether
Bulova will be awarded additional contracts or as to the profitability of any
additional contracts which may be awarded to it.

  To offset the decline in U.S. government defense spending, Bulova is seeking
to increase non-defense and commercial and industrial business by employing its
precision manufacturing capabilities. During 1993, non-defense industrial
products accounted for approximately 16% of this segment's sales, as compared to
4% in 1992. Industrial products included surgical instruments and printed wiring
boards.

  The backlog of defense products sales amounted to $44.6 and $56.0 million as
of December 31, 1993 and 1992, respectively. Approximately 76% of the current
backlog is expected to be filled during 1994. Any backlog for commercial orders
is not believed to be significant.

  The decrease in U.S. government spending has materially increased the level of
competition for defense business. The principal methods of competition are price
and product performance. Defense business represents mostly competitive fixed-
price contracts awarded by the United States government. Bulova competes with a
small number of competitors with respect to defense contracts, several of whom
have substantially greater resources and capabilities. In addition, Bulova
competes with former defense manufacturers as well as commercial companies for
its non-defense business.

  Patents, Research and Development: Bulova has various United States and
foreign patents expiring between 1994 and 2006 and various pending patent
applications.

  Properties: Bulova leases the primary facilities for its consumer products
segment which consist of an 80,000 square foot plant in Woodside, New York for
its principal executive and sales office, watch distribution, service and
warehouse purposes, a 71,000 square foot plant in Maspeth, New York for clock
service and warehouse purposes and a 25,000 square foot plant in Toronto, Canada
for watch and clock sales and service. Bulova's primary facility for its defense
products segment consists of its owned plant in Lancaster, Pennsylvania
aggregating 290,000 square feet. This facility is subject to mortgage
indebtedness of approximately $3,066,000 at December 31, 1993 with interest at
the prime rate, and maturing in the year 1997. Bulova also leases a 100,000
square foot warehouse located in Lancaster, Pennsylvania and 18.5 acres of land
for the storage of defense products located in West Willow, Pennsylvania.

                        DIAMOND OFFSHORE DRILLING, INC.

  The Company's wholly owned subsidiary, Diamond Offshore Drilling Inc.
("Diamond Offshore"), is engaged, through its subsidiaries, in the business of
owning and operating drilling rigs that are used primarily in drilling of oil
and gas wells on a contract basis for companies engaged in exploration and
production of hydrocarbons. The Company entered the drilling business in 1989
through the acquisition of 10 offshore rigs. Land rigs were acquired in 1990. An
additional 40 offshore rigs were acquired in January 1992 through the
acquisition of Odeco Drilling, Inc. ("Odeco"). Diamond Offshore accounted for
2.11%, 1.59%, and 0.47% of the Company's total revenue for the fiscal years
ended December 31, 1993, 1992 and 1991, respectively.

  Drilling Units and Equipment: Diamond Offshore currently owns and operates 39
mobile offshore drilling rigs (16 jackup rigs, 22 semisubmersible rigs and a
drillship), 19 land rigs and related equipment. An additional two offshore rigs,
which are inactive, are currently held for sale. Offshore rigs are mobile units
that can be relocated via either self propulsion or by the use of tugs enabling
them to be repositioned based on market demand.

  Jackup rigs stand on the ocean floor with their drilling platforms "jacked up"
on support legs above the water. They are best suited for drilling in water
depths of less than 300 feet. Nine of Diamond Offshore's jackup rigs

                                       23

are cantilevered rigs capable of over platform development drilling and workover
as well as exploratory drilling. Of Diamond Offshore's 16 jackup rigs, 14 are
located in the Gulf of Mexico and two are currently in South America.

  Semisubmersible rigs are supported by large pontoons and are partially
submerged during drilling for greater stability. They are generally designed for
deep water depths of up to 6,000 feet. Diamond Offshore operates three of the
world's thirteen fourth-generation semisubmersible rigs. These rigs are equipped
with advanced drilling equipment, are capable of operations in ultra deep waters
in severe weather environments, and command high premiums from operators. Of
Diamond Offshore's 22 semisubmersible rigs, 11 are currently located in the Gulf
of Mexico, four are currently located in the North Sea, three are currently
located in Brazil, three are currently located in Australia and one is currently
located in the Black Sea.

  Diamond Offshore's drillship is self-propelled and designed to drill in deep
water. Shaped like a conventional vessel, it is the most mobile of the major rig
types. Diamond Offshore's drillship is located in Indonesia.

  Diamond Offshore's land rigs are all located in the United States and are also
capable of mobilizing to different drilling sites.

  Drilling Contracts and Rig Utilization: Contracts for Diamond Offshore's
drilling rigs are offered worldwide for either a fixed term, which may range
from a few months to several years, or on a well-to-well basis.

  The following table sets forth the size and utilization rate of Diamond
Offshore's fleet for the years ended December 31, 1993, 1992 and 1991. Data for
1991 does not include the rigs acquired from Odeco in January 1992. The
utilization rate for a period is based on the ratio of days in the period during
which the rigs were earning revenues to the total days in the period during
which the rigs were available to work.


<TABLE>
<CAPTION>
                                                Years Ended December 31,
                                          -------------------------------------
                                             1993          1992          1991
                                          -------------------------------------

<S>                                         <C>           <C>           <C>
Jackups
  Rigs in fleet at year-end ..........        16            19             5
  Utilization during the year ........      79.6%         57.9%         71.7%

Semisubmersibles
  Rigs in fleet at year-end ..........        22            26             5
  Utilization during the year ........      71.9%         51.2%         73.3%

Land
  Rigs in fleet at year-end ..........        19            19            32
  Utilization during the year ........      44.3%         22.5%         32.7%
</TABLE>


  The following table shows, for each of Diamond Offshore's four types of
drilling rigs, the number of contract months available and the number of
contract months committed for 1994. Contract months available are based on rigs
that were marketed at December 31, 1993. Contract months committed are
determined on the basis of executed contracts at December 31, 1993 and do not
include customer option periods.


<TABLE>
<CAPTION>
                                                      -------------------------
                                                          Rig           Rig
                                                       Contract       Contract
                                                        Months         Months
                                                       Available      Committed
                                                      -------------------------

<S>                                                       <C>            <C>
Jackups ...........................................       192            24
Semisubmersibles ..................................       264            66
Drillship .........................................        12             4
Land ..............................................       108             3
</TABLE>


                                       24

  Competition: The oil and gas drilling business is dependent on the drilling
requirements of petroleum producers and is competitive in all of its phases.
Diamond Offshore competes with a large number of drilling contractors and must
continually allocate resources for technological changes, repairs and
maintenance. Diamond Offshore's rigs are generally of modern design and equipped
with the latest technology. Companies in the industry compete primarily on the
basis of equipment day-rates and mobilization fees, personnel competence and
equipment suitability and availability.

  Although utilization rates increased in 1993 with the rise in natural gas
prices in the Gulf of Mexico, the oversupply of drilling rigs and low crude oil
prices continue to depress conditions in the drilling industry. In view of the
worldwide oversupply of rigs and the surplus of oil, Diamond Offshore expects
that demand and compensation rates for its rigs could remain at depressed levels
in 1994 and continue to have a material adverse impact on its operations.

  Operating Risks and Regulation: Diamond Offshore's operations are subject to
the usual hazards incident to the drilling of oil and gas wells, such as
blowouts, cratering and fires. Diamond Offshore's offshore operations are also
subject to perils peculiar to marine operations, such as capsizing, collision,
grounding and adverse weather and seas. Any of these hazards can seriously
damage or destroy equipment, suspend drilling operations, and, through oil
spillage, cause pollution damage to offshore or inland waters or the property of
others. Diamond Offshore currently maintains insurance covering these risks,
including expropriation, confiscation and nationalization of certain equipment
in foreign waters. There is no assurance that insurance coverage will continue
to be available at rates considered reasonable or that the insurance will be
adequate to protect against liability and loss or damage resulting from all the
consequences of a significant incident.

  Diamond Offshore is subject to stringent laws relating to the equipment and
operation of vessels and drilling practices and methods. Additional governmental
legislation and regulations involving the petroleum industry could significantly
affect Diamond Offshore's operations.

  Properties: Diamond Offshore owns an 18,000 square foot building and 20 acres
of land in New Iberia, Louisiana for its offshore drilling warehouse and storage
facility, a 13,000 square foot building and 5 acres of land in Dyce, Scotland
for its North Sea operations and a 15,000 square foot building and 10 acres of
land in Alice, Texas for its onshore drilling office, warehouse and storage
facility. Diamond Offshore also leases 50,000 square feet of office space for
its corporate headquarters located in Houston, Texas and various warehouse and
storage facilities in Scotland and Brazil for its offshore drilling operations.

                                OTHER INTERESTS

  The Company owns approximately 20% of the outstanding common stock of CBS Inc.
("CBS"). Laurence A. Tisch, Chairman of the Board of Directors and Co-Chief
Executive Officer of the Company, is Chairman, President and Chief Executive
Officer of CBS. Preston R. Tisch, President and Co-Chief Executive Officer of
the Company, is also a director of CBS.

  The Company also owns a 49 percent common stock interest in a joint venture
which is engaged in the business of owning and operating six large crude oil
tankers that are used primarily to transport crude oil from the Persian Gulf to
a limited number of ports in the Far East, Northern Europe and the United
States.

  In addition, the Company owns a 161,000 square foot first class office
building which is leased to third parties.

                                       25

                               EMPLOYEE RELATIONS

  The Company, inclusive of its operating subsidiaries as described below,
employed approximately 27,100 persons at December 31, 1993 and considers its
employee relations to be satisfactory.

  Lorillard employed approximately 3,800 persons at December 31, 1993.
Approximately 1,600 of these employees are represented by labor unions under
separate contracts with many local unions expiring at varying times and
severally renegotiated and renewed.

  Lorillard has collective bargaining agreements covering hourly rated
production and service employees at various Lorillard plants with the Tobacco
Workers International Union, the International Brotherhood of Firemen and
Oilers, and the International Association of Machinists. Lorillard has a
retirement plan, a deferred profit sharing plan, and other benefits for its
hourly paid employees who are represented by the foregoing unions.

  Loews Hotels employed approximately 2,500 persons at December 31, 1993,
approximately 1,550 of whom are union members covered under collective
bargaining agreements. Loews Hotels has experienced satisfactory labor relations
and provides comprehensive benefit plans for its hourly paid employees.

  The Company maintains a retirement plan, group life, disability and health
insurance program and a savings plan for salaried employees. Lorillard and Loews
Hotels salaried employees also participate in these benefit plans.

  Diamond Offshore employed approximately 2,600 persons at December 31, 1993,
approximately 300 of whom are union members. Diamond Offshore has experienced
satisfactory labor relations and provides comprehensive benefit plans for its
employees.

  CNA and its subsidiaries employ approximately 16,800 persons and have
experienced satisfactory labor relations. CNA and its subsidiaries have
comprehensive benefit plans for substantially all of their employees including a
retirement plan, a savings plan, a disability program, a group life program and
a group health care program.

  Bulova and its subsidiaries employ approximately 1,000 persons, approximately
600 of whom are union members. Bulova and its subsidiaries have experienced
satisfactory labor relations. Bulova has comprehensive benefit plans for
substantially all employees.


I
tem 2. Properties.

  Information relating to the properties of Registrant and its subsidiaries is
contained under Item 1.


Item 3.  Legal Proceedings.

  1. CNA is involved in various lawsuits involving environmental pollution
claims and litigation with Fibreboard Corporation. Information involving such
lawsuits is incorporated by reference to Note 16 of the Notes to Consolidated
Financial Statements in Item 8.

  2. A number of lawsuits have been filed against Lorillard and other
manufacturers of tobacco products seeking damages for cancer and other health
effects claimed to have resulted from the use of cigarettes or from exposure to
tobacco smoke. Presently, forty-three such cases are pending in the United
States federal and state courts against manufacturers of tobacco products
generally; Lorillard is a named defendant in fourteen of these cases. Eighteen
of these cases, including four against Lorillard, have been commenced since
January 1, 1993. Plaintiffs have asserted claims based on, among other things,
theories of negligence, fraud, misrepresentation, strict liability, breach of
warranty, enterprise liability, civil conspiracy, intentional infliction of
harm, and failure to warn of the allegedly harmful and/or addictive nature of
tobacco products. Plaintiffs seek unspecified amounts in compensatory and
punitive damages in many cases, and in other cases damages are stated to amount
to as much

                                       26

as $100,000,000 in compensatory damages and $5,000,000,000 in punitive damages.
Two of these cases are set for trial in 1994. One such case has been tried
during 1994 in which the jury returned a verdict in favor of Lorillard. That
verdict is currently on appeal.

  One pending case, Broin v. Philip Morris Companies, Inc., et al. (Circuit
Court Dade County, Florida, filed October 31, 1991), is a purported class action
brought by thirty-one plaintiffs against Lorillard and other named defendants,
including other manufacturers of tobacco products, on behalf of flight
attendants claiming injury as a result of exposure to environmental tobacco
smoke in the cabins of aircraft. Plaintiffs seek an unspecified amount in
compensatory damages and $5,000,000,000 in punitive damages. The class action
allegations in the complaint were dismissed by the trial court, but this ruling
has been reversed by a Florida court of appeals and remanded to the trial court
for further consideration. Plaintiffs may now seek formal certification of a
class action.

  In addition to the foregoing cases, one pending case, Cordova v. Liggett
Group, Inc., et al. (Super. Ct. San Diego County, California, filed May 12,
1992), alleges that Lorillard and other named defendants, including other
manufacturers of tobacco products, engaged in unfair and fraudulent business
practices in connection with activities relating to the Council for Tobacco
Research-USA, Inc., of which Lorillard is a sponsor, in violation of a
California state consumer protection law by misrepresenting to or concealing
from the public information concerning the health aspects of smoking. Plaintiff
seeks an injunction ordering defendants to undertake a "corrective advertising
campaign" in California to warn consumers of the health hazards associated with
smoking, to provide restitution to the public for funds "unlawfully, unfairly,
or fraudulently" obtained by defendants, and to "disgorge" all revenues and
profits acquired as a result of defendants' "unlawful, unfair and/or fraudulent
business practices." An adverse development in this case could encourage the
filing of additional actions in other states with consumer protection laws
similar to California's.

  Several additional cases have been filed against Lorillard seeking damages for
cancer and other health effects claimed to have resulted from exposure to
asbestos fibers which were incorporated, for a limited period of time, almost
forty years ago, into the filter material used in one of the brands of
cigarettes manufactured by Lorillard. Presently eleven such cases are pending in
federal and state courts against Lorillard. Six such cases have been filed since
January 1, 1993. Allegations of liability against Lorillard include negligence,
strict liability, fraud, misrepresentation and breach of warranty. Plaintiffs
seek unspecified amounts in compensatory and punitive damages in many cases, and
in other cases damages are stated to amount to as much as $10,000,000 in
compensatory damages and $100,000,000 in punitive damages. Two of these cases
are currently set for trial in 1994. One such case has been tried during 1994 in
which the jury returned a defense verdict.

  Another pending case, Lacey v. Lorillard Tobacco, Inc., et al. (Circuit Court,
Fayette County, Alabama, filed in March 1994), alleges that the defendants,
Lorillard and two other cigarette manufacturers, did not disclose to the
plaintiff or other cigarette smokers in the State of Alabama the nature, type,
extent and identity of additives, additions, or additional substances that the
defendants allegedly caused or allowed to be made a part of cigarettes or
cigarette components. Plaintiff seeks certification of the case as a class
action, with the members of the class to be comprised of individuals who have
smoked or are continuing to smoke cigarettes manufactured for sale and sold in
the State of Alabama. Plaintiff requests injunctive relief requiring defendants
to list the additives, additions or additional substances that defendants have
caused or allowed to be placed onto or within cigarettes or cigarette components
manufactured for sale and sold in the State of Alabama. Plaintiff seeks monetary
damages on behalf of his individual claim and on behalf of each member of the
purported class arising out of the complaint's allegations not to exceed $48,500
for the individual claim or for any individual member of the class.

  One of the defenses raised by Lorillard in certain cases is preemption by the
Federal Cigarette Labeling and Advertising Act (the "Labeling Act"). Cipollone
v. Liggett Group, Inc., et al., was tried against Lorillard and two other
tobacco companies in the Unites States District Court, District of New Jersey,
in 1988. The trial resulted in a verdict in favor of Lorillard and another
tobacco company. A verdict of $400,000 was rendered in favor of the plaintiff
against the third defendant, Liggett Group, Inc., on a breach of express
warranty claim. The United States Court of Appeals for the Third Circuit later
reversed this judgment in favor of the plaintiff and remanded the case for a new
trial. The case was appealed to the United States Supreme Court where, on June

                                       27

24, 1992, the Court reversed in part, and affirmed in part, the Third Circuit
ruling concerning the extent to which the Labeling Act preempts certain tort
claims. The Supreme Court held in a plurality opinion that the Labeling Act, as
enacted in 1965, does not preempt common law damage claims but that the Labeling
Act, as amended in 1969, does preempt claims against tobacco companies arising
after July 1, 1969 which assert that the tobacco companies failed to adequately
warn of the alleged health risks of cigarettes, sought to undermine or
neutralize the Labeling Act's mandatory health warnings, or concealed material
facts concerning the health effects of smoking in their advertising and
promotion of cigarettes. The Supreme Court held that claims against tobacco
companies based on fraudulent misrepresentation, breach of express warranty, or
conspiracy to misrepresent material facts concerning the alleged health effects
of smoking are not preempted by the Labeling Act. The Supreme Court in so
holding did not consider whether such common law damage actions were valid under
state law. The effect of the Supreme Court's decision on pending and future
cases against Lorillard and other tobacco companies will likely be the subject
of further legal proceedings.

  The Cipollone case, however, will not be retried. On November 5, 1992, a
consent order dismissing the Cipollone case with prejudice and without costs was
entered by the District Court. Additional litigation involving claims such as
those held to be preempted by the Supreme Court in Cipollone could be encouraged
if legislative proposals to eliminate the federal preemption defense, pending in
Congress since 1991, are enacted. It is not possible to predict whether any such
legislation will be enacted.

  In addition to the defenses based on preemption under the Supreme Court
decision referred to above, Lorillard believes that it has a number of other
valid defenses to pending cases. These defenses, where applicable, include,
among others, statutes of limitations or repose, assumption of the risk,
comparative fault, the lack of proximate causation, and the lack of any defect
in the product alleged by a plaintiff. Lorillard believes, and has been so
advised by counsel, that some or all of these defenses may, in any of the
pending or anticipated cases, be found by a jury or court to bar recovery by a
plaintiff.

  In one recent smoking and health case in which Lorillard is not a defendant,
Horton v. The American Tobacco Company, et al. (Circuit Court Lafayette County,
Mississippi), a jury found in favor of plaintiffs but awarded no damages against
the defendant. The judgment in this case is under appeal by both parties. In
another smoking and health case in which Lorillard is not a defendant, Wilks v.
The American Tobacco Company, et al. (Circuit Court Washington County,
Mississippi), the trial court found that cigarettes are, as a matter of law,
"defective and unreasonably dangerous for human consumption" and held that the
defendant cigarette manufacturer would be absolutely liable for any injuries
caused by smoking. The court also struck all available state law defenses based
on decedent's conduct. However, the trial of this case resulted in a defense
verdict because the jury found that smoking was not the cause of plaintiff's
injury. Plaintiffs' motions for new trial and for judgment notwithstanding the
verdict were denied. Plaintiffs have filed a notice of appeal which is currently
pending.

  Smoking and health related litigation has been brought by plaintiffs against
Lorillard and other manufacturers of tobacco products for many years. While
Lorillard intends to defend vigorously all such actions which may be brought
against it, it is not possible to predict the outcome of any of this litigation.
Based upon the foregoing, however, management believes that the outcome of all
pending litigation should not have a material adverse effect on the financial
condition or results of operations of the Company. Any adverse development in
any of the foregoing matters, whether or not Lorillard is a party, could prompt
the filing of additional cases against Lorillard.

  A Grand Jury investigation is presently being conducted by the United States
Attorney's office for the Eastern District of New York regarding possible fraud
by Lorillard and other tobacco companies relating to smoking and health research
undertaken or administered by the Council for Tobacco Research-USA, Inc.
Lorillard is unable to predict the outcome of this investigation. An adverse
outcome in this investigation could result in criminal, administrative or other
proceedings against Lorillard.

  Lorillard received a Civil Investigative Demand ("CID") dated January 11,
1994, from the Antitrust Division of the United States Department of Justice.
The CID, which requests the production of certain documents, was issued in the
course of an antitrust investigation to determine whether Section 1 of the
Sherman Act, 15 U.S.C. Section 1, may have been violated by joint activity to
restrain competition in the manufacture and sale of

                                       28

cigarettes, including joint activity to limit or restrain research and
development of fire safe or self extinguishing cigarettes or product innovation.
Lorillard is presently scheduled to respond to the CID on May 9, 1994. This
investigation is in its preliminary stages and it is impossible at this time to
predict its ultimate outcome. An adverse outcome in this investigation could
result in civil or other proceedings against Lorillard.

  Management believes that the outcome of these pending investigations should
not have a material adverse effect upon the financial condition or results of
operations of the Company.


Item 4. Submission of Matters to a Vote of Security Holders.

  None.


<TABLE>
<CAPTION>
                      EXECUTIVE OFFICERS OF THE REGISTRANT

                                                                   First
                                                                   Became
      Name             Position and Offices Held     Age           Officer
- --------------------------------------------------------------------------------

<S>                   <C>                            <C>            <C>
Kenneth Abrams ....   Vice President-Personnel       60             1975
Gary W. Garson ....   Vice President and
                       Assistant Secretary           47             1988
Robert J. Hausman .   Vice President                 70             1973
Barry Hirsch ......   Senior Vice President and
                       Secretary                     60             1971
Herbert C. Hofmann    Senior Vice President          51             1979
John J. Kenny .....   Treasurer                      56             1991
Guy A. Kwan .......   Controller                     51             1987
John G. Malino ....   Vice President-Real
                       Estate                        54             1985
Stuart B. Opotowsky   Vice President-Tax             59             1987
Richard E. Piluso .   Vice President-Internal
                       Audit                         55             1990
Roy E. Posner .....   Senior Vice President and
                       Chief Financial Officer       60             1973
Dennis Smith ......   Vice President-Management
                       Information Services          47             1990
James S. Tisch ....   Executive Vice President       41             1981
Jonathan M. Tisch .   Vice President                 40             1987
Laurence A. Tisch .   Chairman of the Board and
                       Co-Chief Executive
                       Officer                       71             1959
Preston R. Tisch ..   President and Co-Chief
                       Executive Officer             67             1960
</TABLE>


  Laurence A. Tisch and Preston R. Tisch are brothers. Andrew H. Tisch and James
S. Tisch are sons of Laurence A. Tisch and Jonathan M. Tisch is a son of Preston
R. Tisch. None of the other officers or directors of Registrant is related to
any other.

  All executive officers of Registrant have been engaged actively and
continuously in the business of Registrant for more than the past five years.

  Officers are elected and hold office until their successors are elected and
qualified, and are subject to removal by the Board of Directors.

                                       29


                                    PART II


Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters.

Price Range of Common Stock

  Loews Corporation's common stock is listed on the New York Stock Exchange. The
following table sets forth the reported consolidated tape high and low sales
prices in each calendar quarter of 1993 and 1992:


<TABLE>
<CAPTION>
                                    1993                       1992
                        --------------------------------------------------------
                              High         Low          High            Low
- --------------------------------------------------------------------------------
<S>                          <C>          <C>          <C>            <C>
First Quarter .........      $120.25      $98.13       $114.50        $105.50
Second Quarter ........       110.88       92.75        118.63         103.50
Third Quarter .........        98.63       86.75        126.50         110.63
Fourth Quarter ........        98.50       90.50        125.25         109.00

</TABLE>



Item 6. Selected Financial Data.


<TABLE>
<CAPTION>

                                                          Years Ended December 31,
                              -----------------------------------------------------------------------------
                                    1993            1992            1991           1990            1989
- -----------------------------------------------------------------------------------------------------------
                                                    (In thousands, except per share data)

<S>                             <C>             <C>             <C>             <C>             <C>
Results of Operations:
  Revenues ..................   $13,686,777     $13,691,454     $13,620,264     $12,636,925     $11,436,722
  Income (loss) before
   cumulative effect of
   changes in accounting
   principles ...............       594,121         (22,097)        904,338         804,650         907,141
  Per share .................          9.27            (.33)          13.14           11.01           12.07
  Net income ................       594,121         122,614         904,338         804,650         907,141
  Per share .................          9.27            1.87           13.14           11.01           12.07
Financial Position:
  Total assets (a) ..........    45,849,752      43,555,514      42,684,157      38,359,766      34,651,369
  Long-term debt ............     2,195,670       1,759,595       1,944,710       1,826,378       1,865,552
  Shareholders' equity ......     6,127,198       5,526,990       5,667,072       5,043,397       4,813,994
  Cash dividends per share ..          1.00            1.00            1.00            1.00            1.00
  Book value per share ......         99.59           84.90           84.18           72.13           64.14
  Shares of common stock
    outstanding .............        61,525          65,099          67,320          69,917          75,059

  (a) Restated for change in accounting for reinsurance contracts in 1993.

  In 1993 the Company changed its method of accounting for reinsurance contracts
and certain investments in debt and equity securities. In 1992 the Company
changed its method of accounting for postretirement benefits, income taxes and
certain workers' compensation and disability claims. See Note 1 of Notes to
Consolidated Financial Statements.
</TABLE>


                                       30


Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

Liquidity and Capital Resources:

Insurance

  Property and casualty and life insurance operations are wholly owned
subsidiaries of CNA Financial Corporation ("CNA"). CNA is an 83% owned
subsidiary of the Company-
  For the year ended December 31, 1993, CNA reported a $251.7 million operating
loss net of tax (exclusive of realized gains/losses and accounting changes),
compared to $897.8 million for the prior year.
  In each of the last two years, results were adversely affected by substantial
additions to reserves for asbestos-related bodily injury claims. The 1993
operating loss reflects a third quarter $500 million addition to Continental
Casualty Company's ("Casualty") claim reserves, which resulted in a $270.1
million charge, or $4.21 per share, against the Company's net income. In 1992
Casualty also increased its claim reserves with respect to asbestos-related
bodily injury cases by $1.5 billion, resulting in an after-tax charge of $822.7
million, or $12.53 per share.
  These reserving actions were taken in recognition of Casualty's litigation
with Fibreboard Corporation ("Fibreboard"), a former asbestos manufacturer. In
February 1993, CNA reported that Casualty intended to discuss a global agreement
to settle third party asbestos-related bodily injury claims with Fibreboard. An
agreement in principle was reached in August 1993 and executed in December 1993
with Fibreboard, Pacific Indemnity Company (a subsidiary of Chubb Corporation)
and a negotiating committee of asbestos claimant attorneys.
  CNA worked aggressively throughout the year with all involved parties to reach
this settlement. Assuming final court approval, the Fibreboard agreement removes
a major source of financial uncertainty for CNA and enables management to focus
even more attention and resources on strengthening the economic value of CNA's
businesses. No material reserve increases are anticipated to fulfill CNA's
obligations in regard to Fibreboard liabilities. See Note 16 of the Notes to
Consolidated Financial Statements for a further discussion of Fibreboard.
  While CNA's 1993 and 1992 results were affected most significantly by the
Fibreboard litigation, they also reflect the impact of serious external
pressures on profitability throughout the insurance industry. Foremost among
these are the long standing cycle of inadequate pricing in property and casualty
commercial lines and low investment yields due to declining interest rates. In
addition, complex and costly litigation has been continuing, fueled by the
tendency of the courts to interpret insurance contracts beyond their stated
intent.
  CNA's commercial lines remain subject to an industry downcycle that has lasted
over seven years and has seriously depressed profitability. CNA cannot predict
when the current negative cycle will turn. The current phase of the downcycle
has been characterized by a difficult pricing environment caused by strong
market competitiveness, a trend toward alternative risk mechanisms such as self-
insurance and regulatory constraints on adequate premium rates, especially in
the workers' compensation line of business.
  Profitability for the life segment remains stable, although negatively
affected by intense competition, high health care costs and weak investment
yields. Increasing costs of health care have resulted in a continued market
shift away from traditional forms of health coverage toward managed care
products. The federal government's initiative to control health care costs and
provide universal access to health care was presented in 1993. The impact of
potential health care reform cannot be determined at this time. Such reform may
impact both individual and group accident and health, workers' compensation,
automobile liability and medical malpractice business of CNA. CNA has urged a
meaningful role for the private sector in any proposed plan. The present health
care system is clearly in need of reform, and CNA has emphasized that the
competitive strengths of the insurance industry must be an integral part of a
workable solution. CNA's ability to compete in this market will be increasingly
dependent on its ability to control costs through managed care techniques,
innovation, and quality customer focused service.
  While CNA's strong financial position continues to represent a major
competitive advantage, CNA continues to take a number of initiatives to respond
to the many uncertainties and changes impacting the insurance environment. One
of these has been to continue to focus on the risk characteristics and premium
rates in commercial lines. CNA will continue to seek business in lines where it
his sizable market share,

                                       31

substantial experience, and foresees clear profit potential over the long term.
The emphasis is on reasonable rates rather than volume growth.
  One of CNA's primary goals has been to provide more efficient and responsive
quality service to our customers. These actions include working closely with
insureds to reduce claims costs through loss control and fraud prevention;
providing professional services to self insured accounts and other alternative
markets; implementing medical and workers' compensation cost management
programs; and reinforcing business partnerships with the independent agents who
represent CNA and equipping them with new or upgraded products tailored to
specific customer needs.
  Additionally, CNA has increased the flexibility, productivity, and customer
focus of its employee force through less centralized decision making and more
widespread use of automation tools.
  CNA also continues to devote time and effort to legislative concerns in the
interests of a more equitable and stable insurance marketing climate. It has
enjoyed some success in enlisting support for workers' compensation reform in
several states and opposing unnecessary restrictions on the insurance industry
in others.
  CNA's property and casualty insurance subsidiaries' statutory surplus had
grown from $2.7 billion five years ago to $3.9 billion in 1991. In 1992,
property and casualty surplus declined to $3.1 billion, primarily due to the
$1.5 billion in asbestos reserves discussed above. In 1993 property and casualty
surplus rose to approximately $3.6 billion despite another $500 million increase
in asbestos reserves. Statutory surplus of CNA's life insurance subsidiaries
grew from $637 million at December 31, 1988 to over $1 billion at December 31,
1993.
  Included in the property and casualty surplus increases are capital
contributions from CNA to Casualty of $475 and $120 million in 1993 and 1990,
respectively. Dividends of $150, $100 and $130 million were paid to CNA by
Casualty in 1993, 1992 and 1991, respectively.
  Life statutory surplus includes capital contributions from Casualty of $100
million in 1990.
  CNA's general account investment portfolio is managed to maximize after tax
investment return, while minimizing credit risks, with investments concentrated
in high quality securities. CNA has the capacity to hold its fixed income
portfolio to maturity. However, securities may be sold as part of CNA's
asset/liability strategies or to take advantage of investment opportunities
generated by changing interest rates, prepayments, tax and credit
considerations, or other similar factors. Accordingly, the fixed income
securities are classified as available for sale.
  During 1993, CNA's consolidated investments increased by $2.9 billion, to
$25.4 billion. This increase is primarily due to investment of operating cash
flow and realized gains on sales of securities, $504 million of unrealized
appreciation due to reporting debt securities at fair value, in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 115, and $495 million
in net proceeds from borrowings. Consolidated investments consist primarily of
fixed income securities, which include bonds and redeemable preferred stocks.
The general account portfolio consists primarily of high quality marketable debt
securities, 96% of which are rated as investment grade primarily by nationally
recognized rating agencies. At December 31, 1993, tax-exempt securities and
short-term investments comprised approximately 19% and 28%, respectively, of the
general account's total investment portfolio compared to 42% and 20%,
respectively, at December 31, 1992. Historically, CNA has maintained short-term
assets at a level that provided for liquidity to meet its short-term
obligations, principally anticipated claim payout patterns. Throughout 1992 and
1993, the level of short-term investments has increased beyond that needed for
short-term liquidity. Though expected to result in a decline in investment
income in the near term, management believes that the increased concentration in
short-term investments will reduce the impact that a rise in interest rates
would have on its fixed income portfolio. At December 31, 1993, the major
components of the short-term investment portfolio were approximately $1.2
billion of U.S. Treasury bills and $4.5 billion of high grade commercial paper.
  As of December 31, 1993, in accordance with SFAS No. 115, CNA's general
account investments in bonds and redeemable preferred stocks were carried at a
fair value of $17.6 billion. In both 1992 and 1991 these securities were carried
at the lower of amortized cost or market value which amounted to $17.4 and $18.8
billion, respectively. This compares to fair values of $18.2 and $19.7 billion
on those respective dates. At December 31, 1993, fixed income securities
unrealized gains amounted to approximately $504 million, after realizing $741
million in capital gains from the bond portfolio during the year. This compares
to $846 and $931 million of unrealized gains at December 31, 1992 and 1991,
respectively. The gross unrealized gains

                                       32

and losses for the fixed income securities portfolio at December 31, 1993, were
$564 and $60 million, respectively, compared to $931 and $85 million,
respectively, at December 31, 1992.
  Net unrealized gains on general account bonds at December 31, 1993 include net
unrealized gains on high yield securities of $15 million, compared to $44
million at December 31, 1992. High yield securities are bonds rated as below
investment grade by bond rating agencies, plus private placements and other
unrated securities which, in the opinion of management, are below investment
grade. Carrying values of high yield securities in the general account were $727
million (fair value) at December 31, 1993, compared to $704 million (amortized
cost) at December 31, 1992.
  At December 31, 1993, total separate account investments amounted to $6.5
billion with taxable debt securities representing approximately 96% of the
separate accounts portfolio. Approximately 86% of separate account investments
are used to fund guaranteed investment contracts ("GIC's") for which CNA's life
insurance affiliate guarantees principal and a specified return to the
contractholders. At December 31, 1993, all fixed income securities in the GIC
portfolio were carried at fair value in accordance with SFAS No. 115 and
amounted to $5.4 billion. In both 1992 and 1991, these securities were carried
at the lower of amortized cost or market which amounted to $5.8 and $5.4
billion, respectively. This compares to market values of $6.0 and $5.6 billion
on those respective dates. At December 31, 1993, fixed income securities
unrealized gains amounted to approximately $148 million. This compares to $158
million in unrealized gains at December 31, 1992 and $203 million at December
31, 1991. The gross unrealized gains and losses for the fixed income securities
portfolio at December 31, 1993, were $163 and $15 million, respectively,
compared to $184 and $26 million, respectively, at December 31, 1992.
  At December 31, 1993 high yield securities in the GIC portfolio were carried
at fair value and amounted to $1,068 million. In 1992 and 1991, these securities
were carried at the lower of amortized cost or market value which amounted to
$779 and $809 million, respectively. Net unrealized gains on high yield
securities held in such separate accounts were $56 million at December 31, 1993,
compared to $28 million at December 31, 1992 and unrealized losses of $14
million at December 31, 1991.
  High yield securities generally involve a greater degree of risk than that of
investment grade securities. Expected returns should, however, compensate for
the added risk. The risk is also considered in the interest rate assumptions in
the underlying insurance products. At December 31, 1993, CNA's concentration in
high yield bonds, including separate accounts, was approximately 4.3% of its
total assets. In addition, CNA's exposure to the risks of the commercial
mortgage loan and real estate markets is substantially less than the industry
average. CNA's concentration in mortgage loans and real estate was less than 1%
of its total assets.
  Included in CNA's fixed income securities at December 31, 1993 (general and
GIC portfolios) are $4.4 billion of asset-backed securities, consisting of
approximately 47% in U.S. Government agency issued pass-through certificates,
47% in collateralized mortgage obligations ("CMO's"), and 6% in corporate asset-
backed obligations. The majority of CMO's held are U.S. Government agency
issues, which are actively traded in liquid markets and are priced monthly by
broker-dealers. At December 31, 1993, the fair value of asset-backed securities
exceeded amortized cost by approximately $87 million compared to $172 million
for the comparable period a year ago. CNA limits the risks associated with
interest rate fluctuations and prepayment by concentrating its CMO investments
in early planned amortization classes with wide bands and relatively short
principal repayment windows.
  Over the last few years, concern has been raised regarding the quality of
insurance company invested assets. At December 31, 1993, 52% of the general
account's debt securities portfolio was invested in U.S. Government and
affiliated securities, 25% in other AAA rated securities and 15% in AA and A
rated securities. DNA's GIC fixed income portfolio is comprised of 30% U.S.
Government and affiliated securities, 14% other AAA rated securities and 24% in
AA and A rated securities. These ratings are primarily from nationally
recognized rating agencies (94% of the general account portfolio and 93% of the
GIC portfolio).
 The liquidity requirements of CNA are met primarily by funds generated from
operations. The principal operating cash flow sources of CNA's property and
casualty and life insurance subsidiaries are premiums and investment income. The
primary operating cash flow uses are payments of claims, policy benefits and
operating expenses.
  For the year ended December 31, 1993, CNA's operating activities generated net
cash flows of $1.3 billion, compared to $1.0 and $1.8 billion in 1992 and 1991,
respectively. The increase in cash flow, as compared

                                       33

with 1992 is due primarily to federal income tax recoveries of $294 million
offset by a decrease of approximately $96 million in investment income received.
CNA believes that future liquidity needs will be met primarily from operations.
  Additional sources of cash flow include sales and maturities of investments,
and financing activities. CNA's debt position in relation to total capital is
low which allowed it to take advantage of the current borrowing opportunities at
favorable rates in the capital markets. As a result, on October 25, 1993, CNA
filed a shelf registration statement with the Securities and Exchange Commission
which made $900 million of debt securities available for issuance from time to
time. In addition $100 million from a previous shelf registration remained
available for issuance. In November 1993, CNA sold $250 million principal amount
of 6.3% notes, due 2003, and $250 million principal amount of 7.3% debentures,
due 2023, at an effective rate per annum of 6.4% and 7.3%, respectively. CNA
contributed $475 million of the proceeds from this offering to the capital of
Casualty. An additional $500 million of debt securities and/or preferred stock
remains available for issuance under the shelf registration statement.
  Net cash flows are invested in marketable securities. Investment strategies
employed by CNA's insurance subsidiaries consider the cash flow requirements of
the insurance products sold and the tax attributes of the various types of
marketable investments.

Cigarettes

  Lorillard, Inc. and subsidiaries ("Lorillard")-
  Funds from operations continue to exceed operating requirements. Lorillard
generated net cash flow from operations of approximately $538 million for the
year ended December 31, 1993, compared to $595 million for the prior year. No
material capital expenditures are anticipated during 1994.
  For a number of years through 1992 leading cigarette marketers, including
Lorillard, had increased the price of their premium brands. For the period 1982
to 1992 the annual price increase for Lorillard's premium brands averaged
approximately 10%. Lorillard's cash flows from operations during this period
benefited significantly from these price increases since virtually all of
Lorillard's sales are in the premium priced segment, with Newport accounting for
more than two-thirds of Lorillard's total unit sales.
  On April 2, 1993, Philip Morris USA, the largest marketer of premium priced
cigarettes in the United States, announced significant changes in pricing
policies for its premium priced brands, including a decision to reduce the
average price of its Marlboro brand through various price promotions. Philip
Morris stated that it "expects to forego further price increases on premium
brands for the foreseeable future." R.J. Reynolds Tobacco Co., the second
largest U.S. marketer of premium priced cigarettes, announced that it would take
appropriate steps to maintain its competitive position.
  Philip Morris and R.J. Reynolds subsequently announced new lower pricing
policies to replace these promotions. Effective August 9, 1993 Lorillard reduced
its premium brand wholesale cigarette unit prices by approximately 25% to
maintain its competitive position. These price moves have established two price
tiers for the industry, eliminating much of the price confusion in the market
place, and substantially narrowing the price gap between premium and discount
cigarettes. These developments may tend to stabilize volume and perhaps slow the
rapid growth of discount cigarettes. While promotional spending can be reduced,
the overall impact of the new lower pricing will substantially reduce
Lorillard's revenues, income contribution and cash flow.
  In November 1993, Philip Morris, R.J. Reynolds and Lorillard announced a price
increase of $2.00 per thousand cigarettes.
  Forty-four lawsuits are pending in U.S. federal and state courts against
cigarette manufacturers seeking damages for cancer or other health effects
claimed to have resulted from the use of or exposure to cigarettes or other
tobacco products. Lorillard is a defendant in 14 such cases. Lorillard is also a
defendant in 10 lawsuits seeking damages for health effects claimed to have
resulted from exposure to asbestos fibers which were incorporated, for a limited
period of time almost forty years ago, into the filter material used in one
brand of cigarettes manufactured by Lorillard. Plaintiffs seek unspecified
amounts of compensatory and punitive damages in many cases, and in other cases
damages are stated to amount to as much as $100 million in compensatory damages
and as much as $5 billion in punitive damages.

                                       34

  To date, no lawsuit has resulted in damages being awarded against Lorillard.
Two cases, tried in late 1993 and January 1994, resulted in verdicts in favor of
Lorillard. However, the fact that a cigarette manufacturer prevails in a case
does not necessarily mean that a cigarette manufacturer will prevail in future
cases; likewise, a loss in any of the pending cases would not necessarily mean
that additional cases will be lost. Lorillard intends to defend vigorously all
product liability lawsuits filed against it.

Hotels

  Loews Hotels Holding Corporation and subsidiaries-
  Funds from operations continue to exceed operating requirements. Funds for
future capital expenditures and working capital requirements are expected to be
provided from operations.

Watches and Other Timing Devices

  Bulova Corporation and subsidiaries ("Bulova"). Bulova is a 97% owned
subsidiary of the Company.
  Competition and oversupply of watch products continue to adversely affect
Bulova. The defense products segment continues to be adversely impacted by the
contraction of defense spending by the United States government. Bulova may
require additional working capital advances from the Company from time to time.
While the Company has no obligation to enter into or maintain arrangements for
any further funding requirements, it is anticipated that it would be provided
through various arrangements with Bulova.

Drilling

  Diamond Offshore Drilling, Inc. and subsidiaries ("Diamond Offshore")-
  Oversupply of drilling rigs and low crude oil prices continue to depress
conditions in the drilling industry and to adversely impact Diamond Offshore. In
1993 drilling activity in the Gulf of Mexico increased due primarily to higher
natural gas prices. This improvement enabled Diamond Offshore to generate
sufficient funds from operations to meet its operating requirements. Although
funds for future capital expenditures and working capital requirements are
expected to be provided from operations, Diamond Offshore may require additional
advances from the Company due to the cyclical nature of the industry.

Parent Company

  During 1993 the Company purchased 3,574,000 shares of its outstanding Common
Stock at an aggregate cost of approximately $336.3 million. The funds required
for such purchases were provided from working capital. Depending on market
conditions, the Company, from time to time, may purchase additional shares in
the open market or otherwise.
  In February 1993 the Company redeemed, at par, its outstanding 10%
subordinated notes due 1996. In April 1993 the Company redeemed, at 105.8%, its
outstanding 9% senior sinking fund debentures due 2016. The aggregate cost of
these redemptions totaled $368 million and was provided from internally
generated funds.
  In June 1993 the Company sold $300 million principal amount of 7.6% senior
notes due 2023 at an effective rate of 7.8% per annum. In October 1993 the
Company sold $400 million principal amount of 7% senior notes due 2023 (the "7%
Notes") at an effective rate of 7.2% per annum. The Company currently has an
aggregate $300 million of debt securities and/or preferred stock available for
issuance under a shelf registration statement.
  In November 1993 the Company redeemed all of its currently outstanding zero
coupon convertible subordinated notes due 2004 for an aggregate redemption price
of approximately $411 million. The Company used the net proceeds received from
the sale of the 7% Notes, together with general corporate funds, to redeem these
notes.

                                       35

Results of Operations:

  Revenues declined by $4.7 million and increased by $66.5 million as compared
to 1992 and 1991, respectively. Income before accounting changes increased by
$616.2 million and decreased by $310.2 million, as compared to 1992 and 1991,
respectively.

Insurance

  Property and casualty revenues increased by $211.0 million and decreased by
$319.4 million, or 2.7% and 3.8%, as compared to 1992 and 1991, respectively.
  Property and casualty premium revenues decreased by $78.5 and $380.2 million,
or 1.2% and 5.7%, as compared to 1992 and 1991, respectively. The decrease from
1992 was principally attributable to increased utilization of a high deductible
program for large commercial accounts. This accounted for $235 million in
reduced premiums. Involuntary risks premiums were $182 million below the prior
year primarily due to a decline in involuntary workers' compensation premiums
recorded for the current and previous years. Small commercial accounts premiums
declined by $70 million. These declines were partially offset by growth in
professional and specialty lines and commercial reinsurance assumed premiums of
$217 million, group accident and health of $75 million and personal lines
packages premiums of $63 million. Property and casualty investment income was
down 13.4% from $1,224 million reported in 1992 and down 17.4% from 1991.
Investment income decreased primarily due to the continuing general decline in
interest rates and an increase in short-term investments (excluding investments
relating to loaned securities) from $3.0 billion at December 31, 1992 to $5.1
billion at December 31, 1993.
  Life insurance revenues increased by $6.8 and $190.9 million, or 0.2% and
7.3%, as compared to 1992 and 1991, respectively. Life premium revenues for 1993
were approximately the same as 1992, and increased by approximately $122.7
million, or 5.4%, as compared to 1991.
 Property and casualty underwriting losses were $1,791.8 million in 1993,
compared to $2,999.6 and $1,224.7 million in 1992 and 1991, respectively. The
combined ratio is the sum of the loss ratio and the expense ratio. The loss
ratio is the percentage of incurred claims and claims adjustment expense to
premiums earned. The expense ratio is the percentage of underwriting expenses,
including the change in deferred acquisition costs, to premiums earned. The
combined ratio was 126.4 for 1993 compared with 144.8 and 116.3 for 1992 and
1991, respectively. As previously discussed, the primary reason for the 1993 and
1992 poor operating results was the addition of $500 million in underwriting
losses related to Fibreboard in the third quarter of 1993 and $1.5 billion in
the fourth quarter of 1992.
  Catastrophe losses for 1993 were approximately $74 million, compared with $270
million in 1992. CNA's 1992 catastrophe losses related primarily to Hurricane
Andrew. For the Los Angeles area earthquake and winter storms occurring in the
first quarter of 1994, CNA has recorded losses on reported claims of
approximately $65 million. Further loss development related to unreported
claims, including assumed reinsurance, is estimated at approximately $35
million.
  Property and casualty pre-tax results include losses for involuntary risks of
$80.8 million in 1993. Involuntary risk charges were $257.3 and $267.0 million
in 1992 and 1991, respectively. Involuntary risks include mandatory
participation in residual markets, statutory assessments for insolvencies of
other insurers and other involuntary charges. CNA's share of involuntary risks
is generally a function of its share of the voluntary market by line of
insurance in each state. CNA records the estimated effects of its mandatory
participation in residual markets on an accrual basis. These estimates are
adjusted as premium, claim and expense activity is received from the residual
markets' administrators. CNA records assessments for insolvencies as they are
paid rather than on an accrual basis. Such an accrual process would be very
difficult, as past experience is not a reliable indicator of future activity.
Further, information currently available from all the states' life and property
and casualty guarantee funds is fairly limited and would not provide reliable
data on which to base an estimated liability. Many states allow recovery of
insolvency assessments by a direct offset to premium taxes or a separate policy
surcharge. In addition, some states assess prospectively based on current
premiums written. Thus, it would be unclear whether or not future assessments
should be accrued on a current basis as they do not necessarily represent a
liability until assessed. In any event, CNA believes that any potential
estimated necessary liability would not be material.

                                       36

  Property and casualty underwriting losses include reserve increases
(decreases) related to prior years, net of reinsurance recoverable, of $590,
$1,617 and $(106) million for the years 1993, 1992 and 1991, respectively. This
reserve development includes $601, $1,689 and $48 million for asbestos claims,
primarily representing reserve additions related to the Fibreboard litigation as
discussed above. Adverse reserve development for reported environmental
pollution claims and claims expenses totaled $107, $48 and $47 million,
respectively. In 1993, CNA allocated approximately $340 million of claim
reserves for unreported environmental pollution claims. Adverse reserve
developments for asbestos and environmental pollution claims were offset, in
part, by favorable development in other lines. For 1993, favorable trends were
represented primarily by positive severity experience in professional liability
lines and improvement in involuntary workers' compensation experience, resulting
in reserve decreases of $182 and $148 million, respectively. See Note 16 of the
Notes to Consolidated Financial Statements for further discussion of asbestos

and environmental pollution exposures.
  In early 1993, CNA began a program of realigning its portfolio, which resulted
in realizing gains in its investment portfolio that increased Casualty's
statutory surplus. Casualty sold approximately $35.4 billion of fixed income and
equity securities in 1993, realizing pre-tax net gains of $741.3 million. Of the
$35.4 billion of securities sold, approximately $11.5, $13.5 and $5.8 billion
were from the U.S. Treasury, Government mortgage-backed and tax-exempt municipal
bond portfolios, respectively. The $2.1 billion increase in short-term
securities since December 31, 1992 has been invested primarily in U.S. Treasury
bills and high grade commercial paper. In addition to reducing the impact that a
rise in interest rates would have on the fixed income portfolio, the increase in
taxable short-term securities and the decrease in tax-exempt investments will
allow the Company to minimize additional alternative minimum tax credit. Since
the portfolio is extremely liquid, CNA has the flexibility to shift quickly into
higher yielding investments, as the economic environment warrants.

Cigarettes

  Revenues decreased by $276.5 and $100.6 million, or 12.7% and 5.0%, as
compared to 1992 and 1991, respectively. Income before accounting changes
decreased by $183.9 and $89.5 million, or 35.1% and 20.8%, as compared to 1992
and 1991, respectively.
  Revenues decreased, as compared to 1992, by approximately $106.0 million, or
4.9%, due to a reduction in unit prices as well as a decline of approximately
$235.5 million, or 10.8%, due to lower unit sales volume, partially offset by
higher federal excise taxes amounting to $65.0 million, or 3.0%. Compared to
1991, revenues declined by approximately $229.6 million, or 11.4%, due to lower
unit sales volume, partially offset by an increase of approximately $129.0
million, or 6.4%, due to price increases. The price increases over 1991 include
approximately $65.0 million, or 3.2%, from the increase of federal excise taxes
of $2.00 per thousand cigarettes on January 1, 1993.
  Lorillard's sales volume has declined 10.4% and 11.4% as compared to 1992 and
1991, respectively. Unit sales volume of the U.S. cigarette industry has
declined by 9.0% and 9.4% over the same period. Lorillard's declining sales
volume reflects a continuing trend of lower consumer cigarette consumption as
well as an increase in industry discount brand sales. The discount brand
category's share of industry sales had increased from an average of 30% during
1991 to an average of 37% during 1993. As at December 31, 1993, discount brands
represented 33% of industry sales. Virtually all of Lorillard's sales are in the
premium brand category.
  Newport, a premium brand which accounts for two-thirds of Lorillard's unit
sales, declined 7.8% as compared to 6.1% versus 1991. As a result of the
accelerated growth of discount brands and continued decline in consumption
during the first seven months of 1993, Newport and other Lorillard premium brand
unit sales were affected. With the industry-wide list price reduction of premium
price brands, effective August 9, 1993, the growth rate of discount brands
appears to have slowed and Lorillard's product line has benefited modestly in
terms of unit sales. These pricing changes have reduced industry profit margins.
  Although Newport declined in unit sales, this decrease was less than the
overall industry decline, and resulted in a share of total industry sales of
4.91% versus 4.85% in 1992, an increase of .06%. On an overall basis,
Lorillard's premium brands compared favorably with the industry's rate of
decline for this segment, a loss of 17.7% for the industry versus 11.2% for
Lorillard.

                                       37

  It is expected that lower consumer cigarette consumption will continue to
influence overall industry unit volume and the discount category will be a
significant influence in overall sales.

  U.S. federal excise taxes on cigarettes increased $2.00 per thousand effective
January 1, 1993. The current administration's efforts to reduce the federal
deficit and to enact health care reform has led to further proposals to increase
the excise tax. The effects of any additional federal tax increases, as well as
increases by state and local taxing authorities, or manufacturers' price
increases cannot be determined, but it is likely they would add to the overall
industry decline and the growth in the discount category.

Hotels

  Revenues decreased by $16.2 and $15.7 million, or 8.0% and 7.8%, as compared
to 1992 and 1991, respectively. Results from operations before accounting
changes declined $3.7 and $6.6 million, as compared to 1992 and 1991,
respectively.
  Oversupply of hotel rooms and the highly competitive nature of the hotel
industry continue to adversely affect average room rates. Although demand has
increased in some areas, it has not compensated for the lower average room
rates.
  Revenues declined due primarily to lower occupancy rates at the Loews Monte
Carlo Hotel resulting from the depressed general economic conditions in southern
Europe as well as the impact of a weak Italian Lira and resulting absence of
Italian tourist business on the Riviera. In addition, average room rates
declined at North American properties, partially offset by increased occupancy
rates. Results from operations before accounting changes declined due primarily
to the lower revenues. The prior year included a charge of $3.7 million relating
to renegotiation of a hotel land lease.

Watches and Other Timing Devices

  Revenues decreased by $27.8 and $10.8 million, or 15.4% and 6.5%, as compared
to 1992 and 1991, respectively. Results from operations before accounting
changes decreased by $2.0 and increased by $0.5 million, as compared to 1992 and
1991, respectively.
  Revenues and results from operations declined due primarily to lower
industrial and defense sales volume related to a $19.5 million payment by the
U.S. government in 1992 in relation to a favorable settlement of defense
contract claims. This benefit was partially offset by a charge of approximately
$2.4 million for the write-off of parts inventory and equipment related to these
contracts, as well as a continuing decline of defense business. Watch and clock
unit sales volume also declined in 1993, partially offset by a gain on sale of
an inactive defense manufacturing facility and accrual of environmental costs in
1992. Results from operations increased, as compared to 1991, due to the gain
from asset dispositions and lower interest expense, partially offset by lower
results from Bulova's consumer products division.

Drilling

  Revenues increased by $70.5 and $223.7 million, as compared to 1992 and 1991,
respectively. Net loss decreased by $34.6 million and increased by $5.4 million,
as compared to 1992 and 1991, respectively.
  Revenues increased and net loss declined, as compared to 1992, due to Gulf of
Mexico jackup rigs achieving nearly 98% utilization due to higher natural gas
prices and deployment to Mexico of jackup rigs under long term contracts. This
caused revenues and operating income to increase by approximately $38 million as
compared to 1992.
  Since this recovery, a number of jackup rigs have been mobilized to the Gulf
of Mexico from foreign locations. To date, the market has been able to absorb
this increase in supply but Diamond Offshore faces a risk that rates and
utilization can decline if the number of rigs available exceeds demand. This
risk is magnified since most Gulf of Mexico employment is short term, on a well
to well basis.
  Higher rig utilization and day rates in the Gulf of Mexico were partially
offset by adverse market conditions in the North Sea due primarily to changes in
the United Kingdom Petroleum Revenue Tax. In addition, regulatory changes will
require substantial capital expenditures for older rigs in order to obtain
licensing for

                                       38

operations in the North Sea. Diamond Offshore believes that it may be necessary
to mobilize its older rigs to new markets during the next year. It is likely
that the costs of these relocations will not be fully reimbursed by customers.
Diamond Offshore anticipates its three newest units will not require major
modifications and may continue to operate in this market.

  Results from operations also benefited from the parent company to retire
intercompany debt.
  Revenues increased in 1993 as compared to 1991, due primarily to the
acquisition of 40 offshore drilling rigs in January 1992. Net loss increased due
primarily to the corresponding increase in intercompany interest and higher
depreciation expenses related to the additional rigs.

Other

  Revenues increased by $27.5 and $98.4 million, as compared to 1992 and 1991,
respectively. Results from operations decreased by $6.9 million and increased by
$77.7 million, as compared to 1992 and 1991, respectively. Other operations
consist primarily of investment income of non-insurance companies and the
Company's investment in CBS Inc.
  Revenues increased due primarily to higher earnings (accounted for under the
equity method) of CBS Inc. and higher realized investment gains, partially
offset by lower investment income. Results from operations before accounting
changes declined, as compared to 1992, due to increased interest expense
relating to the write off of unamortized discount for the early retirement of
debt, partially offset by the increased revenues. Results from operations
increased, as compared to 1991, due to the increased revenues, and lower
interest expense.

Accounting Developments:

  In November 1992, the Financial Accounting Standards Board ("FASB") issued
SFAS No.112, "Employers' Accounting for Postemployment Benefits." This Statement
establishes accounting standards for employers who provide benefits to former or
inactive employees after employment but before retirement (postemployment
benefits). Postemployment benefits include salary continuation, supplemental
unemployment benefits, severance benefits, disability-related benefits, job
training and counseling and continuation of benefits such as health care
benefits and life insurance coverage. This Statement applies to financial
statements for fiscal years beginning after December 15, 1993. This Statement
will not have a significant impact on the Company.
  In May 1993, the FASB issued SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan." This Statement addresses the accounting by creditors for
impairment of certain loans. It is applicable to all creditors and to all loans,
uncollateralized as well as collateralized, except large groups of smaller-
balance homogeneous loans that are collectively evaluated for impairment, loans
that are measured at fair value or at the lower of cost or fair value, leases,
and debt securities. The Statement requires that applicable loans be treated as
impaired when it is probable that a creditor will be unable to collect all
amounts (both principal and interest) contractually due. It requires that
impaired loans be measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate. Impairment may be
measured at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. In early 1994, the FASB began
deliberating certain amendments to this Statement. This Statement applies to
financial statements for fiscal years beginning after December 15, 1994. This
Statement will not have a significant impact on the Company.

                                       39


Item 8. Financial Statements and Supplementary Data.

Loews Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>                                                                       December 31,
                                                                      --------------------------------
(Amounts in thousands of dollars)                                           1993             1992
- ------------------------------------------------------------------------------------------------------
<S>                                                                                       (Restated)
Assets:                                                               <C>                 <C>

Investments (Notes 1, 2, 3 and 4):
  Fixed maturities available for sale, amortized cost of
   $17,132,086 and market value of $18,295,953, respectively ......   $17,657,856         $17,414,480
  Equity securities available for sale, cost of $1,028,733 and
   market value of $902,455, respectively .........................     1,240,256             859,879
  Mortgage loans and notes receivable .............................       121,439             152,328
  Policy loans ....................................................       173,606             177,811
  Other investments ...............................................        72,085              59,524
  Short-term investments ..........................................     8,025,201           5,712,212
                                                                      -------------------------------
     Total investments ............................................    27,290,443          24,376,234
Cash ..............................................................       155,703             105,308
Receivables (Note 1):
  Reinsurance .....................................................     2,951,644           3,249,849
  Other insurance .................................................     3,657,048           3,995,103
  Less allowance for doubtful accounts ............................      (117,324)           (110,420)
  Security sales ..................................................       467,329             137,054
  Federal income taxes (Note 8) ...................................        96,623             301,009
  Other, less allowance for doubtful accounts and cash discounts of
   $12,418 and $20,860 ............................................       419,413             516,790
Inventories (Notes 1 and 6) .......................................       241,287             260,019
Investment in associated companies (Note 5) .......................       490,654             422,941
Property, plant and equipment-net (Notes 1 and 7) .................     1,038,179           1,002,251
Deferred income taxes (Note 8) ....................................     1,074,410           1,109,532
Other assets (Notes 13 and 14) ....................................       564,600             467,498
Deferred policy acquisition costs of insurance subsidiaries (Note 1)      979,166             887,004
Separate Account business (Notes 1 and 3) .........................     6,540,557           6,835,342
                                                                      -------------------------------
     Total assets .................................................   $45,849,752         $43,555,514
                                                                      ===============================

See Notes to Consolidated Financial Statements.

                                                  40

<CAPTION>
                                                                                 December 31,
                                                                      --------------------------------
                                                                            1993             1992
- ------------------------------------------------------------------------------------------------------
                                                                                           (Restated)
<S>                                                                   <C>                 <C>
Liabilities and Shareholders' Equity:

Insurance reserves (Note 1):
  Claims and claims expense .......................................   $21,670,202         $20,733,438
  Future policy benefits ..........................................     2,735,691           2,486,279
  Unearned insurance premiums .....................................     2,556,015           2,422,149
  Policyholders' funds ............................................       477,095             538,373
                                                                      -------------------------------
     Total insurance reserves .....................................    27,439,003          26,180,239
Accounts payable and accrued liabilities ..........................       705,034             598,726
Payable for securities purchased ..................................       190,138             113,960
Securities sold under repurchase agreements (Note 2) ..............       613,250             610,987
Accrued taxes (Note 8) ............................................       290,861             205,520
Long-term debt, less unamortized discount (Notes 3 and 9) .........     2,195,670           1,759,595
Deferred credits and other liabilities (Note 13) ..................       635,667             612,826
Separate Account business (Notes 1 and 3) .........................     6,540,557           6,835,342
Participating policyholders' equity (Note 1) ......................       160,100             177,568
                                                                      -------------------------------
     Total liabilities ............................................    38,689,280          37,094,763
                                                                      -------------------------------
Minority interest .................................................     1,033,274             933,761
                                                                      -------------------------------
Commitments and contingent liabilities
 (Notes 1, 2, 4, 8, 9, 13, 14, 15 and 16)
Shareholders' equity (Notes 1, 2, 5, 9, 11 and 13):
  Common stock, $1 par value:
    Authorized-200,000,000 shares
    Issued and outstanding-61,524,700 and 65,098,700 shares .......        61,525              65,099
  Additional paid-in capital ......................................       210,289             163,076
  Earnings retained in the business ...............................     5,476,660           5,266,983
  Unrealized appreciation .........................................       406,736              31,832
  Pension liability adjustment ....................................       (28,012)
                                                                      -------------------------------
     Total shareholders' equity ...................................     6,127,198           5,526,990
                                                                      -------------------------------
     Total liabilities and shareholders' equity ...................   $45,849,752         $43,555,514
                                                                      ===============================
</TABLE>


                                                  41

Loews Corporation and Subsidiaries

STATEMENTS OF CONSOLIDATED INCOME


<TABLE>
<CAPTION>                                                       Years Ended December 31,
                                                  ---------------------------------------------------
(Amounts in thousands, except per share data)         1993                1992                1991
- -----------------------------------------------------------------------------------------------------
<S>                                               <C>                 <C>                 <C>
Revenues (Note 1):
  Insurance premiums:
    Property and casualty (net of insurance
     premiums ceded of $508,098, $487,381
     and $481,709) ............................   $ 6,273,654         $ 6,352,166         $ 6,653,846
    Life (net of insurance premiums ceded of
     $40,053, $41,884 and $25,869) ............     2,392,027           2,392,690           2,269,320
  Investment income, net of expenses (Note 2) .     1,377,754           1,584,321           1,736,806
  Realized investment gains (Note 2) ..........       862,797             407,247             412,155
  Manufactured products (including excise taxes
   of $379,361, $355,816 and $358,993) ........     2,055,084           2,363,431           2,167,410
  Other (Note 5) ..............................       725,461             591,599             380,727
                                                  ---------------------------------------------------
     Total ....................................    13,686,777          13,691,454          13,620,264
                                                  ---------------------------------------------------
Expenses (Note 1):
  Insurance benefits and underwriting expenses
   (net of reinsurance ceded of $177,550,
   $570,208 and $473,161) .....................     9,271,536          10,697,227           9,076,444
  Amortization of deferred policy acquisition
   costs ......................................     1,193,421           1,067,689           1,112,857
  Cost of manufactured products sold (Note 6) .       864,115             878,465             886,340
  Selling, operating, advertising and
   administrative expenses.....................     1,506,049           1,417,696           1,169,915
  Interest ....................................       162,298             148,843             163,559
                                                  ---------------------------------------------------
     Total ....................................    12,997,419          14,209,920          12,389,115
                                                  ---------------------------------------------------
                                                      689,358            (518,466)          1,231,149
                                                  ---------------------------------------------------
  Income taxes (benefits) (Note 8) ............        46,567            (388,691)            217,458
  Minority interest ...........................        48,670            (107,678)            109,353
                                                  ---------------------------------------------------
     Total ....................................        95,237            (496,369)            326,811
                                                  ---------------------------------------------------
Income (loss) before cumulative effect of
 changes in accounting principles .............       594,121             (22,097)            904,338
Cumulative effect of changes in accounting
 principles-net (Note 1) ......................                           144,711
                                                  ---------------------------------------------------
Net income ....................................   $   594,121         $   122,614         $   904,338
                                                  ===================================================
Earnings Per Share (Note 11):
  Income (loss) before cumulative effect of
   changes in accounting principles ...........         $9.27              $ (.33)             $13.14
  Cumulative effect of changes in accounting
   principles-net .............................                              2.20
                                                  ---------------------------------------------------
     Net income ...............................         $9.27               $1.87              $13.14
                                                  ===================================================

See Notes to Consolidated Financial Statements.
</TABLE>


                                                  42

Loews Corporation and Subsidiaries

STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                   Additional    Earnings      Unrealized    Pension    Common
                                         Common     Paid-In     Retained in   Appreciation  Liability  Stock Held
(Amounts in thousands)                    Stock     Capital     the Business (Depreciation) Adjustment in Treasury
- ------------------------------------------------------------------------------------------------------------------
<S>                                     <C>         <C>         <C>            <C>           <C>        <C>
Balance, December 31, 1990 ..........   $69,917     $130,301    $4,860,494     $(17,315)
  Net income ........................                              904,338
  Dividends paid, $1 per share ......                              (68,923)
  Purchases of common stock ........                                                                    $ 264,182
  Retirement of common stock held
   in treasury .....................     (2,359)      (5,685)     (231,873)                              (239,917)
  Net unrealized appreciation ......                                             14,896
  Equity in certain transactions of
   subsidiary companies (Note 5) ...                  37,546
                                        -------------------------------------------------------------------------
Balance, December 31, 1991 .........     67,558      162,162     5,464,036       (2,419)                   24,265
  Net income .......................                               122,614
  Dividends paid, $1 per share .....                               (65,810)
  Purchases of common stock ........                                                                      238,223
  Retirement of common stock held in
   treasury ........................     (2,459)      (6,172)     (253,857)                              (262,488)
  Net unrealized appreciation.......                                             34,251
  Equity in certain  transactions of
   subsidiary companies ............                   7,086
                                        -------------------------------------------------------------------------
Balance, December 31, 1992 .........     65,099      163,076     5,266,983       31,832
  Net income .......................                               594,121
  Dividends paid, $1 per share .....                               (64,289)
  Purchases of common stock ........                                                                      336,297
  Retirement of common stock held in
   treasury ........................     (3,574)     (12,568)     (320,155)                              (336,297)
  Accounting change (Note 1) .......                                            367,928
  Net unrealized appreciation ......                                              6,976
  Pension liability adjustment
   (Note 13) .......................                                                         $(28,012)
  Equity in certain transactions of
   subsidiary companies (Note 5) ...                  59,781
                                        -------------------------------------------------------------------------
Balance, December 31, 1993 .........    $61,525     $210,289    $5,476,660     $406,736      $(28,012)
                                        =========================================================================

See Notes  to  Consolidated  Financial  Statements.
</TABLE>


                                                       43

Loews Corporation and Subsidiaries

STATEMENTS OF CONSOLIDATED CASH FLOWS


<TABLE>
<CAPTION>                                                        Years Ended December 31,
                                                  ----------------------------------------------------
(Amounts in thousands)                                 1993                1992                1991
- ------------------------------------------------------------------------------------------------------
                                                                      ------------(Restated)----------
<S>                                               <C>                 <C>                 <C>
Operating Activities:
  Net income ..................................   $    594,121        $    122,614        $    904,338
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Cumulative effect of changes in
     accounting principles ....................                           (144,711)
    Undistributed (earnings) losses from
     unconsolidated affiliates ................        (50,045)            (26,170)             22,589
    Distribution of CBS equity earnings .......          3,787               3,029             417,597
    Provision for minority interest ...........         48,670            (107,678)            109,353
    Amortization of investments ...............        (95,262)           (127,416)           (144,697)
    Depreciation and amortization .............        135,101             138,370              99,701
    Realized investment gains .................       (862,797)           (407,247)           (412,155)
    Provision for deferred income taxes .......       (181,601)           (382,691)           (220,207)
  Changes in assets and liabilities-net:
    Reinsurance receivables ...................        298,185             457,892             213,036
    Other receivables .........................        349,971            (327,966)            250,208
    Deferred policy acquisition costs .........        (92,162)            (34,065)            (27,263)
    Insurance reserves and claims .............      1,229,486           2,496,282           1,419,342
    Accounts payable and accrued liabilities ..        403,027             (28,336)            102,754
    Other-net .................................       (119,803)             26,704             (52,871)
                                                  ----------------------------------------------------
                                                     1,660,678           1,658,611           2,681,725
                                                  ----------------------------------------------------
Investing Activities:
  Purchases of fixed maturities ...............    (42,893,379)        (32,343,428)        (38,115,486)
  Proceeds from sales of fixed maturities .....     41,339,798          32,854,377          32,039,457
  Proceeds from maturities of fixed maturities       2,349,370           1,414,987           2,751,185
  Purchases of equity securities ..............       (957,846)           (574,478)           (419,347)
  Proceeds from sales of equity securities ....        874,460             435,147             654,403
  Return of investment from CBS tender offer...                                                 12,666
  Purchases of property and equipment .........       (159,480)           (123,658)            (90,216)
  Proceeds from sales of property and equipment         20,276              17,184              22,411
  Securities sold under repurchase agreements .          2,263            (789,248)          1,381,439
  Change in short-term investments ............     (2,259,348)         (1,841,219)           (293,957)
  Change in other investments .................          8,146             151,821            (110,336)
  Purchase of business-net of cash acquired ...                           (372,242)
                                                  -----------------------------------------------------
                                                    (1,675,740)         (1,170,757)         (2,057,781)
                                                  -----------------------------------------------------
Financing Activities:
  Dividends paid to shareholders ..............        (64,289)            (65,810)            (68,923)
  Purchases of treasury shares ................       (336,297)           (238,223)           (264,182)
  Principal payments on long-term debt ........       (745,163)           (210,662)           (303,717)
  Issuance of long-term debt ..................      1,181,910               1,517             397,461
  Net decrease in short-term debt .............                                               (399,429)
  Receipts credited to policyholders ..........         47,481              47,293              45,204
  Withdrawals of policyholder account balances         (18,185)            (18,476)            (11,581)
                                                  ----------------------------------------------------
                                                        65,457            (484,361)           (605,167)
                                                  -----------------------------------------------------
Net change in cash ............................         50,395               3,493              18,777
Cash, beginning of year .......................        105,308             101,815              83,038
                                                  ----------------------------------------------------
Cash, end of year .............................   $    155,703        $    105,308        $    101,815
                                                  ====================================================

See Notes to Consolidated Financial Statements.
</TABLE>


                                                  44

Loews Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies-

  Principles of Consolidation-The consolidated financial statements include all
significant subsidiaries and all material intercompany accounts and transactions
have been eliminated. The equity method of accounting is used for investments in
associated companies in which the Company has an interest of 20% to 50%.

  Accounting Changes-Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 113, "Accounting and Reporting for
Reinsurance of Short-duration and Long-duration Contracts." This Statement
establishes the conditions required for a contract to be accounted for as
reinsurance, prescribes accounting and reporting standards for those contracts,
and requires that balances pertaining to reinsurance transactions be reported
"gross" on the balance sheet rather than reductions of reserves for claims and
claims expense, policy benefits of unearned premiums. At December 31, 1993,
reinsurance recoverables on insurance claim and policy benefits reserves of
$2,500,000,000 and ceded unearned premiums of $167,000,000 are reported as
assets. Prior years' amounts have been restated. As a result, assets and
liabilities at December 31, 1992 were each increased by $3,100,000,000.
  The provisions of SFAS No. 113 that pertain to risk transfer and recognition
of revenues and costs did not impact the Company's income or shareholders'
equity as all material reinsurance arrangements are prospective and provided for
the transfer of risk.
  Effective December 31, 1993, the Company adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." This Statement requires that
investments in debt and equity securities classified as available: for sale be
carried at fair value. Previously, fixed income securities classified as
available for sale were carried at the lower of aggregate amortized cost or fair
value. Unrealized gains and losses are reflected as a separate component of
shareholders' equity, net of deferred income taxes, participating policyholders'
and minority interests. The effect of adopting this Statement was to increase
shareholders' equity by $367,928,000 (net of $293,973,000 in deferred income
taxes, participating policyholders' and minority interests). The adoption of
this Statement did not impact net income. In accordance with the Statement,
prior period financial statements have not been restated. Separate Account
assets invested in debt securities have also been classified as available for
sale and are now carried at fair value. As a result, Separate Account
investments were increased by $189,000,000 with a corresponding increase to
Separate Account liabilities.
  In 1992 the Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" and SFAS No. 109, "Accounting for
Income Taxes." CBS Inc. has also adopted SFAS Nos. 106 and 109 as well as SFAS
No. 112, "Employers' Accounting for Postemployment Benefits" which requires
accrual of benefits to be provided to former or inactive employees after
employment, but before retirement. In addition, CNA Financial Corporation
("CNA") changed its method of accounting from reporting ultimate reserves for
fixed and determinable claims reserves related to workers' compensation lifetime
claims and accident and health disability claims to discounting such reserves
consistent with accounting practices on other similar fixed and determinable
claims. The cumulative effect as of January 1, 1992 of adopting these accounting
changes is as follows:


<TABLE>
<CAPTION>
                                                      In thousands    Per Share
                                                      ------------    ---------

<S>                                                    <C>              <C>
Postretirement benefits other than pensions (net
 of income tax benefit of $102,005) ...............    $(201,131)       $(3.06)
Accounting for income taxes .......................      128,991          1.96
Discounting for certain workers' compensation and
 disability claims (net of income tax expense
 of $135,200) .....................................      218,132          3.32
Postemployment benefits of CBS Inc. (net of income
 tax benefit of $94) ..............................       (1,281)         (.02)
                                                       ---------        ------
                                                       $ 144,711        $ 2.20
                                                       =========        ======
</TABLE>


                                       45

  Investments-Investments in securities, which are held principally by insurance
subsidiaries of CNA, are carried as follows:
  The Company believes it has the ability to hold all fixed income investments
until maturity. However, securities may be sold to take advantage of investment
opportunities generated by changing interest rates, prepayments, tax and credit
considerations, as part of the Company's asset/liability strategy, or for other
similar factors. As a result, the Company considers its fixed maturity
securities (bonds and redeemable preferred stocks) and equity securities as
available for sale and they are carried at fair value. In prior years, fixed
maturity securities were also considered as available for sale, but were carried
at the lower of aggregate amortized cost or fair value; in accordance with
guidance promulgated by the Securities and Exchange Commission. The amortized
cost of debt securities is adjusted for amortization of premiums and accretion
of discounts to maturity. Such amortization is included in investment income.
  Mortgage loans are carried at unpaid principal balances, adjusted for
amortization of premium or discount. Policy loans are carried at unpaid
balances. Short-term investments are carried at amortized cost, which
approximates market value.
  The cost of securities sold is determined by the identified certificate
method. The unrealized gain or loss on investments which are revalued to current
market values is net of applicable deferred income taxes and participating
policyholders' and minority interests and is reflected as part of shareholders'
equity in unrealized appreciation. Investments are written down to estimated
realizable values and losses are charged to income when a decline in value is
considered to be other than temporary.

  Insurance Operations-Premium revenue-Insurance premiums on property/casualty
and health insurance contracts (included in life premiums) are earned ratably
over the terms of the policies after provision for estimated adjustments on
retrospectively rated policies and deductions for ceded insurance. Revenues on
universal life-type contracts are comprised of contract charges and fees which
are recognized over the coverage period when assessed against the policyholders'
account balances. Other life insurance premiums are recognized as revenue when
due after deductions for ceded insurance.
  Claims and claims expense reserves-Claims and claims expense reserves, except
reserves for structured settlements, workers' compensation lifetime claims and
accident and health disability claims, are based on (a) case basis estimates for
losses reported on direct business, adjusted in the aggregate for ultimate loss
expectations, (b) estimates of unreported losses based upon past experience, (c)
estimates of assumed insurance, (d) estimates of future expenses to be incurred
in settlement of claims, and (e) estimates of claim recoveries. In establishing
these estimates, consideration is given to current conditions and trends as well
as past company and industry experience.
  Structured settlements have been negotiated for claims on certain
property/casualty insurance policies. Structured settlements are agreements to
provide periodic payments to claimants, which are fixed and determinable as to
the amount and time of payment. Certain structured settlements are funded by
annuities purchased from CNA's life insurance subsidiary.
Related annuity obligations are carried in future policy benefits reserves.
Obligations for structured settlements not funded by annuities are carried at
discounted values which approximate the alternative cost of annuity purchases.
Such reserves, discounted at interest rates ranging from 6.3 % to 7.5 %, totaled
$748,900,000 and $662,600,000 at December 31, 1993 and 1992, respectively.
  Workers' compensation lifetime claims and accident and health disability claim
reserves are discounted at interest rates ranging from 3.5% to 5.5% with 
mortality and morbidity assumptions reflecting current industry experience. Such
discounted reserves totaled $969,800,000 and $911,100,000 at December 31, 1993
and 1992 respectively.
  Amounts assuming the changes in accounting for discounting certain workers'
compensation and disability claims were applied retroactively to the year ended
December 31, 1991, in thousands of dollars except per share data, are as
follows:


<TABLE>
<CAPTION>
<S>                                                                  <C>
Pro forma consolidated net income ...............................    $941,730
  Per share .....................................................       13.69
  Net income per share as previously reported ...................       13.14
</TABLE>


                                       46

  Claims and claims expense reserves are based on estimates and the ultimate
liability may vary significantly from such estimates. Any adjustments that are
made to the reserves are reflected in operating income in the year such
adjustments are made.
  Future policy benefits reserves-Reserves for traditional life insurance
products are computed based upon net level premium methods using actuarial
assumptions as to interest rates, mortality, morbidity, withdrawals and
expenses. Actuarial assumptions include a margin for adverse deviations and
generally vary by plan, age at issue and policy duration. Interest rates range
from 3% to 10.5%, and mortality, morbidity and withdrawal assumptions reflect
CNA and industry experience prevailing at the time of issue. Renewal expense
estimates include the estimated effects of inflation and expenses beyond the
premium paying period.
  Reinsurance-CNA assumes and cedes insurance with other insurers and reinsurers
and members of various reinsurance pools and associations. CNA utilizes
reinsurance arrangements to limit its maximum loss, to provide greater
diversification of risk and to minimize exposures on larger risks. The
reinsurance coverages are tailored to the specific risk characteristics of each
product line with CNA's retained amount varying by type of coverage. Generally,
reinsurance coverage for property risks is on excess of loss, per risk basis.
Liability coverages are generally reinsured on a quota share basis in excess of
CNA's retained risk. Amounts recoverable from reinsurers are estimated in a
manner consistent with the claim liability associated with the reinsured policy.
  Deferred policy acquisition costs-Costs of acquiring insurance business, which
vary with and are primarily related to the production of such business, are
deferred. Such costs include commissions, premium taxes, and certain
underwriting and policy issuance costs. Property/casualty acquisition costs are
amortized ratably over the period the related premiums are recognized.
Anticipated investment income is considered in the determination of the
recoverability of deferred policy acquisition costs. Life acquisition costs are
capitalized and amortized based on assumptions consistent with those used for
computing policy benefit reserves. Acquisition costs on ordinary life business
are amortized over the assumed premium paying periods. Universal life and
investment annuity acquisition costs are amortized in proportion to the present
value of estimated gross profits over the products' assumed durations, which are
regularly evaluated and adjusted, as appropriate. To the extent that unrealized
gains or losses on available for sale securities would result in an adjustment
of deferred policy acquisition costs had those gains or losses actually been
realized, the related unamortized deferred policy acquisition costs are recorded
as an adjustment of the unrealized gains or losses included in shareholders'
equity.
  Restricted investments-On December 30, 1993, CNA deposited $986,800,000 in an
escrow account, pursuant to the Fibreboard Global Settlement Agreement, as
discussed in Note 16. The funds are included in short-term investments and are
invested in U.S. treasury securities. The escrow account is the prefunding
mechanism to the trust fund for future claimants.
  Participating business-Participating business represented 1.1%, 1.2% and 1.6%
of CNA's gross life insurance in force and 1.1%, 1.2% and 1.4% of life insurance
premium income for 1993, 1992 and 1991, respectively. Participating
policyholders' equity is determined by allocating 90% of related net income or
loss and unrealized investment gains or losses to such business, less dividends
determined by CNA's Board of Directors. In the accompanying Statements of
Consolidated Income, revenues and benefits and expenses include amounts related
to participating policies; the net income or loss allocated to participating
policyholders' equity is a component of insurance claims and policyholders'
benefits.
  Separate Account business-CNA's life insurance subsidiary, Continental
Assurance Company ("CAC"), issues certain investment and annuity contracts, the
assets and liabilities of which are legally segregated and reflected in the
accompanying Consolidated Balance Sheets as assets and liabilities of Separate
Account business. CAC guarantees principal and a specified return to the
contractholders of approximately 86% of the Separate Account business.
Substantially all assets of the Separate Accounts are carried at fair value.
Separate Account liabilities are carried at the higher of contract value or the
fair value of the underlying assets. Investment income and gains and losses for
the Separate Account accrue to the contractholders and are therefore not
included in the Statements of Consolidated Income or Cash Flows except for
funding which may be required under the guarantees. Revenues to CNA from the
Separate Account business consist principally of administration fees.

                                       47

  Statutory capital and surplus-Statutory capital and surplus and net income
(loss), determined in accordance with accounting practice prescribed or
permitted by the Illinois Insurance Department, for property/casualty and life
insurance subsidiaries are as follows:


<TABLE>
<CAPTION>
                         Statutory Capital
                             and Surplus          Statutory Net Income (Loss)
                       ----------------------  ----------------------------------
                           December 31,             Years Ended December 31,
                       ----------------------  ----------------------------------
                         1993        1992         1993        1992        1991
                       ----------------------------------------------------------
                                            (In thousands)
<S>                    <C>         <C>           <C>       <C>           <C>
Property/casualty .... $3,598,415  $3,135,847    $120,710  $(1,043,050)  $716,950
Life ...............    1,021,970   1,002,985          99       11,831    113,288
</TABLE>


  Inventories-Tobacco products-These inventories, aggregating $174,377,000 and
$186,986,000 at December 31, 1993 and 1992, respectively, are stated at the
lower of cost or market, using the last-in, first-out (LIFO) method.
  Watches and other timing devices-These inventories, aggregating $52,109,000
and $59,322,000 at December 31, 1993 and 1992, respectively, are stated at the
lower of cost or market, using the first-in, first-out (FIFO) method.

  Property, Plant and Equipment-Property, plant and equipment is carried at cost
less accumulated depreciation. Depreciation is computed principally by the
straight-line method over the estimated useful lives of the various classes of
properties. Leaseholds and leasehold improvements are depreciated or amortized
over the terms of the related leases (including optional renewal periods where
appropriate) or the estimated lives of improvements, if less than the lease
term.
  The principal service lives used in computing provisions for depreciation are
as follows:


<TABLE>
<CAPTION>
                                                                      Years
                                                                     --------
<S>                                                                  <C>
Buildings and building equipment .................................         40
Building fixtures ................................................   10 to 20
Machinery and equipment ..........................................    5 to 12
Hotel equipment ..................................................    4 to 12
Drilling equipment ...............................................   10 to 25
</TABLE>


  Research and Development Costs-Research and development costs are charged to
expense as incurred and amounted to $11,866,000, $11,521,000 and $11,476,000 for
the years ended December 31, 1993, 1992 and 1991, respectively.

  Reclassification-Certain amounts applicable to prior periods have been
reclassified to conform to the classifications followed in 1993.

                                       48

2. Investments-

   Investment income consisted of:


<TABLE>
<CAPTION>
                                                Years Ended December 31,
                                        ---------------------------------------
                                           1993          1992           1991
                                        ---------------------------------------
                                                     (In thousands)
<S>                                     <C>           <C>            <C>
Investment income:
  Fixed maturities:
    Bonds:
      Tax exempt ....................   $  504,896    $  728,031     $  638,110
      Taxable .......................      539,695       622,967        811,016
    Redeemable preferred stocks .....       21,231        11,207         13,734
  Equity securities .................       16,441        19,068         19,392
  Mortgage loans ....................       15,410        13,001         15,799
  Policy loans ......................       10,413        10,587         10,520
  Security repurchase transactions ..        6,249        18,627         44,373
  Short-term investments ............      281,401       177,923        217,676
  Other .............................       12,138        22,586         25,848
                                        ---------------------------------------
     Total investment income ........    1,407,874     1,623,997      1,796,468
Investment expenses .................       30,120        39,676         59,662
                                        ---------------------------------------
     Investment income-net ..........   $1,377,754    $1,584,321     $1,736,806
                                        =======================================

  Realized investment gains (losses) are as follows:

<CAPTION>
                                                Years Ended December 31,
                                        ---------------------------------------
                                            1993          1992          1991
                                        ---------------------------------------
                                                     (In thousands)
<S>                                     <C>           <C>            <C>
Fixed maturities ....................   $  765,848    $  303,622     $  441,858
Equity securities ...................      118,774        45,339          3,762
Guaranteed separate accounts ........                     35,496        (39,675)
Other ...............................      (21,825)       22,790          6,210
                                        ---------------------------------------
                                           862,797       407,247        412,155
Income taxes ........................     (300,002)     (132,980)      (140,607)
Allocated to participating
 policyholders ......................      (13,142)      (12,140)       (20,055)
Minority interest ...................      (87,752)      (39,785)       (48,411)
                                        ---------------------------------------
     Realized investment gains-net ..   $  461,901    $  222,342     $  203,082
                                        =======================================
</TABLE>


  Securities sold under agreements to repurchase represent the amounts of
securities which will be reacquired subsequently by certain insurance and non-
insurance subsidiaries as specified in the agreements.  Proceeds from these
transactions have been invested in short-term investments (principally
commercial paper and government securities) with maturities which correspond to
the repurchase dates.
  The carrying value of investments (other than equity securities) that have not
produced income for the last twelve months is $134,188,000 at December 31, 1993.
  Investment gains of $1,005,538,000 and losses of $120,916,000 were realized on
securities available for sale for the year ended December 31, 1993.  Total
investment gains of $459,000,000 and $614,307,000 and losses of $155,378,000 and
$172,449,000 were realized on sales of fixed maturities for the years ended
December 31, 1992 and 1991, respectively.

                                       49

  The amortized cost and market values of securities available for sale are as
follows:


<TABLE>
<CAPTION>
                                                                           Unrealized
                                                    Amortized     ------------------------------       Market
                                                       Cost            Gains            Losses          Value
                                                  -------------------------------------------------------------
                                                                          (In thousands)

                                                                         December 31, 1993
                                                                         -----------------
<S>                                               <C>                <C>               <C>           <C>
United States government and obligations of
 government agencies ..........................    $ 6,482,814       $   80,070        $  8,405      $ 6,554,479
Asset-backed ..................................      2,514,596           42,073           9,373        2,547,296
States, municipalities and political
 subdivisions-tax exempt ......................      4,725,384          316,717          27,260        5,014,841
Corporate .....................................      1,800,548           64,042          12,768        1,851,822
Other debt ....................................      1,163,454           80,033           2,053        1,241,434
Redeemable preferred stocks ...................        445,290            3,493             799          447,984
                                                   -------------------------------------------------------------
     Total fixed maturities ...................     17,132,086          586,428          60,658       17,657,856
Equity securities .............................      1,028,733          229,806          18,283        1,240,256
                                                   -------------------------------------------------------------
                                                   $18,160,819       $  816,234        $ 78,941      $18,898,112
                                                   =============================================================

<CAPTION>
                                                                         December 31, 1992
                                                                         -----------------
<S>                                                <C>               <C>               <C>           <C>
United States government and obligations of
 government agencies ..........................    $ 2,878,835       $   28,639        $  7,427      $ 2,900,047
Asset-backed ..................................      2,132,976           94,942          14,055        2,213,863
States, municipalities and political
 subdivisions-tax exempt ......................      9,501,741          712,962          52,276       10,162,427
Corporate .....................................      1,161,965           75,185          10,765        1,226,385
Other debt ....................................      1,171,407           52,748           2,295        1,221,860
Redeemable preferred stocks ...................        567,556            4,427             612          571,371
                                                   -------------------------------------------------------------
     Total fixed maturities ...................     17,414,480          968,903          87,430       18,295,953
Equity securities .............................        813,779          106,911          18,235          902,455
                                                   -------------------------------------------------------------
                                                   $18,228,259       $1,075,814        $105,665      $19,198,408
                                                   =============================================================
</TABLE>


  The amortized cost and market value of fixed maturities at December 31, 1993
and 1992 are shown below by contractual maturity.  Actual maturities differ from
contractual maturities because securities may be called or prepaid with or
without call or prepayment penalties.

<TABLE>
<CAPTION>
                                                                   December 31,
                                                  --------------------------------------------------------
                                                             1993                         1992
                                                  --------------------------------------------------------
                                                    Amortized       Market       Amortized        Market
                                                      Cost          Value          Cost           Value
                                                  --------------------------------------------------------
                                                                      (In thousands)
<S>                                                <C>            <C>            <C>            <C>
Due in one year or less ......................     $   687,704    $   702,683    $   819,504    $   831,731
Due after one year through five years ........       7,500,849      7,597,198      4,810,388      4,953,451
Due after five years through ten years .......       1,466,050      1,520,597      2,248,911      2,362,085
Due after ten years ..........................       4,962,887      5,290,082      7,402,701      7,934,823
Asset-backed securities not due at a single
 maturity date ...............................       2,514,596      2,547,296      2,132,976      2,213,863
                                                   --------------------------------------------------------
                                                   $17,132,086    $17,657,856    $17,414,480    $18,295,953
                                                   ========================================================
</TABLE>


                                                  50

3. Fair Value of Financial Instruments-

  SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires disclosure of fair value information whether or not recognized in the
balance sheet, for which it is practicable to estimate that value. In cases
where quoted market prices are not available, fair values may be based on
estimates using present value or other valuation techniques. These techniques
are significantly affected by the assumptions used, including the discount rates
and estimates of future cash flows. Accordingly, the estimates presented herein
are subjective in nature and are not necessarily indicative of the amounts that
the Company could realize in a current market exchange. SFAS No. 107 excludes
certain financial instruments and all nonfinancial instruments such as real
estate and insurance reserves from fair value disclosure. Thus, the aggregate
fair value amounts cannot be summed to determine the underlying economic value
of the Company.
  The carrying amounts and estimated fair values of the Company's financial
instruments are as follows:


<TABLE>
<CAPTION>
                                                                  December 31,
                                                  --------------------------------------------------------
                                                          1993                         1992
                                                  --------------------------------------------------------
                                                  Carrying      Estimated       Carrying       Estimated
                                                   Amount       Fair Value       Amount        Fair Value
                                                  --------------------------------------------------------
                                                                    (In thousands)
<S>                                               <C>            <C>            <C>            <C>
Financial Assets:
  Investments:
    Fixed maturities available for sale ......    $17,657,856    $17,657,856    $17,414,480    $18,295,953
    Equity securities available for sale .....      1,240,256      1,240,256        859,879        902,455
    Mortgage loans and notes receivable ......         74,816         77,914        103,018        104,937
    Policy loans .............................        173,606        163,566        177,811        167,894
    Other investments ........................         67,891         70,664         54,294         54,901
Separate Account assets:
  Fixed maturities available for sale ........      6,234,964      6,234,964      6,507,127      6,693,943
  Equity securities available for sale .......        145,663        145,663        112,511        112,594
  Other ......................................        159,930        168,570        215,704        215,727

Financial Liabilities:
  Premium deposits and annuity contracts .....        544,669        534,948        519,758        511,027
  Long-term debt .............................      2,182,210      2,284,651      1,742,799      1,826,894
  Separate Account liabilities:
    Guaranteed investment contracts ..........      4,875,440      5,178,817      5,531,806      5,782,639
    Deferred annuities........................         66,458         81,433         64,284         78,600
    Variable separate accounts................        222,780        222,780        148,970        148,970
    Other.....................................        887,440        887,440        685,390        685,390
</TABLE>


  The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
  The carrying amounts reported in the balance sheet for short-term investments
and securities sold under repurchase agreements approximates fair value, because
of the short maturity of those investments. As such, these financial instruments
are not shown in the table above.
  Fixed maturity securities, equity securities and separate account securities
are based on quoted market prices, where available. For securities not actively
traded, fair values are estimated using values obtained from independent pricing
services or quoted market prices of comparable instruments adjusted for
differences between the quoted instruments and the instruments being valued.
  Fair value for mortgage loans and notes receivable and policy loans are
estimated using discounted cash flow analyses, at interest rates currently being
offered for similar loans to borrowers with comparable credit ratings. Loans
with similar characteristics are aggregated for purposes of the calculations.
  Other investments and other Separate Account assets consist of investments in
limited partnerships, short term securities and various miscellaneous assets.
Valuation techniques to determine fair value consist of discounted cash flows
and quoted market prices of (a) the investments, (b) comparable instruments and
(c) underlying assets of the investments. The fair value of certain assets
contained above approximates their carrying value.

                                       51

  Premium deposit and annuity contracts are valued based on cash surrender
values and the outstanding fund balances.
  Guaranteed investment contracts and deferred annuities of the separate
accounts are estimated using discounted cash flow calculations, based on
interest rates currently being offered for similar contracts with maturities
consistent with those remaining for the contracts being valued.
  The fair value of the liabilities for variable separate accounts are based on
the quoted market values of the underlying assets of each variable separate
account. The fair value of other separate account liabilities approximates
carrying value.
  Fair value of long-term debt traded on securities exchanges is based on quoted
market prices. The fair values for other long-term debt are based on quoted
market prices of comparable instruments adjusted for differences between the
quoted instruments and the instruments being valued or are estimated using
discounted cash flow analyses, based on current incremental borrowing rates for
similar types of borrowing arrangements.

4. Off-Balance-Sheet Financial Instruments-

  The Company enters into various transactions involving off-balance-sheet
financial instruments through a variety of futures, swaps, options, forward and
other contracts (the "contracts") as part of its investing activities. Entering
into these contracts involves not only the risk of dealing with counterparties
and their ability to meet the terms of the contracts but also the market risk
associated with unmatched positions. Notional or contractual amounts are often
used to express the volume of these transactions, but the amounts potentially
subject to credit risk are much smaller. In addition, the amounts subject to
credit loss are substantially mitigated by collateral requirements of the
contracts. These contracts are marked to market and gains or losses are included
in realized investment gains or losses.
  The Company's investments in off-balance-sheet financial instruments are as
follows:


<TABLE>
<CAPTION>
                                                                       December 31,
                                                  -----------------------------------------------------------
                                                              1993                          1992
                                                  -----------------------------------------------------------
                                                  Contractual/    Estimated       Contractual/    Estimated
                                                   Notional       Fair Value       Notional       Fair Value
                                                  -----------------------------------------------------------
                                                                         (In thousands)
<S>                                                  <C>            <C>            <C>             <C>
Interest rate swaps ...........................      $ 75,000       $ (8,005)      $  325,000      $(3,435)
Commitments to purchase government and
 municipal securities .........................       211,000            137          299,500        3,071
Options written on:
  Intermediate term United States Treasury
   securities .................................                                     1,000,000        6,239
  Equities and equity index ...................       133,712         (6,572)          89,974          268
Financial futures .............................       803,313          2,557          444,451       (2,568)
Commodity:
  Swaps .......................................       344,870        (32,277)         272,890       (5,081)
  Futures .....................................        19,921            980           17,737         (446)
  Forward .....................................        96,453          4,188
  Purchase obligations ........................        87,990         (9,870)          87,990
Other .........................................         4,688             14           10,818       (2,685)
</TABLE>


  The estimated fair values approximate carrying values and are generally
equivalent to the gains or losses on these financial instruments. Fair values
are based on quoted market prices, where available. For securities not actively
traded, fair values are estimated using values obtained from independent pricing
services, quoted market prices of comparable instruments or present value
models.
  Through August 1, 1989, CNA's property/casualty operations wrote financial
guarantee insurance contracts. These contracts primarily represent industrial
development bond guarantees and equity guarantees typically extending from ten
to thirteen years. For these guarantees CNA received an advance premium which is
recognized over the exposure period and in proportion to the underlying exposure
insured.

                                       52

  At December 31, 1993 and 1992, gross exposure of financial guarantee insurance
amounted to $792,000,000 and $1,000,000,000, respectively. The degree of risk
attached to this exposure is substantially reduced through reinsurance,
collateral requirements and diversification of exposures. At December 31, 1993
and 1992, collateral consisting of letters of credit and debt service reserves
amounted to $48,000,000 and $60,000,000, respectively. In addition, security
interests in real estate are also obtained. Approximately 38% of the risks were
ceded to reinsurers at December 31, 1993 and 1992. Total exposure, net of
reinsurance, amounted to $492,000,000 and $603,000,000 at December 31, 1993 and
1992, respectively. Gross unearned premium reserves for financial guarantee
contracts were $33,000,000 and $51,000,000 at December 31, 1993 and 1992,
respectively. Gross claims and claims expense reserves totaled $320,000,000 and
$197,000,000 at December 31, 1993 and 1992, respectively. The fair values of the
liability for financial guarantee contracts were $350,000,000 and $235,000,000
at December 31, 1993 and 1992, respectively. Fair values are based on discounted
cash flows utilizing interest rates currently being offered for similar
contracts and spot interest rates.

5. Investments in Associated Companies-

Investments in associated companies consisted of:


<TABLE>
<CAPTION>
                                                            December 31,
                                                     -------------------------
                                                        1993            1992
                                                     -------------------------
                                                           (In thousands)
<S>                                                   <C>             <C>
CBS Inc. (market value $873,975 and $569,423)...      $473,483        $358,500
Other...........................................        17,171          64,441
                                                      ------------------------
                                                      $490,654        $422,941
                                                      ========================
</TABLE>


  Equity in earnings (losses) of associated companies, included in other
revenues, amounted to $53,395,000, $26,743,000 and $(13,802,000) for the years
ended December 31, 1993, 1992 and 1991, respectively.
  CBS Inc.-The Company held approximately 20% of the outstanding common shares
of CBS Inc. ("CBS") at December 31, 1993 and accounts for CBS on the equity
method.
  In 1992, CBS adopted SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," SFAS No. 109, "Accounting for Income Taxes" and
SFAS No. 112, "Employers' Accounting for Postemployment Benefits," effective
January 1, 1992. The cumulative effect of these accounting changes resulted in
recognition by Loews of a charge of $17.4 million, or $.27 per share, in
relation to its investment in CBS.
  The Company's equity in the earnings (losses) of CBS after giving effect to
purchase value adjustments amounted to $58,990,000, $27,012,000 and
$(24,533,000) before taxes and $52,641,000, $24,717,000 and $(22,904,000) after
taxes for the years ended December 31, 1993, 1992 and 1991, respectively.
Dividends received amounted to $3,787,000, $3,029,000 and $3,029,000 for the
respective periods.
  In May 1993, $389.6 million of CBS 5% convertible debentures were converted
for 1,947,975 shares of common stock. The difference between the amount of debt
converted and the average cost of the treasury shares issued, net of unamortized
issue costs related to this debt, was credited to additional paid-in capital. As
a result, the Company's ownership in CBS decreased from approximately 23% to 20%
and the Company's additional paid-in capital increased by $58,942,000.
  In February 1991, CBS completed a cash tender offer at an amount exceeding its
net book value per share for repurchase of its common stock aggregating
approximately $2 billion or 44% of its common shares. The Company tendered its
shares and received cash amounting to $537,234,000, comprised of $414,568,000
realization of previously undistributed earnings and $122,666,000 representing a
return of the Company's investment. As a result of the tender, the Company's
ownership in CBS decreased from approximately 25% to 23% and the Company's
additional paid-in capital increased by $37,880,000.

                                       53

Summarized financial information for CBS is as follows:


<TABLE>
<CAPTION>
                                                             December 31,
                                                      --------------------------
                                                          1993          1992
                                                      --------------------------
                                                             (In thousands)

<S>                                                   <C>             <C>
Current assets ...................................    $1,677,500      $1,480,500
Non-current assets ...............................     1,741,200       1,694,500
                                                      --------------------------
     Total assets ................................     3,418,700       3,175,000
                                                      --------------------------
Current liabilities ..............................     1,038,900       1,117,300
Long-term debt ...................................       590,300         870,000
Other liabilities ................................       651,500         740,900
                                                      --------------------------
     Total liabilities ...........................     2,280,700       2,728,200
                                                      --------------------------
Shareholders' equity .............................    $1,138,000      $  446,800
                                                      ==========================

<CAPTION>
                                                Years Ended December 31,
                                        ---------------------------------------
                                            1993          1992          1991
                                        ---------------------------------------
                                                     (In thousands)

<S>                                      <C>           <C>           <C>
Net sales ..........................     $3,510,100    $3,503,000    $3,035,000
                                         ======================================
Cost of sales ......................     $2,688,800    $2,906,500    $2,938,000
                                         ======================================
Income (loss) before discontinued
 operations and cumulative effect of
 changes in accounting principles ..     $  326,200    $  162,500    $  (98,700)
                                         ======================================
Net income (loss) ..................     $  326,200    $   81,000    $  (85,800)
                                         ======================================
</TABLE>


6. Inventories-


<TABLE>
<CAPTION>
                                                             December 31,
                                                      --------------------------
                                                          1993          1992
                                                      --------------------------
                                                            (In thousands)

<S>                                                      <C>            <C>
Leaf tobacco .....................................       $145,259       $162,093
Manufactured stock ...............................         76,946         77,537
Materials, supplies, etc. ........................         19,082         20,389
                                                         -----------------------
     Total .......................................       $241,287       $260,019
                                                         =======================
</TABLE>


  If the average cost method of accounting had been used for tobacco inventories
instead of the LIFO method, such inventories would have been $211,227,000 and
$211,198,000 higher at December 31, 1993 and 1992, respectively.

7. Property, Plant and Equipment-


<TABLE>
<CAPTION>
                                                             December 31,
                                                      --------------------------
                                                          1993          1992
                                                      --------------------------
                                                            (In thousands)

<S>                                                    <C>            <C>
Land .............................................     $   33,482     $   35,187
Buildings and building equipment .................        395,748        387,250
Machinery and equipment ..........................      1,189,062      1,096,244
Leaseholds and leasehold improvements ............         32,008         30,355
                                                       -------------------------
     Total, at cost...............................      1,650,300      1,549,036
Less accumulated depreciation and amortization ...        612,121        546,785
                                                       -------------------------
     Property, plant and equipment-net ...........     $1,038,179     $1,002,251
                                                       =========================
</TABLE>


                                       54

  Depreciation and amortization expense and capital expenditures, by business
segment, are as follows:


<TABLE>
<CAPTION>
                                                              Years Ended December 31,
                                        ------------------------------------------------------------------------
                                                 1993                    1992                    1991
                                        ------------------------------------------------------------------------
                                          Depr. &     Capital     Depr. &     Capital     Depr. &     Capital
                                           Amort.     Expend.      Amort.     Expend.      Amort.     Expend.
                                        ------------------------------------------------------------------------
                                                                     (In thousands)

<S>                                      <C>         <C>         <C>         <C>           <C>           <C>
Property and casualty insurance ....     $ 24,431    $ 84,100    $  8,030    $ 18,315      $ 8,820       $ 4,191
Life insurance .....................       21,931       5,372       32,644     13,604       29,960        27,534
Cigarettes .........................       21,973      26,996       18,314     23,205       22,938        26,397
Hotels .............................       15,940      18,110       15,479     11,550       14,004        10,842
Watches and other timing devices ...        2,248       1,310        5,608      3,617        3,681           780
Drilling ...........................       43,938      70,276       52,550    471,067       14,545        14,431
                                         -----------------------------------------------------------------------
     Total business segments .......      130,461     206,164      132,625    541,358       93,948        84,175
Corporate ..........................        4,640       1,343        5,745      3,472        5,753         6,041
                                         -----------------------------------------------------------------------
     Total .........................     $135,101    $207,507     $138,370   $544,830      $99,701       $90,216
                                         =======================================================================
</TABLE>


8. Income Taxes-


<TABLE>
<CAPTION>
                                                Years Ended December 31,
                                        ---------------------------------------
                                            1993          1992           1991
                                        ---------------------------------------
                                                     (In thousands)

<S>                                      <C>           <C>            <C>
Income taxes (benefits):
  Operations:
    Federal:
      Current .........................  $ 175,705     $ (67,809)     $ 388,158
      Deferred ........................   (181,601)     (382,691)      (220,207)
    State, city and other, principally
     current ..........................     52,463        61,809         49,507
                                         --------------------------------------
                                            46,567      (388,691)       217,458
  Cumulative effect of changes in
   accounting principles ..............                  118,209
                                         --------------------------------------
     Total ............................  $  46,567     $(270,482)     $ 217,458
                                         ======================================
</TABLE>


  Deferred tax assets (liabilities) are as follows:


<TABLE>
<CAPTION>
                                               December 31,
                                        ---------------------------- January 1,
                                             1993          1992         1992
                                        ---------------------------------------
                                                        (In thousands)

<S>                                      <C>           <C>            <C>
Insurance reserves:
  Property/casualty claim reserve
   discounting .......................   $  990,206    $  861,323     $ 714,320
  Unearned premium reserves ..........      125,560       147,874       134,239
  Life reserve differences ...........      144,078       140,120       108,535
  Others .............................      (12,126)        4,747        15,111
Deferred policy acquisition costs.....     (310,228)     (280,902)     (282,073)
Employee benefits.....................      144,566       128,127       117,292
Property, plant and equipment.........     (132,750)     (148,541)     (154,714)
Investments...........................      143,342        61,280        46,455
Alternative minimum tax credit........      165,200       151,000
Other-net.............................       44,371        55,590        38,762
                                         --------------------------------------
                                          1,302,219     1,120,618       737,927
Unrealized (appreciation) depreciation     (257,764)      (15,601)          186
Other-net.............................       29,955         4,515           387
                                         --------------------------------------
     Deferred tax assets-net..........   $1,074,410    $1,109,532     $ 738,500
                                         ======================================
</TABLE>


                                       55

  Gross deferred tax assets amounted to $1,895,689,000 and $1,595,083,000 and
liabilities amounted to $821,279,000 and $485,551,000, for the years ended
December 31, 1993 and 1992, respectively.
  No valuation allowance for deferred tax assets is necessary due to the
Company's election to designate its 1988 through 1991 tax payments as Special
Estimated Tax Payments as permitted under the Technical and Miscellaneous
Revenue Act of 1988, which should assure realization of a substantial portion of
deferred tax assets arising from the discounting of property/casualty loss
reserves and the Company's past history of profitability and anticipated
continued profitability.

  Deferred Federal income taxes (benefits) have been provided for the tax
effects of items reported in different periods for financial and income tax
reporting purposes. The sources of these differences for the year ended December
31, 1991, in thousands of dollars, were as follows:


<TABLE>
<CAPTION>
<S>                                                                  <C>
Insurance reserves ...............................................   $(149,076)
Utilization of alternative minimum tax credit ....................      41,000
Deferred income ..................................................     (50,393)
Investment write-downs ...........................................     (57,865)
Deferred policy acquisition costs ................................      (7,183)
Provisions deductible in different years .........................      14,307
Other ............................................................     (10,997)
                                                                     ---------
     Total .......................................................   $(220,207)
                                                                     =========
</TABLE>


  Total income tax expense (benefit) for the years ended December 31, 1993, 1992
and 1991 was different than the amounts of $241,275,000, $(176,278,000) and
$418,591,000, computed by applying the statutory U.S. federal income tax rate of
35%, 34% and 34%, respectively to income (loss) before income taxes and minority
interest for each of the years. The reasons for variances from the statutory
rate are as follows:


<TABLE>
<CAPTION>
                                               Percent of Pre-tax Income
                                                Years Ended December 31,
                                        ---------------------------------------
                                            1993          1992          1991
                                        ---------------------------------------

<S>                                        <C>            <C>           <C>
Statutory rate ......................       35 %          (34)%         34 %
(Decrease) increase in income tax
 rate resulting from:
  Tax rate change ....................      (5)
  Exempt interest and dividends
   received deduction ................     (28)           (44)          (16)
  Special deduction-salvage and
   subrogation .......................      (2)            (3)           (2)
  Fresh start adjustments ............                                   (3)
  State and city income taxes ........       7              8             3
  Other ..............................                     (2)            2
                                           --------------------------------
  Effective income tax rate...........       7 %          (75)%          18 %
                                           ================================
</TABLE>


  Federal, foreign, state and local income tax payments, net of refunds,
amounted to approximately $10,263,000, $355,853,000 and $346,856,000 for the
years ended December 31, 1993, 1992 and 1991, respectively.
  The Tax Reform Act of 1986 enacted a new separate parallel tax system referred
to as the Alternative Minimum Tax ("AMT") system. AMT is based on a flat rate
applied to a broader tax base. It is calculated separately from the regular
federal income tax and the higher of the two taxes is paid. The excess of the
AMT over regular tax is a tax credit, which can be carried forward indefinitely
to reduce regular tax liabilities of future years. As a result of a carryback of
1992 tax losses, the Company received a tax refund of approximately $32,000,000.
At December 31, 1993 the AMT credit totaled approximately $165,200,000.

                                       56

  The Company has entered into separate tax allocation agreements with Bulova
and CNA, majority-owned subsidiaries in which its ownership exceeds 80% (the
"Subsidiaries"). Each agreement provides that the Company will (i) pay to the
Subsidiary the amount, if any, by which the Company's consolidated federal
income tax is reduced by virtue of inclusion of the Subsidiary in the Company's
return, or (it) be paid by the Subsidiary an amount, if any, equal to the
federal income tax which would have been payable by the Subsidiary if it had
filed a separate consolidated return. Under these agreements, the federal income
tax benefit (expense) to CNA amounted to approximately $17,000,000, $350,000,000
and $(82,000,000) for the years ended December 31, 1993, 1992 and 1991,
respectively, and the federal income tax benefit (expense) to Bulova amounted to
approximately $2,500,000, $(3,300,000) and $1,900,000 for the years ended
December 31, 1993, 1992 and 1991, respectively. Each agreement may be cancelled
by either of the parties upon thirty days' written notice.
  The Company's federal income tax returns have been examined through 1988 and
settled through 1983, and the years 1989 and 1990 are currently under
examination. While tax liabilities for subsequent years are subject to audit and
final determination, in the opinion of management the amount accrued in the
consolidated balance sheet is believed to be adequate to cover any additional
assessments which may be made by federal, state and local tax authorities and
should not have a material effect on the financial condition of the Company.
  The Revenue Reconciliation Act of 1990 (the "1990 Act") requires
property/casualty insurance companies to accrue estimated salvage and
subrogation recoverable for tax purposes as of January 1, 1990. Under a
transition provision of the 1990 Act, for companies that had anticipated salvage
and subrogation in determining loss reserves, 87% of such accrual as of January
1, 1990 was forgiven. This special deduction is to be taken ratably over four
taxable years beginning in 1990. CNA recognized a tax benefit of approximately
$17,000,000, $17,000,000 and $33,000,000 for the years ended December 31, 1993,
1992 and 1991, respectively. The 1991 amount recognizes tax benefit for the 1990
year.
  The Omnibus Budget Reconciliation Act of 1993, enacted in August 1993, among
other things, increased the corporate tax rate from 34% to 35 % effective
January 1, 1993. In accordance with SFAS No. 109 deferred tax assets have been
adjusted for the effect of the change in tax rates in the period enacted. As a
result, the Company has recorded a tax benefit in 1993 of approximately
$31,636,000 to increase its deferred tax asset.

                                       57

9. Long-Term Debt-


<TABLE>
<CAPTION>

                                                                      December 31, 1993
                                                  ------------------------------------------------------------
                                                      Senior       Unamortized                     Current
                                                       Debt         Discount          Net         Maturities
                                                  ------------------------------------------------------------
                                                                            (In thousands)
<S>                                                <C>              <C>            <C>               <C>
By  company:
Loews Corporation ............................     $1,208,573       $23,529        $1,185,044        $1,252
CNA ..........................................        920,777         7,498           913,279         1,699
Bulova .......................................          4,282                           4,282           943
Other ........................................         93,065                          93,065         4,647
                                                   --------------------------------------------------------
     Total ...................................     $2,226,697       $31,027        $2,195,670        $8,541
                                                   ========================================================
<CAPTION>

  Long-term debt, net of notes and debentures held by the Company (a), consists
of:

                                                             December 31,
                                                      -------------------------
                                                          1993          1992
                                                      -------------------------
                                                             (In thousands)

<S>                                                    <C>            <C>
Senior  debt:
  Loews Corporation (Parent Company):
   8.5% notes due 1998 (effective  interest rate of
    8.6%) (authorized, $125,000) ..................    $  117,832     $  117,832
   8.3% debentures due 2007 (effective interest
    rate of 8.4%) (authorized, $200,000) (b) ......       200,000        200,000
   8.9% debentures due 2011 (effective interest
    rate of 9.0%) (authorized, $175,000) ..........       175,000        175,000
   9% senior sinking fund debentures due 2016 .....                      158,700
   7.6% notes due 2023 (effective interest rate of
    7.8%) (authorized, $300,000) (c) ..............       300,000
   7% notes due 2023 (effective interest rate of
    7.2%) (authorized, $400,000) (d) ..............       400,000
   Note payable (effective interest rate of 10%) ..        15,741         16,879
  CNA Financial Corporation:
   8.6% notes due 1996 (effective interest rate of
    8.8%) (authorized, $250,000) ..................       250,000        250,000
   8.9% notes due 1998 (effective interest rate of
    9.2%) (authorized, $150,000) ..................       150,000        150,000
   6.3% notes due 2003 (effective interest rate of
    6.4%) (authorized, $250,000) ..................       250,000
   7.3% debentures due 2023 (effective interest
    rate of 7.3%) (authorized, $250,000) ..........       250,000
   Other senior debt (effective interest rates
    approximate 4.6%) .............................        20,777         16,096
  Other senior debt, principally mortgages
   (effective interest rates approximate 8.9%) ....        97,347        103,476
                                                       -------------------------
                                                        2,226,697      1,187,983
Less unamortized discount .........................        31,027         11,042
                                                       -------------------------
     Senior debt-net ..............................     2,195,670      1,176,941
                                                       -------------------------

Subordinated debt:
  Loews Corporation (Parent Company):
   10% subordinated notes due 1996 ................                      200,000
   Zero coupon convertible subordinated notes
    due 2004, net of discount of $393,293 .........                      390,138
                                                       -------------------------
                                                                         590,138
Less unamortized discount .........................                        7,484
                                                       -------------------------
      Subordinated debt-net .......................                      582,654
                                                       -------------------------
      Long-term debt, less unamortized discount ...    $2,195,670     $1,759,595
                                                       =========================
</TABLE>


                                       58

(a) Amounts of notes and debentures held by the Company are:


<TABLE>
<CAPTION>
                                                             December 31,
                                                      -------------------------
                                                          1993          1992
                                                      -------------------------
<S>                                                      <C>          <C>
8.5%, due 1998 ....................................      $7,168       $  7,168
Zero coupon, due 2004, net of discount of $146,372                     145,197
9%, due 2016 ......................................                     41,300
</TABLE>


(b) Redeemable in whole or in part at January 15, 1997 at 104%, and decreasing
percentages thereafter.
(c) Redeemable in whole or in part at June 1, 2003 at 104%, and decreasing
percentages thereafter.
(d) Redeemable in whole or in part at October 15, 2003 at 102%, and decreasing
percentages thereafter.

  The aggregate of long-term debt maturing in each of the next five years is
approximately as follows: $8,541,000 in 1994, $6,815,000 in 1995, $282,499,000
in 1996, $21,512,000 in 1997 and $273,283,000 in 1998.
  The Company paid interest expenses of approximately $219,099,000, $127,689,000
and $146,659,000 for the years ended December 31, 1993, 1992 and 1991,
respectively.
  Payment of dividends by insurance subsidiaries of CNA without prior regulatory
agency approval is limited to certain formula-derived amounts. At December 31,
1993, $2,089,629,000 of retained earnings of subsidiaries was not available for
dividends to the Company.

10. Purchase of Business-

  In January 1992 Diamond Offshore Drilling, Inc., a wholly owned subsidiary,
acquired all of the outstanding common stock of Odeco Drilling, Inc. ("Odeco")
at a purchase price of $372,242,000 in cash. Odeco owned and operated 40
offshore drilling rigs that were used in drilling oil and gas wells. The
acquisition has been accounted for by the purchase method and the results of
operations are included in the Company's financial statements as of January 1,
1992. Had this acquisition occurred on January 1, 1991, consolidated results of
operations for the year ended December 31, 1991 would not have been materially
different.

11. Capital Stock and Earnings Per Share-

  In addition to its common stock, the Company has authorized 25,000,000 shares
of preferred stock, $.10 par value.
  Earnings per share, assuming no dilution, are based on the weighted average
number of shares outstanding during each year (64,108,000, 65,659,000 and
68,807,000 for the years ended December 31, 1993, 1992 and 1991, respectively).
Fully diluted earnings per share assumes conversion of the zero coupon
convertible subordinated notes and elimination of the related interest charges,
net of taxes. Fully diluted earnings per share are not presented for the years
ended December 31, 1992 and 1991 since such dilution is not material.

                                       59

12. Quarterly Financial Data (Unaudited)-


<TABLE>
<CAPTION>
                                       1993 Quarters Ended                             1992 Quarters Ended
                         -------------------------------------------------------------------------------------------------
                           Dec. 31     Sept. 30    June 30     March 31    Dec. 31     Sept. 30    June 30      March 31
                         -------------------------------------------------------------------------------------------------
                                                      (In thousands, except per share data)

<S>                       <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
Total revenues ........   $3,351,634  $3,416,934  $3,375,079  $3,543,130  $3,433,430  $3,419,039  $3,442,358  $3,396,627
Income (loss) before
 cumulative effect of
 changes in accounting
 principles ...........      138,403     (89,615)    203,643     341,690    (620,691)    122,326     266,179     210,089
  Per share ...........         2.20       (1.40)       3.16        5.25       (9.53)       1.88        4.06        3.14
Net income (loss) .....      138,403     (89,615)    203,643     341,690    (620,691)    122,326     266,179     354,800
  Per share ...........         2.20       (1.40)       3.16        5.25       (9.53)       1.88        4.06        5.30
</TABLE>


13. Retirement Plans-

  Pension Plans-The Company and its subsidiaries have several non-contributory
defined benefit plans for eligible employees. The benefits for certain plans
which cover salaried employees and certain union employees are based on formulas
which include among others, years of service and average pay. The benefits for
one plan which covers union workers under various union contracts and certain
salaried employees are based on years of service multiplied by a stated amount.
  Pension cost includes the following components:


<TABLE>
<CAPTION>
                                                Years Ended December 31,
                                        ---------------------------------------
                                            1993          1992          1991
                                        ---------------------------------------
                                                    (In thousands)

<S>                                       <C>           <C>            <C>
Service cost-benefits earned ........     $ 37,141      $ 34,292       $ 29,672
Interest cost .......................       81,811        76,814         69,715
Return on plan assets-actual ........      (54,079)      (55,446)       (95,262)
Net amortization and deferrals ......       (7,163)         (598)        49,722
                                          -------------------------------------
  Net pension cost ..................     $ 57,710      $ 55,062       $ 53,847
                                          =====================================
</TABLE>


  The following table sets forth the pension plans' funded status:


<TABLE>
<CAPTION>
                                                                          December 31,
                                                  ------------------------------------------------------------
                                                              1993                          1992
                                                  ------------------------------------------------------------
                                                    Overfunded     Underfunded    Overfunded     Underfunded
                                                      Plans           Plans         Plans           Plans
                                                  ------------------------------------------------------------
                                                                          (In thousands)

<S>                                                 <C>              <C>            <C>            <C>
Actuarial present value of benefit obligations:
  Accumulated benefit obligation .............      $ 450,751        $512,907       $ 534,041      $261,216
                                                    =======================================================
  Accumulated vested benefit obligation ......      $ 409,399        $473,030       $ 473,042      $244,372
                                                    =======================================================
Projected benefit obligation .................      $ 619,001        $565,127       $ 733,121      $264,512
Plan assets at fair value ....................        483,774         361,285         616,655       158,865
                                                    -------------------------------------------------------
Projected benefit obligation over plan assets         135,227         203,842         116,466       105,647
Unrecognized prior service cost ..............        (16,273)        (17,587)        (22,628)      (18,785)
Unrecognized net asset (obligation), January 1         22,330         (39,756)         22,437       (40,387)
Unrecognized net loss ........................       (159,594)        (96,156)       (103,651)      (23,610)
Adjustment required to recognize minimum
 liability ...................................                        102,343                        83,713
                                                    -------------------------------------------------------
  Net pension (asset) liability recognized in
   the balance sheet .........................      $ (18,310)       $152,686       $  12,624      $106,578
                                                    =======================================================
</TABLE>


                                       60

  At December 31, 1993, the Company's adjustment required to recognize its
minimum pension liability exceeded its unrecognized prior service cost and net
transition obligation by $43,095,000. This excess is recorded as a reduction to
shareholders' equity of $28,012,000, net of tax benefits of $15,083,000, in
accordance with SFAS No. 87, "Employers' Accounting for Pensions."
  The rates used in the actuarial assumptions were:


<TABLE>
<CAPTION>
                                                Years Ended December 31,
                                        ---------------------------------------
                                            1993          1992          1991
                                        ---------------------------------------

<S>                                     <C>           <C>               <C>
Discount rate ......................    7.3% to 7.5%  8.3% to 8.5%  8.5% to 9.0%
Rate of compensation increase.......    4.5% to 5.8%  5.3% to 5.5%  5.8% to 6.3%
Expected long-term rate of return on
 assets ............................    7.5% to 8.5%          9.0%  9.3% to 9.5%
</TABLE>


  The Company's funding policy is to make contributions in accordance with
applicable governmental regulatory requirements. The assets of the plans are
invested primarily in interest-bearing obligations and for one plan with an
insurance subsidiary of the Company, in its Separate Account business.
  Other Postretirement Benefit Plans-The Company and its subsidiaries have
several postretirement benefit plans covering eligible employees and retirees.
Participants generally become eligible after reaching age 55 with required years
of service. Actual requirements for coverage vary by plan. Benefits for retirees
who were covered by bargaining units vary by each unit and contract. Benefits
for certain retirees are in the form of a company health care account which can
have a maximum of $4,500 per year, with an equal amount for a spouse in the same
age grouping.
  Benefits for retirees reaching age 65 are generally integrated with Medicare.
Benefits for certain retirees are in the form of a company health care account
which can have a maximum value of $1,500 per year, with an equal amount for a
spouse in the same age grouping. Other retirees, based on plan provisions, must
use Medicare as their primary coverage, with the Company reimbursing a portion
of the unpaid amount; or are reimbursed for the Medicare Part B premium or have
no company coverage. The benefits provided by the Company are basically health,
and for certain retirees, life insurance type benefits.
  The Company does not fund any of these benefit plans and accrues
postretirement benefits during the active service of those employees who would
become eligible for such benefits when they retire.
  The rates used in the actuarial assumptions were:


<TABLE>
<CAPTION>
                                                            December 31
                                                      -------------------------
                                                         1993          1992
                                                      -------------------------

<S>                                                   <C>           <C>
Net periodic postretirement benefit cost ..........   8.3% to 8.5%  8.5% to 9.0%
Accumulated postretirement benefit liability ......   7.3% to 7.5%  8.3% to 8.5%
</TABLE>


                                       61

  The following table sets forth the postretirement plans' status:


<TABLE>
<CAPTION>

                                                             December 31,
                                                      --------------------------
                                                          1993          1992
                                                      --------------------------
                                                            (In thousands)

<S>                                                     <C>            <C>
Accumulated postretirement benefit obligation:
  Retirees ........................................     $134,502       $136,493
  Fully eligible active plan participants .........       57,376         61,369
  Other active plan participants ..................      128,992        125,170
                                                        -----------------------
                                                         320,870        323,032
  Unrecognized prior service cost .................          736
  Unrecognized net gain (loss) ....................       21,869        (11,216)
                                                        -----------------------
  Accrued postretirement benefit liability ........     $343,475       $311,816
                                                        =======================

<CAPTION>
                                                       Years Ended December 31,
                                                      --------------------------
                                                          1993          1992
                                                      --------------------------
                                                             (In thousands)

<S>                                                     <C>           <C>
Postretirement benefit cost includes the following
 components:
  Service costs ...................................     $ 10,892       $ 10,807
  Interest costs ..................................       25,238         24,919
                                                        -----------------------
  Net periodic postretirement benefit cost ........     $ 36,130       $ 35,726
                                                        =======================
</TABLE>


  Prior to 1992 the Company recognized the expense as amounts were paid. Such
costs amounted to approximately S10,441,000 for 1991.
  For measurement purposes, a trend rate of 14.5% to 15% pre-65 and 11.5% post-
65, for covered costs was used. These trend rates are expected to decrease
gradually to 6% and 7% at rates from 0.5% to 1.0% per annum. An increase of one
percentage point in assumed health care cost trend rates would increase the
accumulated postretirement benefit obligation by approximately $28,685,000 and
the net periodic postretirement benefit cost by approximately $3,900,000.

14. Reinsurance-

  CNA assumes and cedes insurance with other insurers and reinsurers and members
of various reinsurance pools and associations. CNA utilizes reinsurance
arrangements to limit its maximum loss, to provide greater diversification of
risk and to minimize exposures on larger risks. The reinsurance coverages are
tailored to the specific risk characteristics of each product line with CNA's
retained amount varying by type of coverage. Generally, reinsurance coverage for
property risks is on excess of loss, per risk basis. Liability coverages are
generally reinsured on a quota share basis in excess of CNA's retained risk. In
addition, CNA has catastrophe coverage for certain types of losses over
stipulated amounts arising from any one occurrence or event.
  The ceding of insurance does not discharge the primary liability of the
original insurer. CNA places reinsurance with other carriers only after careful
review of the nature of the contract and a thorough assessment of the
reinsurers' credit quality and claim settlement performance. Further, for
carriers that are not authorized reinsurers in Illinois, CNA receives collateral
primarily in the form of bank letters of credit, securing a large portion of the
recoverables. At December 31, 1993, such collateral totaled approximately
$155,000,000. CNA's largest recoverable, including prepaid reinsurance premiums,
at December 31, 1993 was approximately $484,000,000 with Lloyd's of London. The
recoverable from Lloyd's of London is dispersed among thousands of individual
reinsurers and other names who have unlimited liability.

                                       62

  The effects of reinsurance on written premiums and earned premiums are as
follows:


<TABLE>
<CAPTION>
                                                                       Written Premiums
                                                  -----------------------------------------------------------
                                                      Direct         Ceded          Assumed          Net
                                                  -----------------------------------------------------------
                                                                         (In thousands)

                                                                   Year Ended December 31, 1993

<S>                                                  <C>            <C>            <C>            <C>
Long Duration Contracts ......................       $  422,700     $ 23,000       $  141,600     $  541,300
Short Duration Contract ......................        7,654,900      540,100        1,168,400      8,283,200
                                                     -------------------------------------------------------
     Total ...................................       $8,077,600     $563,100       $1,310,000     $8,824,500
                                                     =======================================================

                                                                   Year Ended December 31, 1992

Long Duration Contracts ......................       $  413,800     $ 23,200       $  146,500     $  537,100
Short Duration Contracts .....................        7,325,800      506,500        1,367,500      8,186,800
                                                     -------------------------------------------------------
     Total ...................................       $7,739,600     $529,700       $1,514,000     $8,723,900
                                                     =======================================================

                                                                   Year Ended December 31, 1991

Long Duration Contracts ......................       $  366,000     $ 19,700       $  161,700     $  508,000
Short Duration Contracts .....................        7,623,500      491,800        1,294,700      8,426,400
                                                     -------------------------------------------------------
     Total ...................................       $7,989,500     $511,500       $1,456,400     $8,934,400
                                                     =======================================================

                                                                          Earned Premiums
                                                  ------------------------------------------------------------

                                                                   Year Ended December 31, 1993

Long Duration Contracts ......................      $  350,100     $ 23,000        $  140,900     $  468,000
Short Duration Contracts .....................       7,603,200      525,100         1,142,700      8,220,800
                                                    --------------------------------------------------------
     Total ...................................      $7,953,300     $548,100        $1,283,600     $8,688,800
                                                    ========================================================

                                                                   Year Ended December 31, 1992

Long Duration Contracts ......................      $  376,400     $ 23,200        $  146,500     $  499,700
Short Duration Contracts .....................       7,570,500      506,100         1,203,900      8,268,300
                                                    --------------------------------------------------------
     Total ...................................      $7,946,900     $529,300        $1,350,400     $8,768,000
                                                    ========================================================

                                                                   Year Ended December 31, 1991

Long Duration Contracts ......................      $  324,100     $ 19,700        $  161,700     $  466,100
Short Duration Contracts .....................       7,741,700      487,900         1,226,500      8,480,300
                                                    --------------------------------------------------------
     Total ...................................      $8,065,800     $507,600        $1,388,200     $8,946,400
                                                    ========================================================
</TABLE>


15. Leases-

  The Company's hotels in some instances are constructed on leased land or are
leased. Other leases cover central office facilities, computer equipment and
operating service offices. Rent expense amounted to $84,946,000, $85,400,000 and
$84,429,000 for the years ended December 31, 1993, 1992 and 1991, respectively.
It is expected, in the normal course of business, that leases which expire will
be renewed or replaced by leases on other properties; therefore, it is believed
that future minimum annual rental commitments will not be less than the amount
of rental expense incurred in 1993. At December 31, 1993 future aggregate
minimum rental payments approximated $282,805,000.

                                       63

16. Legal Proceedings and Contingent Liabilities-

  Pending litigation includes claims seeking damages for cancer and other health
effects claimed to have resulted from use of tobacco products. It is not
possible to predict the outcome of pending litigation; however, on the basis of
the facts presently known to it, management does not believe the actions pending
will have a material adverse effect upon the financial condition or results of
operations of the Company. Should additional facts arise in the future
indicating a probable adverse determination of any such actions, such ultimate
determination might have a material adverse effect upon the Company's financial
condition.

  Fibreboard Litigation--CNA's primary property/casualty subsidiary, Continental
Casualty Company ("Continental"), is party to litigation with Fibreboard
Corporation ("Fibreboard") involving coverage for certain asbestos-related
claims and defense costs (San Francisco Superior Court, Judicial Council
Coordination Proceeding 1072). As described below, Continental, Fibreboard,
another insurer ("Pacific Indemnity"), a subsidiary of the Chubb Corporation,
and a negotiating committee of asbestos claimant attorneys have reached a Global
Settlement (the "Global Settlement") to resolve all future asbestos-related
bodily injury claims involving Fibreboard. Continental, Fibreboard and Pacific
Indemnity have also reached an agreement, which is subject to court approval,
(the "Trilateral Agreement") on a settlement to resolve the coverage litigation
in the event the Global Settlement does not obtain final court approval. The
implementation of the Global Settlement or the Trilateral Agreement would have
the effect of settling Continental's litigation with Fibreboard. Pending final
court approval of either the Global Settlement or the Trilateral Agreement, at
the request of Continental, Fibreboard and Pacific Indemnity, the California
Court of Appeal withheld its ruling on the issues discrete to Continental and
Pacific Indemnity in the appeal in that litigation.

  Coverage Litigation--Between 1928 and 1971, Fibreboard manufactured insulation
products containing asbestos. Since the 1970's, thousands of claims have been
filed against Fibreboard by individuals claiming bodily injury as a result of
asbestos exposure.
  Continental insured Fibreboard under a comprehensive general liability policy
between May 4, 1957 and March 15, 1959. Fibreboard disputed the coverage
positions taken by its insurers and, in 1979, Fireman's Fund, another of
Fibreboard's insurers, brought suit with respect to coverage for defense and
indemnity costs. In January 1990, the San Francisco Superior Court (Judicial
Council Coordination Proceeding 1072) rendered a decision against the insurers
including Continental and Pacific Indemnity. The court held that the insurers
owed a duty to defend and indemnify Fibreboard for certain of the asbestos-
related bodily injury claims asserted against Fibreboard (in the case of
Continental, for all claims involving exposure to Fibreboard's asbestos products
if there was exposure to asbestos at any time prior to 1959 including years
prior to 1957, regardless of when the claims were asserted or injuries
manifested) and that the policies contained no aggregate limit of liability in
relation to such claims. The judgment was appealed.
  The Court of Appeal entered an opinion on November 15, 1993, as modified on
December 13, 1993, which substantially affirmed the lower court's decisions on
scope of coverage and trigger of coverage issues, as described below. The Court
of Appeal withheld its ruling on the issues discrete to Continental and Pacific
Indemnity pending final court approval of either the Global Settlement or the
Trilateral Agreement described below. On January 27, 1994, the California
Supreme Court granted a Petition for Review, filed by several insurers,
including Continental, of, among other things, the trigger and scope of coverage
issues. The order granting review has no effect on the Court of Appeal's order
severing the issues unique to Continental and Pacific Indemnity. Continental
cannot predict the time frame within which the issues before the California
Supreme Court may be resolved. If neither the Global Settlement nor the
Trilateral Agreement is approved, it is anticipated that Continental and Pacific
Indemnity will resume the appeal process.
  Continental's appeal of the coverage judgment raises many legal issues. Key
issues on appeal under the policy are trigger of coverage, scope of coverage,
dual coverage requirements and number of occurrences:
  .The trial court adopted a continuous trigger of coverage theory under which
   all insurance policies in effect at any time from first exposure to asbestos
   until the date of the claim filing or death are triggered. The Court of
   Appeal endorsed the continuous trigger theory, but modified the ruling to
   provide that policies are triggered by a claimant's first exposure to the
   policyholder's products, as opposed to the first exposure to any asbestos
   product. Therefore, an insurance policy is not triggered if a claimant's
   first

                                       64

   exposure to the policyholder's product took place after the policy period.
   The court, however, placed the burden on the insurer to prove the claimant
   was not exposed to its policyholder's product before or during the policy
   period. The trigger of coverage issue is now on appeal to the California
   Supreme Court. Continental's position is that its policy is triggered under
   California law by manifestation of appreciable harm. The bodily injury cannot
   be said to occur within the meaning of the policy until actual physical
   symptoms and associated functional
   impairment manifest themselves. Thus, Continental's position is that if
   existing California law were applied, there would be no coverage under
   Continental's policy.
  .The scope of coverage decision imposed a form of "joint and several"
   liability that makes each triggered policy liable in whole for each covered
   claim, regardless of the length of the period the policy was in effect. This
   decision was affirmed by the Court of Appeal, and is now on appeal to the
   California Supreme Court. Continental's position is that liability for
   asbestos claims should be shared not jointly, but severally and on a pro data
   basis between the insurers and insured. Under this theory, Continental would
   only be liable for that proportion of the bodily injury that occurred during
   the 22-month period its policy was in force.
  .Continental maintains that both the occurrence and the injury resulting
   therefrom must happen during the policy period for the policy to be
   triggered. Consequently, if the court holds that the occurrence is exposure
   to asbestos, Continental's position is that coverage under the Continental
   policy is restricted to those who actually inhaled Fibreboard asbestos fibers
   and suffered injury from May 4, 1957 to March 15, 1959.
  .Continental's policy had a $1 million per occurrence limit. Continental
   contends the number of occurrences under California law must be determined by
   the general cause of the injuries, not the number of claimants, and that the
   cause of the injury was the continuous sale and manufacture of the product.
   Because the manufacture and sale proceeded from two locations, Continental
   maintains that there were only two occurrences and thus only $2 million of
   coverage under the policy. However, the per occurrence limit was interpreted
   by the trial court to mean that each claim submitted by each individual
   constituted a separate occurrence. The Court of Appeal withheld ruling on
   this issue, as noted above.
  Under various reinsurance agreements, Continental has asserted a right to
reimbursement for a portion of its potential exposure to Fibreboard. The
reinsurers have disputed Continental's right to reimbursement and have taken the
position that any claim by Continental is subject to arbitration under
provisions in the reinsurance agreement. A Federal court has ruled that the
dispute must be resolved by arbitration. There can be no assurance that
Continental will be successful in obtaining a recovery under its reinsurance
agreements.

  Interim Agreement--While the state court action in regard to the coverage
issues was pending, Continental and Fibreboard entered into an Interim Agreement
in 1988 under which Continental agreed to fund Fibreboard's defense costs and
certain settlements up to specified dollar limits through 1992. Continental
funded approximately $96 million in defense costs under the Interim Agreement.

  Assignments--Beginning in 1991, Fibreboard unilaterally reached settlements
with various classes of claimants by purporting to assign to plaintiffs
potential proceeds from its insurance policy with Continental disputed
Fibreboard's right to make such settlements and assignments, asserted that they
violated the terms of the policy and the Interim Agreement described above and
asserted that the settlement amounts were unreasonable and excessive. In June
1992 a California trial court ruled in one case that Fibreboard could make such
settlements and assignments since, in its view, Continental was not fully
defending Fibreboard against the claims. Continental is appealing this decision.
The trial court did rule that Continental could challenge the reasonableness of
individual settlements and assignments. Following that ruling, Continental
agreed to fund Fibreboard's reasonable defense costs without limitation as to
amount pending resolution of Continental's appeal. Fibreboard continued to make
settlements and assignments following such agreement, and Continental vigorously
disputed Fibreboard's right to do so.
  This settlement and assignment process by Fibreboard escalated significantly
in the fourth quarter of 1992. Through December 31, 1992, Fibreboard entered
into unilateral assignment agreements covering 31,100 claims for a total of $400
million or an average of $12,800 per claim. Of these claims, approximately
30,000 were settled and assigned by Fibreboard in the month of December, 1992.

                                       65

  Settlement Negotiations--Based on the facts and circumstances of the
Fibreboard case prior to the fourth quarter of 1992, including the strength of
Continental's legal arguments, a material loss to Continental was not known or
believed to be probable. Significant fourth quarter developments, including the
assignments noted above, and the continuing trend for court decisions to expand
liability of policies beyond their original intent, led management to consider
negotiation of an all-inclusive settlement of Continental's asbestos-related
bodily injury litigation with Fibreboard.
  On April 9, 1993, Continental and Fibreboard entered into an agreement
pursuant to which, among other things, the parties agreed to use their best
efforts to negotiate and finalize a global class action settlement with
asbestos-related bodily injury and death claimants.
  Through December 31, 1993, Continental, Fibreboard and plaintiff attorneys had
reached settlements with respect to approximately 95,000 claims, subject to
resolution of the coverage issues, for a maximum settlement amount of
approximately $1.2 billion. If neither the Global Settlement nor the Trilateral
Agreement receive final court approval, Continental's obligation to pay under
all settlements will be partially subject to the results of the pending appeal
in the coverage litigation. Minimum amounts payable under all such agreements,
regardless of the outcome of coverage litigation, total approximately $560
million, of which $193 million was paid through December 31, 1993. Continental
may negotiate other agreements with various classes of claimants including
groups who may have previously reached agreement with Fibreboard.
  Continental will continue to pursue its appeals in respect of the coverage
litigation and all other litigation involving Fibreboard if a Global Settlement
or the Trilateral Agreement cannot be implemented.

  Global Settlement--On August 27, 1993, Continental, Pacific Indemnity,
Fibreboard and a negotiating committee of asbestos claimant attorneys reached an
agreement in principle for an omnibus settlement to resolve all future asbestos-
related bodily injury claims involving Fibreboard. The Global Settlement was
executed on December 23, 1993. The agreement calls for contribution by
Continental and Pacific Indemnity of an aggregate of $1.525 billion to a trust
fund for a class of all future asbestos claimants, defined generally as those
persons whose claims against Fibreboard were neither filed nor settled on or
before August 27, 1993. An additional $10 million is to be contributed to the
fund by Fibreboard. The Global Settlement is subject to court approval and
possible appeals. As noted below, there is limited precedent with settlements
which determine the rights of future claimants to seek relief.
  Subsequent to the announcement of the agreement in principle, Continental,
Fibreboard and Pacific entered into the Trilateral Agreement which sets forth
the parties' obligations in the event the Global Settlement is not approved by
the court. In such case, Continental and Pacific would contribute to a
settlement fund an aggregate of $2 billion, less certain adjustments. Such fund
would be devoted to the payment of Fibreboard's asbestos liabilities other than
liabilities in respect of previously settled claims. Continental's share of such
fund would be $1.46 billion, reduced by a portion of the additional payment of
$635 million, which Pacific Indemnity has agreed to pay in respect of unsettled
present claims and previously settled claims. Continental has agreed that if
either the Global Settlement or the Trilateral Agreement is approved, it will
assume responsibility for the claims that had been settled and paid on or before
August 27, 1993. A portion of the additional $635 million payment by Pacific
Indemnity would be applied to the payment of such claims as well. As a part of
the Global Settlement and the Trilateral Agreement, Continental would be
released by Fibreboard from any further liability under the comprehensive
general liability policy written for Fibreboard by Continental, including but
not limited to liability for asbestos-related claims against Fibreboard. The
Trilateral Agreement is subject to court approval and possible appeals.
  Continental and Fibreboard have entered into a supplemental agreement (the
"Supplemental Agreement") which governs the interim arrangements and obligations
between the parties until such time as the Global Settlement is either approved
or disapproved by the court and also governs certain obligations between the
parties in the event the Global Settlement is approved, including the payment of
present claims which have been filed or settled and not included in the Global
Settlement.
  In addition, Continental and Pacific Indemnity have entered into an agreement
(the "Continental Pacific Agreement") which sets forth the parties' agreement
with respect to the means for allocating among themselves responsibility for
payments arising out of the Fibreboard insurance policies whether or not the
Global Settlement or the Trilateral Agreement is approved. Under the
Continental-Pacific Agreement, Continental and Pacific Indemnity have agreed to
pay 64.71% and 35.29%, respectively, of the $1.525 billion plus interest and
expenses to be used to satisfy the claims of future claimants. If neither the
Global

                                       66

Settlement nor the Trilateral Agreement is approved, Continental and Pacific
Indemnity would share, in the same percentages, most but not all liabilities and
costs of either insurer including, but not limited to, liabilities in respect of
unsettled present claims and presently settled claims. If either the Trilateral
Agreement or the Global Settlement is approved by the court, Pacific Indemnity's
share for unsettled present claims and presently settled claims will be $635
million.

  Reserves--In the fourth quarter of 1992, Continental increased its reserve
with respect to potential exposure to asbestos-related bodily injury cases by
$1.5 billion. In connection with the agreement in principle announced on August
27, 1993, Continental determined to add $500 million to such claim reserve. The
Fibreboard litigation represents the major portion of Continental's asbestos-
related claim exposure.
  There are inherent uncertainties in establishing a reserve for complex
litigation of this type. Courts have tended to impose joint and several
liability, and because the number of manufacturers who remain potentially liable
for asbestos-related injuries has diminished on account of bankruptcies, as has
the potential number of insurers due to operation of policy limits, the
liability of the remaining defendants is difficult to estimate. Further, a
recent trend by courts to consolidate like cases into mass tort trials limits
the discovery ability of insurers, generally does not allow for individual claim
adjudication, restricts the identification of appropriate allocation methods and
thereby results in an increasing likelihood for fraud and disproportionate and
potentially excessive judgments. Additionally, management believes that recent
court decisions would appear to be based on social of other considerations
irrespective of the facts and legal issues involved.
  The Global Settlement and the Trilateral Agreement are subject to court
approval. There is limited precedent with settlements which determine the rights
of future claimants to seek relief. It is extremely difficult to assess the
magnitude of Continental's potential liability in respect of such future
claimants if the Global Settlement and the Trilateral Agreement are not approved
and upheld, keeping in mind that Continental's potential liability is limited to
persons exposed to asbestos prior to the termination of the policy in 1959.
  Projections by experts of future trends differ widely, based upon different
assumptions with respect to a host of complex variables. Some recently published
studies, not specifically related to Fibreboard, conclude that the number of
future asbestos-related bodily injury claims against asbestos manufacturers
could be several times the number of claims brought to date. Such studies
include claims asserted against asbestos manufacturers for all years, including
claims filed or projected to be filed in respect of periods after 1959. As
indicated above Continental, Fibreboard and plaintiff attorneys have reached
settlements with respect to approximately 95,000 claims, subject to the
resolution of coverage issues. Such amount does not include presently pending or
unsettled claims, previously dismissed or claims settled pursuant to agreements
to which Continental is not a party.
  Another aspect of the complexity in establishing a reserve arises from the
widely disparate values that have been ascribed to claims by courts and in the
context of settlements. Under the terms of a settlement reached with plaintiff
counsel in August 1993, the expected settlement for approximately 34,000 claims
for exposure to asbestos prior to 1959 is expected to be $445 million, or an
average of $13,000 per claim. Based on reports by Fibreboard, since September
1988, Fibreboard resolved approximately 40,000 claims (other than by the
assignment process noted above), approximately 45% of which involved no cost to
Fibreboard other than defense costs, with the remaining claims involving the
payment of approximately $11,000 per claim. On the other hand, a trial court in
Texas in 1990 rendered a verdict in which Fibreboard's liability in respect of
2,300 claims was found to be approximately $310,000 per claim including interest
and punitive damages. Fibreboard entered into a settlement of such claims by
means of an assignment of its potential proceeds from its policy with
Continental. Continental intervened and settled these claims in 1992 for
approximately $77,000 on average, subject to resolution of the coverage appeal.
  Continental believes that as a result of the proposed Global Settlement and
the Trilateral Agreement it has greatly reduced the uncertainty of its exposure
with respect to the Fibreboard matter. However, if neither the Global Settlement
nor the Trilateral Agreement are approved and upheld, in light of the factors
discussed herein, the range of Continental's potential liability cannot be
meaningfully estimated and there can be no assurance that the reserves
established would be sufficient to pay all amounts which ultimately could become
payable in respect of asbestos-related bodily injury liabilities.
 While it is possible that the ultimate outcome of this matter could have a
material adverse impact on the equity of CNA, management does not believe that a
further loss material to equity is probable. Management will continue to monitor
the potential liabilities with respect to asbestos-related bodily injury claims
and will make adjustments to the claim reserves if warranted.

                                       67

  Environmental Pollution-Potential exposures exist for claims involving
environmental pollution, including toxic waste clean-up. Environmental pollution
clean-up is the subject of both federal and state regulation. By some estimates,
there are thousands of potential waste sites subject to clean-up. The insurance
industry is involved in extensive litigation regarding coverage issues. Judicial
interpretations in many cases have expanded the scope of coverage and liability
beyond the original intent of the policies.
  Under federal regulation, the Comprehensive Environmental Response
Compensation and Liability Act of 1980 ("Superfund") governs the clean-up and
restoration of abandoned toxic waste sites and formalizes the concept of legal
liability for clean-up and restoration by "Potentially Responsible Parties"
("PRP's"). Superfund establishes a mechanism to pay for clean-up of waste sites
if PRP's fail to do so, and to assign liability to PRP's. The extent of
liability to be allocated to a PRP is dependent on a variety of factors.
Further, the number of waste sites subject to clean-up is unknown. To date,
approximately 1,300 clean-up sites have been identified by the Environmental
Protection Agency ("EPA"). On the other hand, the Congressional Budget Office is
estimating that there will be 4,500 National Priority List sites and other
estimates run as high as 30,000 sites that will require clean-up. Very few sites
have been subject to clean-up to date. The extent of clean-up necessary and the
assignment of liability has not been established.
  CNA and the insurance industry are disputing coverage for many such claims.
Key coverage issues include whether Superfund response cost are considered
damages under the policies, trigger of coverage, applicability of pollution
exclusions, the potential for joint and several liability and definition of an
occurrence. Similar coverage issues exist for clean-up of waste sites not
covered under Superfund. To date, courts have been inconsistent in their rulings
on these issues.
  The Superfund legislation must be reauthorized in 1994. A number of proposals
to reform Superfund have been made by various parties including the EPA, the
Treasury Department, congressional delegates and the Keystone Commission, a
broad based national coalition which includes community, industry and insurance
representatives. It is too early to determine the future impact of these
proposals on CNA and the insurance industry.
  Due to the inherent uncertainties described above, including the inconsistency
of court decisions, the number of waste sites subject to clean-up, and the
standards for clean-up and liability, the exposure to CNA for environmental
pollution claims cannot be meaningfully quantified. Prior to 1993, no specific
allocation of reserves was made for unreported claims or for litigation
expenses. CNA identified reserves only for reported environmental pollution
claims. In 1993, CNA allocated approximately $340 million of claims and claims
expense reserves for unreported environmental pollution claims in addition to
the $94 million of reserves recorded for reported claims. Claims and claims
expense reserves represent management's estimates of ultimate liabilities based
on currently available facts and law. However, in addition to the uncertainties
previously discussed, additional issues related to, among other things, specific
policy provisions, multiple insurers and allocation of liability among insurers,
consequences of conduct by the insured, missing policies and proof of coverage
make quantification of liabilities exceptionally difficult.
  The number of claims filed for environmental pollution coverage continues to
increase. Approximately 2,700 claims were reported in 1993 and approximately
19,200 claims have been reported to date. Pending claims total approximately
10,600, 10,800, and 9,300 at December 31, 1993, 1992 and 1991, respectively.
Approximately 8,600 claims were closed through December 31, 1993, of which
approximately 7,800 claims were settled without payment, except for claim
expenses of $18 million. Settlements for the remaining 800 claims totaled $76
million, plus claim expenses of $21 million. Reserve development for
environmental claims totaled $446, $48, and $47 million in 1993, 1992 and 1991,
respectively, including litigation costs of $28, $25 and $21 million. As noted
above, adverse development for 1993 primarily resulted from the allocation of
$339 million of reserves for unreported claims. The results of operations in
future years may continue to be adversely affected by environmental pollution
claims and claims expenses. Management will continue to monitor potential
liabilities and make further adjustments as warranted.

                                       68

17. Business Segment Data-

  The Company's subsidiaries are engaged primarily in insurance (property,
casualty and life), the production and sale of cigarettes, the operation of
hotels and oil and gas drilling rigs, the distribution of watches and the
production and sale of other timing devices. The following table sets forth the
major sources of the Company's consolidated revenues, income and assets.


<TABLE>
<CAPTION>
                                                                 Years Ended December 31,
                                                  --------------------------------------------------------
                                                        1993                1992               1991
                                                  --------------------------------------------------------
                                                                       (In thousands)

<S>                                                  <C>                <C>                  <C>
Revenues (a):
  Property and casualty insurance ...........        $ 8,159,851         $ 7,948,867         $ 8,479,267
  Life insurance (b) ........................          2,823,314           2,816,471           2,632,368
  Cigarettes ................................          1,908,903           2,185,448           2,009,545
  Hotels ....................................            185,268             201,436             200,924
  Watches and other timing devices ..........            153,543             181,388             164,301
  Drilling ..................................            288,251             217,713              64,571
  Investment income-net (c) .................            120,000             117,189              69,463
  Equity in income of CBS Inc. ..............             58,990              27,012             (24,533)
  Other and eliminations-net ................            (11,343)             (4,070)             24,358
                                                     ---------------------------------------------------
                                                     $13,686,777         $13,691,454         $13,620,264
                                                     ===================================================

Income contribution (a) (d):
  Property and casualty insurance ...........        $   (33,136)        $(1,495,498)        $   529,391
  Life insurance ............................            177,392             159,600              75,037
  Cigarettes ................................            592,368             914,973             771,636
  Hotels ....................................             14,216              19,127              25,400
  Watches and other timing devices ..........              6,274              12,470               7,299
  Drilling ..................................              4,866             (48,911)            (14,838)
  Investment income-net (c) .................            116,062             116,076              69,463
  Equity in income of CBS Inc. ..............             58,990              27,012             (24,533)
  Other .....................................            (17,207)             (7,279)             19,115
                                                     ---------------------------------------------------
                                                     $   919,825         $  (302,430)        $ 1,457,970
                                                     ===================================================

Net income (a):
  Property and casualty insurance ...........        $   145,757         $  (623,243)        $   490,394
  Life insurance ............................             94,288              85,227              36,619
  Cigarettes ................................            340,689             524,546             430,219
  Hotels ....................................             (1,785)              1,911               4,809
  Watches and other timing devices ..........              2,413               4,366               1,880
  Drilling ..................................            (16,576)            (51,174)            (11,221)
  Investment income-net (c) .................             71,476              75,858              45,324
  Equity in income of CBS Inc. ..............             52,641              24,717             (22,904)
  Interest expense and other-net (e) ........            (94,782)            (64,305)            (70,782)
  Cumulative effect of changes in accounting
   principles-net ...........................                                144,711
                                                     ---------------------------------------------------
                                                     $   594,121         $   122,614         $   904,338
                                                     ===================================================

                                                       69
<CAPTION>
                                                                          December 31,
                                                  --------------------------------------------------------
                                                        1993                1992               1991
                                                  --------------------------------------------------------
                                                                       (In thousands)

<S>                                                  <C>                <C>                  <C>
Identifiable assets:
  Property and casualty insurance ...........        $29,630,328         $27,247,756         $26,867,628
  Life insurance ............................         12,225,641          12,355,269          12,137,393
  Cigarettes ................................            547,063             623,936             616,920
  Hotels ....................................            199,288             205,900             207,870
  Watches and other timing devices ..........            158,609             166,482             155,520
  Drilling ..................................            550,622             538,792             107,719
  Investment income .........................          1,966,655           1,917,614           2,098,439
  Investment in CBS Inc. ....................            473,483             358,500             345,842
  Other .....................................             56,046              96,013             114,099
  Corporate .................................             42,017              45,252              32,727
                                                     ---------------------------------------------------
                                                     $45,849,752         $43,555,514         $42,684,157
                                                     ===================================================
</TABLE>


(a) Realized investment gains (losses) included in Revenues, income contribution
and Net income are as follows:


<TABLE>
<CAPTION>
                                                Years Ended December 31,
                                        ----------------------------------------
                                            1993          1992          1991
                                        ----------------------------------------
<S>                                       <C>           <C>            <C>
Revenues:
  Property and casualty insurance ...     $674,452      $262,658       $456,541
  Life insurance ....................      125,813        95,433          7,434
  Investment income-net .............       62,532        49,156        (51,820)
                                          -------------------------------------
                                          $862,797      $407,247       $412,155
                                          =====================================

Income contribution:
  Property and casualty insurance ...     $674,452      $262,658       $456,541
  Life insurance ....................      112,671        83,293        (12,622)
  Investment income-net .............       62,532        49,156        (51,820)
                                          -------------------------------------
                                          $849,655      $395,107       $392,099
                                          =====================================

Net income:
  Property and casualty insurance ...     $362,917      $146,466       $248,490
  Life insurance ....................       60,256        44,592        (11,085)
  Investment income-net .............       38,728        31,284        (34,323)
                                          -------------------------------------
                                          $461,901      $222,342       $203,082
                                          =====================================
</TABLE>


(b) Includes $1,700,000, $1,600,000 and $1,500,000 under contracts covering U.S.
government employees and their dependents for the respective periods.

(c) Consists of investment income of non-insurance operations.  Investment
income of insurance operations is included in the Revenues, Income contribution
and Net income of the related insurance operations.

(d) Consists of income before minority interest, cumulative effect of changes in
accounting principles and allocation
for financial reporting purposes of interest expense, corporate expense and
income taxes.

(e) Includes interest expense, net of tax benefits, of $83,127, $71,499 and
$91,306 for the respective periods.

                                       70


I
tem 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure.

  None.


                                    PART III

  Information called for by Part III has been omitted as Registrant intends to
file with the Securities and Exchange Commission not later than 120 days after
the close of its fiscal year a definitive Proxy Statement pursuant to regulation
14A.


                                    PART IV


Item 14. Exhibits, Financial Statement Schedules, and Reports on Form  8-K.

  (a) 1. Financial Statements:

  The financial statements appear above under Item 8. The following additional
financial data should be read in conjunction with those financial statements.
Schedules not included with these additional financial data have been omitted
because they are not applicable or the required information is shown in the
consolidated financial statements or notes to consolidated financial statements.


<TABLE>
<CAPTION>

                                                                         Page
     2. Financial Statement Schedules:                                  Number
                                                                        -------

<S>                                                                       <C>
Independent Auditors' Report  ........................................    L-1

Loews Corporation and Subsidiaries:
  Schedule I-Summary of investments-other than investments in related
   parties at December 31, 1993 ......................................    L-2
  Schedule III-Condensed financial information of Registrant for the
   years ended December 31, 1993, 1992 and 1991 ......................    L-3
  Schedule VIII-Valuation and qualifying accounts for the years ended
   December 31, 1993, 1992 and 1991 ..................................    L-8
  Schedule IX-Short-term borrowings for the years ended December 31,
   1993, 1992 and 1991 ...............................................    L-9
  Schedule XIV-Supplemental information concerning property/casualty
   insurance operations for the years ended December 31, 1993, 1992
   and 1991 ..........................................................    L-10

     3. Exhibits:

<CAPTION>
                                                                        Exhibit
                                Description                             Number
                               ------------                            --------

<S>                                                                       <C>
(3)  Articles of Incorporation and By-Laws

     Restated Certificate of Incorporation of the Registrant,
     incorporated herein by reference to Exhibit 3 to Registrant's
     Report on Form 10-Q for the quarter ended September 30, 1987 ....    3.01

     By-Laws of the Registrant as amended to date, incorporated
     herein by reference to Exhibit 4.6 to Registrant's Registration
     Statement No. 33-31432 ..........................................    3.02

                                       71
<CAPTION>
                                                                        Exhibit
                                Description                             Number
                               ------------                            --------

<S>                                                                       <C>
(4)  Instruments Defining the Rights of Security Holders, Including
     Indentures

     The Registrant hereby agrees to furnish to the Commission upon
     request copies of instruments with respect to long-term debt,
     pursuant to Item 601(b)(4)(iii) of Regulation S-K.

(10) Material Contracts

     Employment Agreement between Registrant and Laurence A. Tisch
     dated March 1, 1971 as amended through October 22, 1992 is
     incorporated herein by reference to Exhibit 10.01 to Registrant's
     Reports on Form 10-K for the years ended December 31, 1981,
     December 31, 1983, December 31, 1984, December 31, 1985,
     December 31, 1986, December 31, 1988, December 31, 1989 and
     December 31, 1992 ...............................................   10.01

     Employment Agreement dated as of March 1, 1988 between Registrant
     and Preston R. Tisch as amended through October 22, 1992 is
     incorporated herein by reference to Exhibit 10.05 to Registrant's
     Report on Form 10-K for the years ended December 31, 1987,
     December 31, 1989 and December 31, 1992 ..........................  10.02

     Continuing Service Agreement between a subsidiary of Registrant
     and Edward J. Noha, dated February 27, 1991 incorporated herein
     by reference to Exhibit 10.04 to Registrant's Report on Form 10-K
     for the year ended December 31, 1990 ............................   10.03

     Loews Corporation Benefits Equalization Plan dated
     January 10, 1994, amended and restated as of December 31, 1993 ..   10.04*

     Loews Corporation Deferred Compensation Plan is incorporated
     herein by reference to Exhibit 10.07 to Registrant's Report on
     Form 10-K for the year ended December 31, 1988 ..................   10.05

     Agreement between Fibreboard Corporation and Continental Casualty
     Company, dated April 9, 1993 is incorporated herein by reference
     to Exhibit A to Registrant's Report on Form 8-K filed April 12,
     1993 ............................................................   10.06

     Settlement Agreement entered into on October 12, 1993 by and
     among Fibreboard Corporation, Continental Casualty Company, CNA
     Casualty Company of California, Columbia Casualty Company and
     Pacific Indemnity Company together the "Parties" is incorporated
     herein by reference to Exhibit 99.1 to Registrant's Report on
     Form 10-Q for the quarter ended September 30, 1993 ..............   10.07

     Continental-Pacific Agreement entered into on October 12, 1993
     between Continental Casualty Company and  Pacific Indemnity
     Company is incorporated herein by reference to Exhibit 99.2 to
     Registrant's Report on Form 10-Q for the quarter ended
     September 30, 1993 ..............................................   10.08

     Global Settlement Agreement among Fibreboard Corporation,
     Continental Casualty Company, CNA Casualty Company of California,
     Columbia Casualty Company, Pacific Indemnity Company and the
     Settlement Class dated December 23, 1993 ........................   10.09*

                                       72

<CAPTION>
                                                                        Exhibit
                                Description                             Number
                               ------------                            --------

<S>                                                                       <C>
     Glossary of Terms in Global Settlement Agreement, Trust
     Agreement, Trust Distribution Process and Defendant Class
     Settlement Agreement as of December 23, 1993 ....................   10.10*

     Fibreboard Asbestos Corporation Trust Agreement dated
     December 23, 1993 ...............................................   10.11*

     Trust Distribution Process - Annex A to the Trust Agreement as of
     December 23, 1993 ...............................................   10.12*

     Defendant Class Settlement Agreement dated December 23, 1993 ....   10.13*

     Escrow Agreement among Continental Casualty Company, Pacific
     Indemnity Company and the First National Bank of Chicago dated
     December 23, 1993 ...............................................   10.14*

(11) Statement Re Computation of Per Share Earnings

     Computation of earnings per common share assuming full dilution
     for the years ended December 31, 1992 and 1991 ..................   11.01*

(21) Subsidiaries of the Registrant

     List of subsidiaries of Registrant ..............................   21.01*

(23) Consents of Experts and Counsel

     Consent of Deloitte & Touche ....................................   23.01*

(28) Information from Reports furnished to State Insurance Regulatory
     Authorities

     Reconciliation of Property/Casualty Reserves as shown on
     Schedule P to Reserves for Unpaid Claims and Claims Expense as
     shown in the Form 10-K for the year ended December 31, 1993 .....   28.01*

     Schedule P of Annual Statements to state regulatory authorities
     by property/casualty insurance subsidiaries for the year ended
     December 31, 1993 ...............................................   28.02*
</TABLE>


* Filed herewith

  (b) Reports on Form 8-K:

  During the three months ended December 31, 1993, Registrant filed a Current
Report on Form 8-K, dated October 20, 1993, reporting under Item 5, Other
Events, with respect to the issuance by the Company of $400,000,000 aggregate
principal amount of the Company's 7% Senior Notes due October 15, 2023 (the
"Notes") and the call for redemption on November 19, 1993, of the entire
principal amount of the Company's outstanding Liquid Yield Option Notes due 2004
(the "LYONS") for an aggregate redemption price of approximately $411 million.
The Company used the net proceeds received from the sale of the Notes, together
with general corporate funds, to redeem the LYONS.

                                       73

                                   SIGNATURES

  Pursuant  to the  requirements  of Section  13  or 15(d)  of  the  Securities
Exchange Act of 1934, the Registrant has duly caused this report  to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                                LOEWS CORPORATION



Dated: March 24, 1994                         By         Roy E. Posner
                                                --------------------------------
                                                  (Roy E. Posner, Senior Vice
                                                  President and Chief Financial
                                                             Officer)

  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



Dated: March 24, 1994                         By       Laurence A. Tisch
                                                --------------------------------
                                                 (Laurence A. Tisch, Chairman of
                                                     the Board and Principal
                                                        Executive Officer)


Dated: March 24, 1994                         By         Roy E. Posner
                                                --------------------------------
                                                  (Roy E. Posner, Senior Vice
                                                  President and Chief Financial
                                                             Officer)


Dated: March 24, 1994                         By          Guy A. Kwan
                                                --------------------------------
                                                    (Guy A. Kwan, Controller)


Dated: March 24, 1994                         By        Charles B. Benenson
                                                --------------------------------
                                                 (Charles B. Benenson, Director)


Dated: March 24, 1994                         By          John Brademas
                                                --------------------------------
                                                    (John Brademas, Director)


                                              By
                                                --------------------------------
                                                   (Bernard Myerson, Director)

Dated: March 24, 1994                         By         Edward J. Noha
                                                --------------------------------
                                                   (Edward J. Noha, Director)


Dated: March 24, 1994                         By         Lester Pollack
                                                --------------------------------
                                                   (Lester Pollack, Director)

                                       74


                                              By
                                                --------------------------------
                                                   (Gloria R. Scott, Director)


Dated: March 24, 1994                         By         Andrew H. Tisch
                                                --------------------------------
                                                   (Andrew H. Tisch, Director)


Dated: March 24, 1994                         By         James S. Tisch
                                                --------------------------------
                                                   (James S. Tisch, Director)


Dated: March 24, 1994                         By        Jonathan M. Tisch
                                                --------------------------------
                                                  (Jonathan M. Tisch, Director)


Dated: March 24, 1994                         By        Preston R. Tisch
                                                --------------------------------
                                                  (Preston R. Tisch, Director)

                                       75


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and
Shareholders of Loews Corporation:

  We have audited the accompanying consolidated balance sheets of Loews
Corporation and its subsidiaries as of December 31, 1993 and 1992, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1993. Our audits
also included the financial statement schedules listed in the Index at Item
14(a)2. These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements and financial statement schedules based on
our audits.

  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

  In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Loews Corporation and its
subsidiaries at December 31, 1993 and 1992 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1993 in conformity with generally accepted accounting principles. Also, in
our opinion, such financial statement schedules, when considered in relation to
the basic consolidated financial statements taken as a whole, present fairly in
all material respects the information set forth therein.

  As discussed in Note 1 to the consolidated financial statements, the Company
changed its methods of accounting for reinsurance and certain investments in
debt and equity securities in 1993 and its methods of accounting for
postretirement benefits, income taxes and certain workers' compensation and
disability claims in 1992.




Deloitte & Touche

New York, New York
February 16, 1994


                                      L-1

                                                                      SCHEDULE I

                       LOEWS CORPORATION AND SUBSIDIARIES

      Summary of Investments - Other than Investments in Related Parties at
                               December 31, 1993


<TABLE>
<CAPTION>
                                                        Quoted
                                                        Market       Carrying
                                            Cost         Value         Value
                                        ---------------------------------------
                                                    (In thousands)

<S>                                     <C>           <C>           <C>
Fixed maturities available for sale:
 Bonds and notes:
  United States government and
   government agencies and authorities  $ 8,551,503   $ 8,688,293   $ 8,688,293
  States, municipalities and political
   subdivisions-tax exempt ...........    4,724,041     5,014,841     5,014,841
  Foreign governments ................      420,948       423,356       423,356
  Public utilities ...................      235,366       256,502       256,502
  Convertibles and bonds with warrants
   attached ..........................      188,583       193,943       193,943
  All other corporate ................    2,489,849     2,632,937     2,632,937
 Redeemable preferred stocks .........      445,291       447,984       447,984
                                        ---------------------------------------
     Total fixed maturities available
      for sale .......................   17,055,581   $17,657,856    17,657,856
                                        --------------===========--------------

Equity securities available for sale:
  Common stocks:
   Public utilities ..................       21,634       $21,810        21,810
   Banks, trusts and insurance
    companies ........................       57,784        56,695        56,695
   Industrial, miscellaneous and all
    other ............................      949,196     1,161,751     1,161,751
                                        ---------------------------------------
     Total equity securities .........    1,028,614    $ 1,240,256    1,240,256
                                        ---------------===========-------------
Mortgage loans and notes receivable ..      128,934                     125,402
                                        -----------                 -----------

Loans to life insurance policyholders       174,006                     173,606
                                        -----------                 -----------

Other long-term investments ..........       69,375                      68,121
                                        -----------                 -----------

Short-term investments ...............    8,025,201                   8,025,201
                                        -----------                 -----------
     Total investments ...............  $26,481,711                 $27,290,442
                                        ===========                 ===========
</TABLE>


                                      L-2

                                                                    SCHEDULE III

                 Condensed Financial Information of Registrant

                               LOEWS CORPORATION

                                 BALANCE SHEETS

                                     ASSETS


<TABLE>
<CAPTION>
                                                             December 31,
                                                      --------------------------
                                                           1993          1992
                                                      --------------------------
                                                             (In thousands)
                                                                      (Restated)
<S>                                                    <C>            <C>
Current assets:
  Cash and cash equivalents .......................    $   11,140     $  508,468
  Investment in U.S. government securities ........       762,639        561,844
  Income tax receivable (c) .......................        96,623        301,009
  Receivables .....................................        82,504         11,159
  Deferred income taxes ...........................         3,264
                                                       -------------------------
     Total current assets .........................       956,170      1,382,480
Investments in securities .........................       782,228        572,681
                                                       -------------------------
     Total current assets and investments .........     1,738,398      1,955,161
Investments in capital stocks of subsidiaries, at
 equity ...........................................     5,356,871      4,968,120
Advances to subsidiaries ..........................       415,114
Other assets ......................................        20,954         22,211
                                                       -------------------------
     Total assets .................................    $7,531,337     $6,945,492
                                                       =========================

<CAPTION>
                       LIABILITIES AND SHAREHOLDERS' EQUITY

<S>                                                    <C>            <C>
Current liabilities:
  Accounts payable and accrued liabilities ........    $  159,805     $   47,625
  Accrued taxes ...................................         8,121         14,089
  Securities sold under repurchase agreements .....                      100,125
  Current maturities of long-term debt (b) ........         1,252        201,138
                                                       -------------------------
     Total current liabilities ....................       169,178        362,917
Long-term debt, less current maturities (b) .......     1,183,792      1,042,020
Deferred income tax ...............................        51,169          2,260
Advances from subsidiaries ........................                       11,245
                                                       -------------------------
     Total liabilities ............................     1,404,139      1,418,502
                                                       -------------------------

Shareholders' equity (a):
  Common stock, $1 par value
    Authorized-200,000,000 shares
    Issued and outstanding-61,524,700 and
     65,098,700 shares ............................        61,525         65,099
  Additional paid-in capital ......................       210,289        163,076
  Earnings retained in the business ...............     5,476,660      5,266,983
  Unrealized appreciation .........................       406,736         31,832
  Pension liability adjustment ....................       (28,012)
                                                       -------------------------
     Total shareholders' equity ...................     6,127,198      5,526,990
                                                       -------------------------
     Total liabilities and shareholders' equity ...    $7,531,337     $6,945,492
                                                       =========================
</TABLE>


                                      L-3

                                                                    SCHEDULE III
                                                                     (Continued)

                 Condensed Financial Information of Registrant

                               LOEWS CORPORATION

                              STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                 Years Ended December 31,
                                          --------------------------------------
                                             1993          1992          1991
                                          --------------------------------------
                                                      (In thousands)
                                                       -(Restated)-

<S>                                        <C>           <C>          <C>
Revenues:
  Equity in income (loss) of
   subsidiaries (d) ..................     $585,039      $(63,448)    $  942,203
  Realized investment gains ..........       46,184        39,377         14,602
  Interest and other .................       46,103        95,009         94,510
                                           -------------------------------------
     Total ...........................      677,326        70,938      1,051,315
                                           -------------------------------------

Expenses:
  Administrative .....................        5,119         6,990          6,139
  Interest ...........................       86,239       101,129        106,795
                                           -------------------------------------
     Total ...........................       91,358       108,119        112,934
                                           -------------------------------------
                                            585,968       (37,181)       938,381
                                           -------------------------------------
(Benefit) provision for income taxes
 (c):
  Federal ............................      (13,853)      (16,464)        22,987
  State ..............................        5,700         1,380         11,056
                                           -------------------------------------
     Total ...........................       (8,153)      (15,084)        34,043
                                           -------------------------------------
Income (loss) before cumulative effect
 of changes in accounting principles .      594,121       (22,097)       904,338
Cumulative effect of changes in
 accounting principles-net ...........                    144,711
                                           -------------------------------------
Net income ...........................     $594,121      $122,614     $  904,338
                                           =====================================
</TABLE>


                                      L-4

                                                                    SCHEDULE III
                                                                     (Continued)

                 Condensed Financial Information of Registrant

                               LOEWS CORPORATION

                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                Years Ended December 31,
                                        ----------------------------------------
                                             1993          1992          1991
                                        ----------------------------------------
                                                     (In thousands)
                                                       -(Restated)-

<S>                                       <C>            <C>          <C>
Operating Activities:
  Net income .........................    $ 594,121      $ 122,614    $ 904,338
  Adjustments to reconcile net income
   to net cash provided by operating
   activities:
    Cumulative effect of changes in
     accounting principles ...........                    (144,711)
    Undistributed (earnings) losses
     of affiliates ...................      (52,819)       626,733     (273,829)
    Realized investment gains ........      (46,184)       (39,377)     (14,602)
  Changes in assets and liabilities-net:
    Receivables ......................      (71,829)         3,624       33,224
    Accounts payable and accrued
     liabilities .....................       38,015          3,744      (19,601)
    Federal income taxes .............      204,386       (382,949)      14,663
    Other-net ........................      (14,743)        46,799       (1,175)
                                          --------------------------------------
                                            650,947        236,477      643,018
                                          --------------------------------------
Investing Activities:
  Purchases of securities ............     (263,476)      (142,292)    (237,839)
  Proceeds from sales of securities ..      262,918        124,032      159,673
  Investments in and advances to
   subsidiaries-net ..................     (426,359)       (82,441)     373,054
  Net (increase) decrease in U.S.
   government securities .............     (201,086)       440,345     (251,274)
  Securities sold under agreements to
   repurchase ........................     (100,125)       100,125
  Change in other investments ........       39,082         98,444      (98,443)
                                          --------------------------------------
                                           (689,046)       538,213      (54,829)
                                          --------------------------------------
Financing Activities:
  Dividends paid to shareholders .....      (64,289)       (65,810)     (68,923)
  Purchases of treasury shares .......     (336,297)      (238,223)    (264,182)
  Principal payments on long-term debt     (739,893)       (17,207)    (294,975)
  Issuance of long-term debt .........      681,250
                                          --------------------------------------
                                           (459,229)      (321,240)    (628,080)
                                          --------------------------------------
Net change in cash and cash equivalents    (497,328)       453,450      (39,891)
Cash and cash equivalents, beginning
 of year .............................      508,468         55,018       94,909
                                          --------------------------------------
Cash and cash equivalents, end of year    $  11,140      $ 508,468    $  55,018
                                          ======================================
</TABLE>


                                      L-5

                                                                    SCHEDULE III
                                                                     (Continued)

                 Condensed Financial Information of Registrant

- --------------

Notes:

  (a) In addition to its common stock, the Company has authorized 25,000,000
shares of preferred stock, $.10 par value.

  (b) Long-term debt consisted of:


<TABLE>
<CAPTION>
                                                             December 31,
                                                      --------------------------
                                                          1993           1992
                                                      --------------------------
                                                             (In thousands)

<S>                                                    <C>            <C>
8.5% notes due 1998 (effective interest rate of
 8.6%) (authorized, $125,000) ..................       $  117,832     $  117,832
8.3% debentures due 2007 (effective interest
 rate of 8.4%) (authorized, $200,000) (1) ......          200,000        200,000
8.9% debentures due 2011 (effective interest
 rate of 9.0%) (authorized, $175,000) ..........          175,000        175,000
9% senior sinking fund debentures due 2016
 (effective interest rate of 9.2%)(authorized,
 $200,000) .....................................                         158,700
7.6% notes due 2023 (effective interest rate of
 7.8%) (authorized, $300,000) (2) ..............          300,000
7% notes due 2023 (effective interest rate of
 7.2%) (authorized, $400,000) (3) ..............          400,000
Notes payable due 2002 (effective interest rate
 of 10.0%) .....................................           15,741         16,879
10% subordinated notes due 1996 ................                         200,000
Zero coupon convertible subordinated notes due
 2004, net of discount of $393,293 .............                         390,138
                                                       -------------------------
                                                        1,208,573      1,258,549
Less: unamortized discount .....................           23,529         15,391
      current maturities .......................            1,252        201,138
                                                       -------------------------
                                                       $1,183,792     $1,042,020
                                                       =========================

(1) Redeemable in whole or in part at January 15, 1997 at 104%, and decreasing
percentages thereafter.
(2) Redeemable in whole or in part at June 1, 2003 at 104%, and decreasing
percentages thereafter.
(3) Redeemable in whole or in part at October 15, 2003 at 102%, and decreasing
percentages thereafter.
  The aggregate of long-term debt maturing in each of the next five years is
approximately as follows: $1,252,000; $1,380,000; $1,527,000; $1,680,000 and
$119,685,000.

                                      L-6

  (c) The Company is included in a consolidated federal income tax return with
certain of its subsidiaries and, accordingly, participates in the allocation of
certain components of the consolidated provision for federal income taxes. Such
taxes are generally allocated on a separate return bases.
  The Company has entered into separate tax allocation agreements with Bulova
and CNA, majority-owned subsidiaries in which its ownership exceeds 80% (the
"Subsidiaries"). Each agreement provides that the Company will (i) pay to the
Subsidiary the amount, if any, by which the Company's consolidated federal
income tax is reduced by virtue of inclusion of the Subsidiary in the Company's
return, or (ii) be paid by the Subsidiary an amount, if any, equal to the
federal income tax which would have been payable by the Subsidiary if it had
filed a separate consolidated return. Under these agreements, the federal income
tax benefit (expense) to CNA amounted to approximately $17,000,000, $350,000,000
and $(82,000,000) for the years ended December 31, 1993, 1992 and 1991,
respectively, and the federal income tax benefit (expense) to Bulova amounted to
approximately $2,500,000, $(3,300,000) and $1,900,000 for the years ended
December 31, 1993, 1992 and 1991, respectively. Each agreement may be cancelled
by either of the parties upon thirty days' written notice. See Note 8 to the
Notes to Consolidated Financial Statements of Loews Corporation and
subsidiaries.

  (d) Cash dividends paid to the Company by affiliates amounted to $505,739,000,
$553,592,000 and $654,741,000 for the years ended December 31, 1993, 1992 and
1991, respectively.
</TABLE>


                                      L-7

                                                                   SCHEDULE VIII

                       LOEWS CORPORATION AND SUBSIDIARIES

                       Valuation and Qualifying Accounts


<TABLE>
<CAPTION>
      Column A       Column B          Column C          Column D     Column E
      --------       --------          --------          --------     --------
                                       Additions
                                 --------------------
                    Balance at    Charge to Charged to               Balance at
                    Beginning     Costs and    Other                   End of
    Description     of Period     Expenses   Accounts   Deductions     Period
- --------------------------------------------------------------------------------
                                            (In thousands)

                                For the Year Ended December 31, 1993

<S>                  <C>           <C>      <C>          <C>         <C>
Deducted from assets:
 Allowance for
  discounts ........ $  5,277      $ 69,754              $72,494(1)  $  2,537
 Allowance for
  doubtful accounts   126,003        11,137                9,935      127,205
                     ----------------------------------------------------------
     Total ......... $131,280      $ 80,891              $82,429     $129,742(2)
                     ==========================================================

<CAPTION>
                                For the Year Ended December 31, 1992

<S>                  <C>           <C>      <C>          <C>         <C>
Deducted from assets:
 Allowance for
  discounts ........ $  5,124      $ 75,546              $75,393(1)  $  5,277
 Allowance for
  doubtful accounts   112,880        33,179               20,056      126,003
                     ----------------------------------------------------------
     Total ......... $118,004      $108,725              $95,449     $131,280(2)
                     ==========================================================

<CAPTION>
                                For the Year Ended December 31, 1991

<S>                  <C>           <C>      <C>          <C>         <C>
Deducted from assets:
 Allowance for
  discounts ........ $  5,089      $ 71,374              $71,339(1)  $  5,124
 Allowance for
  doubtful accounts    89,629        39,104               15,853      112,880
                     ----------------------------------------------------------
     Total ......... $ 94,718      $110,478              $87,192     $118,004(2)
                     ==========================================================

- -----------

Notes:

  (1) Discounts allowed.
  (2) Shown in the following captions in the accompanying consolidated
balance sheets:

<CAPTION>
                                              1993          1992          1991
                                            ------------------------------------

      <S>                                   <C>           <C>           <C>
      Receivables:
        Insurance .....................     $117,324      $110,420      $100,382
        Other .........................       12,418        20,860        17,622
                                            ------------------------------------
           Total ......................     $129,742      $131,280      $118,004
                                            ====================================
</TABLE>


                                      L-8

                                                                     SCHEDULE IX

                       LOEWS CORPORATION AND SUBSIDIARIES

                             Short-Term Borrowings


<TABLE>
<CAPTION>

                                                                      Weighted
                                           Maximum       Average       average
Category of                 Weighted       amount        amount       interest
aggregate        Balance    average     outstanding    outstanding      rate
short-term      at end of   interest     during the     during the   during the
borrowings       period      rate          period       period (a)   period (b)
- --------------------------------------------------------------------------------
                                   (In thousands of dollars)

                                  Year Ended December 31, 1993

<S>              <C>         <C>          <C>            <C>            <C>
Banks            $2,000      4.00%        $  2,000       $  2,000       4.43%

<CAPTION>
                                  Year Ended December 31, 1992

<S>              <C>         <C>          <C>            <C>            <C>
Banks            $2,000      5.13%        $  2,101       $  2,040       5.52%

<CAPTION>
                                  Year Ended December 31, 1991

<S>              <C>         <C>          <C>            <C>            <C>
Banks (c)        $2,011      6.02%        $288,577       $107,399       6.61%

- ----------

Notes:  (a) Average amounts outstanding during the period are calculated by an
average of end of month balances.
        (b) Weighted average interest rate during the period is calculated by
dividing short-term interest expense by the average amount outstanding for the
period.
        (c) CNA entered into master note agreements and loan participation
certificates ("LPC") with several banks and a money market fund that provided
short-term borrowing facilities. Master notes represent borrowings on a demand
basis arranged generally with trust departments of certain banks. LPC's are bank
loans that are immediately sold to other institutions; they are similar in
nature to commercial paper.
</TABLE>


                                      L-9

                                                                    SCHEDULE XIV

                       LOEWS CORPORATION AND SUBSIDIARIES

   Supplemental Information Concerning Property/Casualty Insurance Operations


<TABLE>
<CAPTION>
                                        Consolidated Property/Casualty Entities
                                        ----------------------------------------

                                                Years Ended December 31,
                                        ----------------------------------------
                                           1993           1992            1991
                                        ----------------------------------------
                                                      (In thousands)
                                                      --------(Restated)--------

<S>                                     <C>           <C>           <C>
Deferred policy acquisition costs ....  $   562,029   $   507,487   $   494,010
Reserves for unpaid claims and claims
 expense .............................   20,811,955    20,033,647    18,200,170
Discount, if any, deducted above
 (based on interest rates ranging from
 3.5% to 7.5%) .......................    1,886,532     1,787,348     1,126,024
Unearned premiums ....................    2,556,015     2,425,105     2,507,955
Earned premiums ......................    6,275,018     6,353,574     6,655,318
Net investment income ................    1,059,796     1,224,120     1,282,736
Claims and claims expense related to
 current year ........................    5,387,947     5,708,216     5,833,016
Claims and claims expense related to
 prior years .........................      589,959     1,617,433       (12,255)
Amortization of deferred policy
 acquisition costs ...................    1,172,362     1,032,556     1,056,753
Paid claims and claims expense .......    4,916,888     4,676,600     4,468,924
Premiums written .....................    6,382,326     6,286,197     6,620,099
</TABLE>


                                      L-10




                                                                   EXHIBIT 11.01

                       LOEWS CORPORATION AND SUBSIDIARIES

     Statement Re Computation of Per Share Earnings Assuming Full Dilution


<TABLE>
<CAPTION>
                                                       Years Ended December 31,
                                                      --------------------------
                                                          1992           1991
                                                      --------------------------
                                                         (In thousands, except
                                                             per share data)

<S>                                                     <C>             <C>
Computation of Fully Diluted Net Income:
  Net Income  .....................................     $122,614        $904,338
  Reduction of interest and debt discount expenses
   related to notes assumed converted, net of
   applicable federal income taxes ................       14,924          15,693
                                                        ------------------------
  Fully diluted net income ........................     $137,538        $920,031
                                                        ========================

Computation of Fully Diluted Shares:
  Weighted average shares outstanding .............       65,659          68,807
  Add shares assumed to be issued upon conversion
   of notes .......................................        2,154           2,405
                                                        ------------------------
  Fully diluted shares ............................       67,813          71,212
                                                        ========================

Net Income Per Share Assuming Full Dilution .......     $   2.03        $  12.92
                                                        ========================
</TABLE>


                                      L-11




                                                                   Exhibit 21.01

                               LOEWS CORPORATION

                         Subsidiaries of the Registrant

                               December 31, 1993

                                          Organized Under
            Name of Subsidiary                Laws of            Business Names
            ------------------            ---------------        --------------

CNA Financial Corporation .............      Delaware      )
 Continental Casualty Company .........      Illinois      )
  Continental Assurance Company .......      Illinois      )
  National Fire Insurance Company of                       )
   Hartford ...........................      Connecticut   )       CNA Insurance
  American Casualty Company of Reading,                    )
   Pennsylvania .......................      Pennsylvania  )
  CNA Management Company Limited ......      United Kingdom)

Lorillard, Inc. .......................      New York      )
 Lorillard Tobacco Company ............      Delaware      )       Lorillard


  The names of certain subsidiaries which, if considered as a single subsidiary,
would not constitute a "significant subsidiary" as defined in Regulation S-X,
have been omitted.







                                                                   EXHIBIT 23.01

                         INDEPENDENT AUDITORS' CONSENT


  We consent to the incorporation by reference in Registration Statement No. 33-
60342 of Loews Corporation on Form S-3 of our report dated February 16, 1994,
appearing in this Annual Report on Form 10-K of Loews Corporation for the year
ended December 31, 1993.




Deloitte & Touche

New York, New York
March 24, 1994







                                                                   EXHIBIT 28.01

                       LOEWS CORPORATION AND SUBSIDIARIES

      Reconciliation of Property/Casualty Reserves as shown on Schedule P
                to Reserves for Unpaid Claims and Claims Expense

                               December 31, 1993

  A reconciliation of property/casualty reserves as shown on Schedule P to
reserves for unpaid claims and claims expense, as shown in the Form 10-K
follows. Schedule P is from Continental Casualty Company's 1993 consolidated
annual statutory statement provided to state insurance regulatory authorities.
Statutory claims and claims expense reserves are present net of ceded
reinsurance reserve. Under generally accepted accounting principles such
reserves are recorded "gross" of reinsurance. Ceded reinsurance recoverables are
recorded as assets.


<TABLE>
<CAPTION>
Property/Casualty Reserve Reconciliation
Statutory Basis to Generally Accepted Accounting Principles
- --------------------------------------------------------------------------------
                                                                  (In thousands)

<S>                                                                  <C>
Total claims and claims expense per Schedule P ..................    $17,962,503
Non-domestic affiliates .........................................        358,778
Ceded claims and claims expense .................................      2,490,674
                                                                     -----------
     Reserve for claims and claims expense-gross ................    $20,811,955
                                                                     ===========
</TABLE>














                                  LOEWS CORPORATION

                              BENEFIT EQUALIZATION PLAN

                    amended and restated as of December 31, 1993







































                                                           January 10, 1994

                                      FOREWORD

          Effective as of January 1, 1987, Loews Corporation, Marcus Loew
          Booking Agency and Lorillard, Inc. have adopted the Loews
          Corporation Benefit Equalization Plan (the "Plan") for the
          benefit of certain of their executives.  The Plan has been
          amended and restated, as hereinafter set forth, effective as of
          January 1, 1989.  It is intended that the "excess benefits"
          provided under the Plan be an "excess benefits plan" as that term
          is defined in Section 3(36) of the Employee Retirement Income
          Security Act of 1974, and that the "supplemental benefits",
          "pension supplement benefits", "savings supplement benefits",
          and/or "deferred compensation benefits" provided under the Plan
          be a deferred compensation plan for "a select group of management
          or highly compensated employees" as that term is used in the
          Employee Retirement Income Security Act of 1974.

          The purpose of the Plan is to:

               (1)  provide retired participants and their surviving
                    spouses, contingent annuitants and beneficiaries under
                    the Retirement Plan for Employees of Loews Corporation
                    ("Retirement Plan") with the amount of company-provided
                    benefits that would
 have been provided under the
                    Retirement Plan but for

                    (i)   the limitations on benefits imposed under Section
                          415 of the Internal Revenue Code,

                    (ii)  the limitation on compensation for purposes of
                          the Retirement Plan imposed by Section 401(a)(17)
                          of such Code, and/or

                    (iii) the fact that the participant elected to defer
                          compensation that otherwise would be payable
                          currently by reason of an election to defer such
                          compensation under the Loews Corporation Deferred
                          Compensation Plan,

               (2)  provide certain participants in the Loews Corporation
                    Employees Savings Plan ("Savings Plan") with the
                    "pension supplement benefits" (as defined in Section
                    1.7 of this Plan) that would have been credited to
                    their accounts under the Savings Plan were it not for
                    the limitation on compensation for purposes of the
                    Savings Plan imposed by Section 401 (a)(17) of the
                    Internal Revenue Code and/or the fact that such
                    participants may have elected to defer compensation
                    that would otherwise have been payable currently in
                    accordance with the Loews Corporation Deferred
                    Compensation Plan, and

               (3)  provide certain participants in the Loews Corporation
                    Employees Savings Plan ("Savings Plan") with the
                    "savings supplement benefits" (as defined in Section
                    1.11 of this Plan) that would have been credited to
                    their accounts under the Savings Plan were it not for
                    the fact that such participants may have elected to
                    defer compensation that would otherwise have been
                    payable currently in accordance with the Loews
                    Corporation Deferred Compensation Plan.

                                          i

          In addition, additional and/or modified benefits under this Plan
          may be provided to an employee in accordance with the terms of an
          Agreement between such employee and the Company.  If and to the
          extent the provisions of any such Agreement are inconsistent with
          any Plan provision, such provisions of such Agreement (i) shall
          be deemed to modify the terms of the Plan with respect to the
          employee to whom the Agreement applies, and (ii) shall in all
          events control and govern, notwithstanding any Plan provision to
          the contrary.

          Except to the extent otherwise indicated, and to the extent
          otherwise inappropriate, the Retirement Plan and the provisions
          thereof and the Savings Plan and the provisions thereof are
          hereby incorporated by reference.

                                         ii

                                     SECTION ONE
                                     -----------

                                     Definitions
                                     -----------


          1.1    Except to the extent otherwise indicated herein, and to the
                extent otherwise inappropriate in the context, the
                definitions contained in Article 1 of the Retirement Plan
                are applicable under the Plan.

          1.2   "Agreement" means a written agreement between an executive
                of the Company and the Company which modifies the
                provisions of the Plan insofar as such provisions relate to
                such executive.

          1.3   "Board of Directors" means the Board of Directors of Loews
                Corporation.

          1.4   "Company" means Loews Corporation or any successor by
                merger, purchase or otherwise, with respect to its
                employees; Marcus Loew Booking Agency with respect to its
                employees; Lorillard, Inc. with respect to its employees;
                or any other company participating in the Plan as provided
                in Section 4.3 with respect to its employees.

          1.5   "Deferred Compensation Benefit" means, except as is
                otherwise provided in an Agreement, the excess, if any, of
                (i) the retirement allowance which would have been payable
                to or with respect to a participant under the Retirement
                Plan had he not elected to defer compensation that would
                have otherwise been payable to him currently in accordance
                with the provisions of the Loews Corporation Deferred
                Compensation Plan over (ii) the retirement allowance
                payable to or with respect to the participant under the
                Retirement Plan.

          1.6   "Excess Benefit" means, except as is otherwise provided in
                an Agreement, the excess, if any, of (i) the retirement
                allowance which would have been payable to or with respect
                to a participant under the Retirement Plan had the
                limitations on benefits imposed by Section 4.08 of the
                Retirement Plan not been applicable over (ii) the
                retirement allowance payable to or with respect to the
                participant under the Retirement Plan.

          1.7   "Pension Supplement Benefit" means, except as is otherwise
                provided in an Agreement, in the case of an individual who
                is a participant in the Savings Plan and whose employment
                with the Company commenced prior to January 1, 1982, the
                sum of:

                (i)  the following percentage of such person's compensation
                     for each year based on his age as of the first day of
                     each such year to the extent such compensation (a)
                     exceeds the limitation on compensation imposed by
                     Section 401(a)(17) of the Code, or (b) is not
                     currently received by reason of an election to defer
                     compensation in accordance with the Loews Corporation
                     Deferred Compensation Plan:

                                          1

              Age at Beginning of Year      Percentage of Compensation
              ------------------------      --------------------------

                     Under age 28                        0%
                          28                           .04%
                          29                           .07%
                          30                           .09%
                          31                           .12%
                          32                           .14%
                          33                           .17%
                          34                           .20%
                          35                           .22%
                          36                           .25%

                          37                           .28%
                          38                           .31%
                          39                           .34%
                          40                           .37%
                          41                           .40%

                          42                           .44%
                          43                           .47%
                          44                           .51%
                          45                           .54%
                          46                           .58%

                          47                           .61%
                          48                           .65%
                          49                           .69%
                          50                           .73%
                          51                           .77%

                          52                           .81%
                          53                           .85%
                          54                           .89%
                          55                           .94%
                          56                           .98%

                          57                          1.03%
                          58                          1.08%
                          59                          1.12%
                          60                          1.17%
                          61                          1.21%

                          62                          1.25%
                     63 and older                     1.30%

                                          2

                plus

                (ii) interest on such amount equal to the aggregate
                     investment experience that would have been credited
                     with respect to such amount if it had been credited to
                     the participant's account in the Money Market/
                     Government Securities Fund of the Savings Plan were it
                     not for (a) the limitation on the amount of
                     compensation recognized under the Savings Plan by
                     reason of Section 401(a)(17) of the Code, or (b) the
                     fact that such compensation is not payable currently
                     due to a deferral election in accordance with the
                     Loews Corporation Deferred Compensation Plan.

          1.8   "Plan" means the Loews Corporation Benefit Equalization
                Plan as set forth herein and as from time to time in
                effect.

          1.9   "Retirement Plan" means the Retirement Plan for Employees
                of Loews Corporation.

          1.10  "Savings Plan" means the Loews Corporation Employees
                Savings Plan.

          1.11  "Savings Supplement Benefit" means, except as is otherwise
                provided in an Agreement, in the case of an individual who
                is a participant in the Savings Plan, the sum of:

                (i)  1% of that portion of the first $100,000 of such
                     person's compensation for each year to the extent such
                     compensation is not currently received by reason of an
                     election to defer compensation in accordance with the
                     Loews Corporation Deferred Compensation Plan; plus

                (ii) interest on such amount equal to the aggregate
                     investment experience that would have been credited
                     with respect to such amount if it had been credited to
                     the participant's account in the Money Market/
                     Government Securities Fund of the Savings Plan were it
                     not for the fact that such compensation is not payable
                     currently due to a deferral election in accordance
                     with the Loews Corporation Deferred Compensation Plan.

          1.12  "Supplemental Benefit" means, except as is otherwise
                provided in an Agreement, the excess, if any, of (i) the
                retirement allowance that would have been payable to or
                with respect to a participant under the Retirement Plan had
                the amount of the participant's total annual compensation
                paid by the Company and the amount deferred under the Loews
                Corporation Deferred Compensation Plan been included in the
                term "Compensation" under the Retirement Plan over (ii) the
                sum of (a) the retirement allowance payable to or with
                respect to the participant under the Retirement Plan, (b)
                any Excess Benefit payable under this Plan, and (c) any
                Deferred Compensation Benefit payable under this Plan.

                                          3

                                     SECTION TWO
                                     -----------

                                    Participation
                                    -------------


          Except as is otherwise provided in an Agreement, participation in
          the Plan shall be limited to

                (1)  those participants in the Retirement Plan and their
                     surviving spouses, contingent annuitants and
                     beneficiaries who, as a result of

                     (i)   the limitations on benefits that may be paid or
                           accrued under the Retirement Plan by reason of
                           Section 415 of the Internal Revenue Code,

                     (ii)  the limitation on compensation which may be
                           taken into account under the Retirement Plan by
                           reason of Section 401(a)(17) of such Code,
                           and/or

                     (iii) the deferral of the receipt of compensation that
                           would have otherwise have been payable currently
                           pursuant to an election to defer such
                           compensation in accordance with the Loews
                           Corporation Deferred Compensation Plan,

                     receive or will receive a lesser amount of retirement
                     income under the Retirement Plan than otherwise would
                     be paid or payable in the absence of such limitations
                     and/or such election to defer,

                (2)  those participants in the Savings Plan whose
                     employment with the Company commenced prior to January
                     1, 1982 (and the surviving spouses and other
                     beneficiaries of such individuals) who, as a result of
                     the limitation on compensation which may be taken into
                     account under the Savings Plan by reason of Section
                     401(a)(17) of the Internal Revenue Code and/or the
                     fact that such participants may have elected to defer
                     compensation that would otherwise have been payable
                     currently in accordance with the Loews Corporation
                     Deferred Compensation Plan, receive or will receive a
                     lesser amount of benefits in accordance with Section
                     3.1(b) of the Savings Plan (or any successor to such
                     section) than otherwise would be receivable, and

                (3)  those participants in the Savings Plan who, as a
                     result of their deferral of compensation that would
                     otherwise be recognized under such Savings Plan
                     pursuant to an election to defer in accordance with
                     the Loews Corporation Deferred Compensation Plan,
                     receive or will receive a lesser allocation in
                     accordance with Section 3.1(a) of the Savings Plan (or
                     any successor to such section) than otherwise would be
                     allocated.

                                          4

                                    SECTION THREE
                                    -------------

                                      Benefits
                                      --------


          3.1   Excess Benefits
                ---------------

                The aggregate amount of Excess Benefit payable to or with
                respect to a participant shall be paid directly to such
                participant, or to his surviving spouse, contingent
                annuitant or beneficiary, as applicable, from the general
                assets of the Company in accordance with Section 3.6.

          3.2   Supplemental Benefits
                ---------------------

                The aggregate amount of Supplemental Benefit payable to or
                with respect to a participant shall be paid directly to
                such participant, or to his surviving spouse, contingent
                annuitant or beneficiary, as applicable, from the general
                assets of the Company in accordance with Section 3.6.

          3.3   Deferred Compensation Benefits
                ------------------------------

                The aggregate amount of Deferred Compensation Benefit
                payable to or with respect to a participant shall be paid
                directly to such participant, or to his surviving spouse,
                contingent annuitant or beneficiary, as applicable, from
                the general assets of the Company in accordance with
                Section 3.6.

          3.4   Pension Supplement Benefits
                ---------------------------

                The aggregate amount of Pension Supplement Benefits payable
                to or with respect to a participant shall be paid directly
                to such participant, or to his surviving spouse or
                beneficiary, as applicable, from the general assets of the
                Company in accordance with Section 3.6.

          3.5   Savings Supplement Benefits
                ---------------------------

                The aggregate amount of Savings Supplement Benefits payable
                to or with respect to a participant shall be paid directly
                to such participant, or to his surviving spouse or
                beneficiary, as applicable, from the general assets of the
                Company in accordance with Section 3.6.

          3.6   General Provisions
                ------------------

                (a)  The Company shall make no provision for the funding of
                     any Excess Benefits, Supplemental Benefits, Deferred
                     Compensation Benefits, Pension Supplement Benefits, or
                     Savings Supplement Benefits payable hereunder.

                                          5

                (b)  In the event that the Company shall decide to
                     establish an advance accrual reserve on its books
                     against the future expense of Excess Benefit payments,
                     Supplemental Benefit payments, Deferred Compensation
                     Benefit payments, Pension Supplement Benefit payments,
                     or Savings Supplement Benefit payments, such reserve
                     shall not under any circumstances be deemed to be an
                     asset of this Plan but, at all times, shall remain a
                     part of the general assets of the Company, subject to
                     claims of the Company's creditors.

                (c)  A person entitled to an Excess Benefit, Supplemental
                     Benefit, Deferred Compensation Benefit, Pension
                     Supplement Benefit, or Savings Supplement Benefit
                     shall have a claim upon the Company only to the extent
                     of the monthly payments thereof, if any, due up to and
                     including the then current month and shall not have a
                     claim against the Company for any subsequent monthly
                     payment unless and until such payment shall become due
                     and payable.

                (d)  Except as is otherwise provided in an Agreement and in
                     the case of an active participant over age 70-1/2 who
                     is receiving required payments, the Excess Benefit,
                     Supplemental Benefit, and Deferred Compensation
                     Benefit with respect to a participant shall be paid to
                     the participant, his surviving spouse, contingent
                     annuitant or beneficiary in the same form and at the
                     same time as the retirement allowance to or with
                     respect to the participant under the Retirement Plan.
                     An active participant over age 70-1/2 will not receive
                     payments under this Plan until his or her termination
                     of employment.  Except as is otherwise provided in an
                     Agreement, the Pension Supplement Benefit and Savings
                     Supplement Benefit with respect to a participant shall
                     be paid to the participant, his surviving spouse, or
                     beneficiary in a cash lump sum payment to be made as
                     soon as is practicable following the date of the
                     participant's termination of employment.

                (e)  Except as is otherwise provided in an Agreement, to
                     the extent that any supplemental retirement benefits
                     (other than Pension Supplement Benefits and Savings
                     Supplement Benefits) are payable to a participant
                     under an employment or other agreement between the
                     participant and the Company (other than the Loews
                     Corporation Deferred Compensation Plan), the amount of
                     such payments shall be deducted from Excess Benefit,
                     Supplemental Benefit, and/or Deferred Compensation
                     Benefit payable hereunder.

                (f)  Except as is otherwise provided in an Agreement, in
                     the event that the Retirement Plan shall be terminated
                     in accordance with Section 8.01 thereof, Excess
                     Benefits, Supplemental Benefits, and Deferred
                     Compensation Benefits shall continue to be paid
                     directly by the Company but only to the same extent
                     and for the same duration as that part of the payee's
                     benefit from the Trust fund of the Retirement Plan,
                     which is directly related to such Excess
                     Benefit, supplemental Benefit, or Deferred Compensation
                     Benefit is continued to be provided by the assets of the
                     Trust fund of the Retirement Plan; but such continued
                     payment of Excess Benefit, Supplemental Benefit, or
                     Deferred Compensation Benefit shall still be subject
                     to the conditions specified in subsections (a), (b),
                     (c), (d) and (e) above.  Except as is otherwise
                     provided in an Agreement, in the event that the
                     Savings Plan shall be terminated, Pension


                                          6

                     Supplement Benefits Savings Supplement Benefits shall be
                     paid at such time and in such manner as related accounts
                     under the Savings Plan are paid.


          3.7   Minimum Benefits:
                -----------------

                Effective with respect to participants who terminate
                employment for any reason after December 31, 1993, there
                shall be certain minimum benefits payable, as follows:

                (a)  The minimum Excess Benefit, as defined in Section 1.6,
                     payable at age 65 or later retirement, shall be 75%
                     (90% for active Loews participants age 65 or older at
                     December 31, 1993) of the Excess Benefit determined as
                     if the participant had terminated employment on
                     December 31, 1993 and elected to receive this benefit
                     at age 65 (age at December 31, 1993, if older), but
                     recognizing the 1994 limitation under Section 4.08 of
                     the Retirement Plan.

                (b)  The minimum Pension Supplement Benefit, as defined in
                     Section 1.7, shall be the December 31, 1993 account
                     balance.

                (c)  The minimum Savings Supplement Benefit, as defined in
                     Section 1.11, shall be the December 31, 1993 account
                     balance.

                (d)  The minimum Supplemental Benefit, as defined in
                     Section 1.12, payable at age 65 or later retirement,
                     shall be 75% (90% for active Loews participants age 65
                     or older at December 31, 1993) of the Supplemental
                     Benefit determined as if the participant had
                     terminated employment on December 31, 1993 and elected
                     to receive this benefit at age 65 (age at December 31,
                     1993, if older), but recognizing the 1994 limitation
                     under Section 4.08 of the Retirement Plan for purposes
                     of computing the Excess Benefit.

                                          7

                                    SECTION FOUR
                                    ------------

                                   Administration
                                   --------------

          4.1   Plan Administrator
                ------------------

                Loews Corporation shall be the "administrator" of the Plan
                within the meaning of ERISA.

          4.2   Retirement Committee
                --------------------

                Subject to the provisions of Section 4.1, the Retirement
                Committee of the Retirement Plan shall be vested with the
                general administration of the Plan.  The Retirement
                Committee shall have the exclusive right to interpret the
                Plan.  The decisions, actions and records of the Retirement
                Committee shall be conclusive and binding upon the Company
                and all persons having or claiming to have any right or
                interest in or under the Plan.

          4.3   Participation by Subsidiary
                ---------------------------

                If any company is now or hereafter becomes a subsidiary or
                affiliated company of the Company and becomes a
                participating company under the Retirement Plan or the
                Savings Plan, the Board of Directors may authorize such
                subsidiary or affiliated company to participate in this
                Plan upon appropriate action by such company necessary to
                adopt the Plan.

                                          8

                                    SECTION FIVE
                                    ------------

                              Amendment and Termination
                              -------------------------


          5.1   Amendment of the Plan
                ---------------------

                Subject to the provisions of Section 5.3, the Plan may be
                wholly or partially amended or otherwise modified at any
                time by the Board of Directors.

          5.2   Termination of the Plan
                -----------------------

                Subject to the provisions of Section 5.3, the Plan may be
                terminated at any time by the Board of Directors.

          5.3   No Impairment of benefits
                -------------------------

                Notwithstanding the provisions of Sections 5.1 and 5.2, no
                amendment to or termination of the Plan shall impair any
                rights to benefits which have accrued hereunder.

                                          9


                                                                   EXHIBIT 10.09






                           IN THE UNITED STATES DISTRICT COURT
                            FOR THE EASTERN DISTRICT OF TEXAS
                                      TYLER DIVISION


     GERALD AHERN, JAMES DENNIS, and         )
     CHARLES W. JEEP, On Behalf of           )
     Themselves and Others                   )
     Similarly Situated                      )
                                             )
               Plaintiffs,                   )
                                             )
          v.                                 )
                                             )
     FIBREBOARD CORPORATION                  )        Civil Action No. 6:93cv526
                                             )
               Defendant                     )
                                             )
     CONTINENTAL CASUALTY COMPANY            )
     and                                     )
     PACIFIC INDEMNITY COMPANY               )
                                             )
               Intervenors                   )


                        SUBMISSION OF GLOBAL SETTLEMENT AGREEMENT
                       -----------------------------------------

          COMES NOW Continental Casualty Company ("Continental"), together with
     Fibreboard Corporation, CNA Casualty Company of California, Columbia
     Casualty Company, Pacific Indemnity Company, and the Settlement Class,
     provisionally certified by this Court, and submit the following Global
     Settlement Agreement, together with Exhibits A-E.

     Dated:  December 23, 1993

                                                 Respectfully submitted,

                                                 IRELAND, CARROLL & KELLEY, P.C.
                                                 6101 S. Broadway, Suite 500
                                                 Tyler, Texas 75703
                                                 (903) 561-1600
                                                 (903) 581-1071 Facsimile


                                                  BY:      Bill Parker
                                                  -----------------------------
                                                           BILL PARKER






                          GLOBAL SETTLEMENT AGREEMENT
                                     AMONG
                            FIBREBOARD CORPORATION,
                         CONTINENTAL CASUALTY COMPANY,
                      CNA CASUALTY COMPANY OF CALIFORNIA,
                           COLUMBIA CASUALTY COMPANY,
                           PACIFIC INDEMNITY COMPANY,
                                      AND
                              THE SETTLEMENT CLASS


                               TABLE OF CONTENTS
                               -----------------

                                                                           Page
                                                                           ----

ARTICLE 1 DEFINITIONS ...................................................    8

     SECTION 1.1     Certain Defined Terms ..............................    8

ARTICLE
 2 SETTLEMENT ....................................................    8

     SECTION 2.1     Settlement .........................................    8
     SECTION 2.2     Exclusive Rights Against the Trust .................    8
     SECTION 2.3     Payments ...........................................    9
     SECTION 2.4     Additional Fibreboard Obligations ..................   11
     SECTION 2.5     Releases ...........................................   14
     SECTION 2.6     Final Settlement of the Insurance Policies .........   16
     SECTION 2.7     Indemnity Obligation of the Trust After Global
                     Approval Judgment ..................................   17
     SECTION 2.8     Fibreboard Corporation's Indemnity and Related
                     Obligations ........................................   17

ARTICLE 3 ACTIONS TO BE TAKEN TO IMPLEMENT THIS AGREEMENT ...............   19

     SECTION 3.1     Applications for Initial Court Orders, Settlement
                     Class Order, Defendant Class Order and Global
                     Approval Judgment ..................................   19
     SECTION 3.2     Effect of Class Certification ......................   19
     SECTION 3.3     Execution and Delivery of Escrow Instructions ......   20

ARTICLE 4 TERMINATION ...................................................   23

     SECTION 4.1     Termination ........................................   23

ARTICLE 5 SETTLEMENT TRUST ..............................................   24

     SECTION 5.1     Trust Agreement ....................................   24
     SECTION 5.2     Continuing Jurisdiction of the Court ...............   24
     SECTION 5.3     Preservation of Funds ..............................   25

ARTICLE 6 THIRD PARTY CLAIMS ............................................   25

     SECTION 6.1     Bar Orders .........................................   25
     SECTION 6.2     Judgment Reduction and Subrogation Rights ..........   25
     SECTION 6.3     Actions Necessary to Obtain Discharges and Bar
                     Orders .............................................   26

                                     - i -


                                                                           Page
                                                                           ----

ARTICLE 7 INTERIM CLAIM LIQUIDATION PROCEDURES ..........................   28

     SECTION 7.1     Interim Claims .....................................   28
     SECTION 7.2     Processing Interim Claims ..........................   29
     SECTION 7.3     Payment of Exigent and Extreme Hardship Claims .....   32
     SECTION 7.4     Payment of Interim Claims Other Than Exigent Health
                     Claims and Extreme Hardship Claims .................   32
     SECTION 7.5     Sources of Payment of Liquidated Amounts for Interim
                     Claims .............................................   34
     SECTION 7.6     Miscellaneous Interim Claim Provisions .............   35

ARTICLE 8 MISCELLANEOUS .................................................   36

     SECTION 8.1     Designated or Qualified Settlement Fund ............   36
     SECTION 8.2     Counsel ............................................   38
     SECTION 8.3     No Oral Representations ............................   38
     SECTION 8.4     Payment of Costs ...................................   38
     SECTION 8.5     Modification and Waiver ............................   39
     SECTION 8.6     Further Actions ....................................   39
     SECTION 8.7     Effectiveness of Agreement Notwithstanding
                     Developments .......................................   40
     SECTION 8.8     No Admission or Use ................................   40
     SECTION 8.9     No Breach of Other Obligations .....................   41
     SECTION 8.10    Third Party Beneficiaries ..........................   41
     SECTION 8.11    Rights and Obligations of Fibreboard Corporation and
                     the Insurers Under the Settlement Agreement and
                     Related Agreements .................................   41
     SECTION 8.12    Headings ...........................................   42
     SECTION 8.13    Notices ............................................   42
     SECTION 8.14    Counterparts .......................................   47

                                     - ii -


                          UNITED STATES DISTRICT COURT
                           EASTERN DISTRICT OF TEXAS
                                 TYLER DIVISION



GERALD AHEARN, JAMES DENNIS and    )
CHARLES W. JEEP, On Behalf of      )
Themselves and Others Similarly    )
Situated,                          )
                                   )
          Plaintiffs,              )
                                   )
     vs.                           )
                                   )
FIBREBOARD CORPORATION,            )         Civil Action No. 6:93 cv 526
                                   )
          Defendant,               )
                                   )
CONTINENTAL CASUALTY COMPANY       )
                                   )
     and                           )
                                   )
PACIFIC INDEMNITY COMPANY,         )
                                   )
          Intervenors.             )
___________________________________)



                          GLOBAL SETTLEMENT AGREEMENT
                          ---------------------------

          This Agreement is made and entered into as of August 27, 1993, by and

among the Representative Plaintiffs as representatives of the Settlement Class,

acting by and through Class Counsel; Fibreboard Corporation, a Delaware

corporation; Continental Casualty Company, an Illinois corporation; CNA Casualty

Company of California, a California corporation; Columbia Casualty Company, an

Illinois corporation; and Pacific Indemnity Company, a California corporation,

together the "Parties."



                                    RECITALS
                                   ---------

          A.  The Representative Plaintiffs have filed a class action complaint

in the Class Action on behalf of the Settlement Class against Fibreboard

Corporation in the Global Court, and the Court has provisionally certified that

class under Rule 23(b)(1)(B) of the Federal Rules of Civil Procedure for

settlement purposes only. Continental and Pacific have been allowed to intervene

as parties to the Class Action.

          B.  For more than fifteen years, thousands of individuals exposed to

asbestos or asbestos-containing products have filed lawsuits alleging personal

injury and damage in the state and federal courts against Fibreboard Corporation

and against many other defendants.

          C.  These lawsuits have resulted in extensive discovery concerning the

potential liability of Fibreboard Corporation and other defendants, as well as

full consideration of the legal and factual bases, including medical issues,

underlying each individual asbestos plaintiff's personal injury lawsuit.

          D.  The vast majority of the asbestos personal injury lawsuits brought

against Fibreboard Corporation and others in the past fifteen years have been

settled without trial, although a small percentage have been tried to verdict,

with plaintiffs prevailing in some cases and Fibreboard Corporation and other

defendants prevailing in other cases.

          E.  Despite significant success in reducing litigation costs through a

variety of mechanisms, plaintiffs and defendants have spent, and continue to

spend,

                                     - 2 -


enormous resources contesting both liability and damages, allocating

responsibility among the parties, and litigating issues of insurance coverage.

          F.  Continental, CNA Casualty, Columbia and Pacific issued certain

Insurance Policies to Fibreboard.

          G.  Fibreboard Corporation and certain of the Insurers have been and

are engaged in litigation in several actions involving disputed questions of

insurance coverage, the first of which was filed in 1979 in the Superior Court

of the State of California in and for the City and County of San Francisco

entitled Fireman's Fund Insurance Company v.  Fibreboard Corporation et al., No.
         -------------------------------------------------------------------

753885, and is an included action in the Coverage Case.

          H.  In the Coverage Case, Fibreboard Corporation contends that certain

of the Insurers are obligated to defend and indemnify Fibreboard Corporation

against certain of Fibreboard Corporation's liabilities for claims for asbestos

personal injury or death and for related claims.  These Insurers contend that

they have no further obligation to defend or indemnify Fibreboard Corporation

for any such claims.  A judgment in favor of Fibreboard Corporation was rendered

by Judge Ira Brown in the Coverage Case on January 24, 1990, and that judgment

is currently on appeal.  The Parties' contentions are, inter alia, set forth in

the pleadings in the Coverage Case and in the briefs before the Court of Appeal.

          I.  In addition to the tens of thousands of claims for asbestos

personal injury or death that have been filed and resolved against Fibreboard

Corporation and other defendants in jurisdictions throughout the United States,

tens of thousands of filed claims remain pending and thousands more are expected

to be

                                     - 3 -


filed in the future.  Litigating the asbestos-related personal injury lawsuits

is depleting Fibreboard Corporation's resources, including insurance resources,

available to compensate claimants.  Absent substantial insurance resources,

Fibreboard Corporation could not satisfy the claims for asbestos personal injury

pending against it.

          J.  The expenditures necessary to process and resolve asbestos

lawsuits have contributed to more than ten major asbestos defendants filing for

bankruptcy reorganization.  Because some of these defendants represent a

significant portion of the traditional liability share for asbestos personal

injury cases, and many jurisdictions apply the principle of joint and several

liability, these bankruptcy filings have increased costs substantially, caused

significant delays to plaintiffs and created financial pressures on the

remaining defendants.

          K.  Continental and Fibreboard Corporation entered into an agreement,

dated April 9, 1993, pursuant to which Continental and Fibreboard Corporation

agreed, among other things, upon terms and conditions set forth therein, to use

their best efforts jointly to negotiate and finalize a global class action

settlement with personal injury claimants, and Continental agreed, whether or

not a global settlement was reached, to pay certain defense and other costs of

certain asbestos-related claims on an interim basis.

          L.  On or about August 22, 1993 and August 29, 1993, Continental and

Pacific entered into agreements, which agreements have been superseded by the

Continental-Pacific Agreement, dated as of October 12, 1993, whereby Continental

                                     - 4 -


and Pacific settled the dispute between them and agreed upon terms for the

sharing of liabilities of each of them with respect to certain asbestos-related

claims.

          M.  Fibreboard Corporation, Continental, CNA Casualty, Columbia and

Pacific entered into the Settlement Agreement, dated October 12, 1993, pursuant

to which they agreed, among other things, to settle and compromise all claims

and potential claims against the Insurers under the Insurance Policies.

          N.  Fibreboard Corporation has invested substantial sums in pursuing

its insurance coverage for certain asbestos-related personal injury claims

asserted against Fibreboard Corporation.  Although Fibreboard Corporation has

been successful in this litigation to date, it is still subject to risks and

uncertainties.  These include the risks associated with the Coverage Case and

the continuing effect on Fibreboard Corporation's corporate operations created

by asbestos-related personal injury claims and Fibreboard Corporation's

unresolved insurance coverage with respect thereto.  The Settlement Class

Members are also subject to the risks associated with the Coverage Case since

their ability to collect upon any judgments they may obtain against Fibreboard

Corporation is largely dependent upon the existence and extent of Fibreboard

Corporation's insurance coverage.  Continental and Pacific are similarly

subjected to the risks and uncertainties presented by the Coverage Case and the

potential liabilities Continental and Pacific may have with respect to asbestos

- -related personal injury claims.  Absent this Agreement, the results in the

Coverage Case likely would be severely prejudicial to either Continental and

Pacific, on the one hand, or Fibreboard Corporation and the Settlement Class

Members, on the other hand.

                                      - 5-


          O.  Counsel for the Representative Plaintiffs each has a decade or

more of experience in the litigation of asbestos-related personal injury cases.

They have conducted a thorough investigation into the law and facts relating to

matters set forth in the class action complaint.

          P.  In light of the uncertainties associated with the pending,

unresolved issues enumerated above, there are substantial risks that

adjudications with respect to certain asbestos-related personal injury claims by

Settlement Class Members will, as a practical matter, be dispositive of the

claims and interests of certain other Settlement Class Members not yet

adjudicated or will substantially impair or impede the ability of such other

Settlement Class Members to protect their interests.

          Q.  The primary purpose of this Agreement is to create a fund to

compensate the Settlement Class Members, free of the risks of the pending

Coverage Case litigation between Fibreboard Corporation and the Insurers, and to

apply the fund thus created to an equitable settlement of the claims of the

Settlement Class Members.  The mechanism for accomplishing this purpose is

creation of the Trust, to which the claims of all Settlement Class Members

against Fibreboard Corporation or the Insurers shall be directed.

          R.  The settlement contemplated by this Agreement would provide a

fair, flexible, speedy, cost-effective and assured method of compensating

claimants who have been exposed to asbestos or asbestos-containing products for

which Fibreboard Corporation may bear legal liability and who have contracted or

will in the future contract an asbestos-related condition.  Thus, this Agreement

provides

                                     - 6 -


considerable benefit to the Settlement Class, while avoiding costly litigation

of difficult and contentious issues.

          S.  Based on extensive analysis of the law and facts at issue in the

Class Action, the other factors and considerations enumerated above concerning

asbestos litigation, and the fair, flexible, speedy, cost-effective and assured

procedures set forth in this Agreement and its exhibits for compensating the

Settlement Class, each Party has determined that settlement on the terms set

forth below would be fair, adequate and reasonable, and thus in its best

interests.

          T.  Third Party Claims are litigated infrequently in asbestos

litigation.  The vast majority of asbestos personal injury, death and related

cases are settled before trial.  In those cases where trials result in judgments

against nonsettling defendants, the law in most jurisdictions protects settling

defendants against claims for contribution by judgment debtors.  Nevertheless,

because the potential for Third Party Claims would remain, absent provision for

them, this Agreement sets forth a fair, flexible, speedy, cost-effective and

assured procedure for resolving Third Party Claims.

          NOW, THEREFORE, in consideration of the foregoing and the mutual

covenants contained herein, the Parties hereby agree as follows:

                                     - 7 -


                                   ARTICLE 1

                                  DEFINITIONS

          SECTION 1.1     Certain Defined Terms.
                          ---------------------

          Capitalized terms used herein and not defined herein shall have the

definitions for such terms set forth in the Glossary annexed as Exhibit A hereto

and incorporated herein.

                                   ARTICLE 2

                                   SETTLEMENT

          SECTION 2.1     Settlement.
                          ----------

          Effective upon Global Approval Judgment, Representative Plaintiffs, on

their own behalf and on behalf of all Settlement Class Members, hereby

compromise and settle, finally and fully, all of the Class Member Claims with

Fibreboard Corporation, Continental, CNA Casualty, Columbia and Pacific on the

terms and conditions set forth herein; provided, however, that nothing in this

Agreement or in any exhibit hereto shall discharge the Insurers from liability

predicated on policies other than the Insurance Policies.

          SECTION 2.2     Exclusive Rights Against the Trust.
                          ----------------------------------

          A.  Effective upon Global Approval Judgment, all Class Member Claims

are finally and fully settled by this Agreement, and none of such claims or any

Third Party Claim shall be prosecuted in any way against any of the Fibreboard,

Continental or Pacific Releasees.  All Class Member Claims, except claims for

punitive or exemplary damages (which are dismissed and shall not be

enforceable), are hereby directed to the Trust for disposition pursuant to the

Trust Agreement and

                                     - 8 -


Trust Distribution Process.  Third Party Claims shall be treated as provided in

Article 6 of this Agreement.  The Court shall retain jurisdiction over this

Agreement and shall use its equitable powers to enforce this Section.

          B.  The claims of Persons providing workers compensation benefits to

Settlement Class Members shall be directed to the Trust, instead of Fibreboard

Corporation or the Insurers, and disposed of pursuant to the Trust Agreement and

the Trust Distribution Process.  Such Persons providing workers compensation

benefits shall have existing remedies, whether by way of lien rights against a

Settlement Class Member's Claim against the Trust, subrogation, direct action,

or otherwise, against the Trust (instead of Fibreboard Corporation or the

Insurers), subject only to the provisions of the Trust Agreement and Trust

Distribution Process.  Only payment of funds pursuant to a Settlement Class

Member's individual settlement with the Trust, and not this Agreement (or the

resulting Global Approval Judgment, dismissal and release), shall trigger the

notice, approval and forfeiture provisions of the Longshore and Harbor Workers

Compensation Act (33 USC Section 933) and other similar state and federal

workers compensation provisions.

          SECTION 2.3     Payments.
                          --------

          A.  After execution of this Agreement, Continental and Pacific shall

(1) pay, on December 30, 1993, an aggregate amount of $1,525,000,000 into an

escrow account (the "Escrow Fund") and (2) pay the class notice costs, court

costs and other incidental expenses associated with obtaining Global Approval

Judgment and Settlement Agreement Approval Judgment.  Of the foregoing amounts,

Continental shall pay 64.71% and Pacific shall pay 35.29%.  Such payment

                                     - 9 -


obligations of Continental and Pacific shall be several and not joint.  The

Escrow Fund shall be held in the manner provided in the Escrow Agreement that is

substantially in the form of Exhibit D to this Agreement.

          B.  Upon Global Approval Judgment:

          (1)  The amount in the Escrow Fund shall be transferred to the Trust.

          (2)  Fibreboard Corporation shall pay $10,000,000 into the Trust, plus

               simple interest at the rate of 3.085% from August 27, 1993;

               provided that, with respect to interest owed on the sum of

               $9,892,223 (of the $10,000,000 referred to above) from September

               23, 1993, Fibreboard Corporation's obligation shall be fully

               discharged and satisfied by delivery of an assignment (in the

               form attached hereto as Exhibit E) from Fibreboard Corporation to

               the Trust of Fibreboard Corporation's rights against Home

               Insurance Company to payment of such interest and to damages

               arising from bad faith or other tortious conduct for failure to

               pay the $9,892,223 in a timely fashion and to pay such interest.

               Before Global Approval Judgment Fibreboard Corporation will pay

               the costs of its exercise of reasonable diligence in cooperation

               with Class Counsel in pursuing such assigned claims on its own

               behalf and on behalf of the Settlement Class.  After Global

               Approval Judgment Fibreboard will pay the reasonable costs of

               pursuing such assigned claims.

                                     - 10 -


          (3)  Continental shall pay 64.71% and Pacific shall pay 35.29% of (i)

               the fees of Class Counsel as determined and approved by the Court

               up to a maximum of 3% of the sum set forth in Section 2.3(A) and

               (ii) the reasonable expenses of Class Counsel as determined and

               approved by the Court.  The payment obligations of Continental

               and Pacific under this subsection (B)(3) shall be several and not

               joint.

          SECTION 2.4     Additional Fibreboard Obligations.
                          ---------------------------------

          A.  Fibreboard Corporation shall provide for intake, maintenance and

processing (but not evaluation) of Class Member Claims for a period of five

years from August 27, 1993 or one year from Global Approval Judgment, whichever

occurs later (unless the obligation is earlier terminated, at the election of

the Trustees).  The Parties anticipate that Fibreboard Corporation and the Trust

will subsequently refine the scope of Fibreboard Corporation's obligation under

this paragraph.

          B.  At the end of the period referred to in subsection (A) above,

Fibreboard Corporation shall transfer without charge the data and (to the extent

transferrable) software with respect to its case management system (including a

perpetual, non-exclusive license to use the case management system software

exclusively for the purpose of processing Class Member Claims and Third Party

Claims), but not including equipment or other hard assets associated therewith,

to the Trust.  Thereafter, Fibreboard Corporation shall have no further

responsibility with respect to Class Member and Third Party Claims.  The Trust

shall allow

                                     - 11 -


Trustors access to and use of the case management system thereafter for use in

connection with Settled Claims and Unsettled Claims.  The Trust shall establish

any necessary procedures to be followed by the Trustors to facilitate this

arrangement and shall be reimbursed for the actual cost of providing information

or data to the Trustors.  The Trust shall not disclose any information it may

obtain relating to Settled Claims or Unsettled Claims except as required by

court order.  The Trust shall promptly advise the Trustors of any request for

such information and afford them an opportunity to object to disclosure of any

such information.

          C.  Fibreboard Corporation shall cooperate by providing existing

information and evidence to the Trust as is reasonably necessary to evaluate,

defend and resolve Class Member Claims and Third Party Claims, including, but

not limited to, information and evidence concerning Fibreboard's products and

their distribution, the history of the conduct of Fibreboard's business,

Fibreboard's defenses and the history of Fibreboard's settlements in asbestos

- -related personal injury lawsuits.  All such information and evidence shall be

used only for such purposes.  Fibreboard Corporation shall not withhold such

information or evidence from the Trust on any grounds, including attorney

- -client, work product or any other privilege; provided, however, that Fibreboard

Corporation shall provide information and evidence which is subject to an

express claim of privilege to the Trust only on the basis that such information

and evidence remains privileged and confidential, and that the Trust shall keep

all such information and evidence privileged and confidential and shall not

waive the privileged and confidential status of such information and evidence

without Fibreboard Corporation's written consent.  With respect to Trust

requests


                                     - 12 -


for information or evidence possessed by Fibreboard Corporation which is subject

to a shared ownership, shared work product or shared attorney-client privilege

with a Defendant Class Member, the Trust shall be deemed the successor-in

- -interest to Fibreboard Corporation, but any such Defendant Class Member

affected by the proposed transfer of information shall receive reasonable notice

of, and may object to, any proposed transfer of such shared information or

evidence.

          D.  Effective upon Global Approval Judgment, Fibreboard Corporation,

except as provided in Section H of the Trust Distribution Process, transfers to

the Trust its rights, if any, to all claims for contribution or indemnity

against other joint tortfeasors arising from (i) Class Member Claims, (ii)

Personal Injury Asbestos Claims that were settled against Fibreboard Corporation

before August 27, 1993 and remain settled thereafter and (iii) judgments against

Fibreboard Corporation that became final before August 27, 1993.  Effective upon

Global Approval Judgment, to the extent that Continental, CNA Casualty, Columbia

or Pacific has been subrogated to the foregoing rights of Fibreboard to

contribution or indemnity claims, each such subrogee transfers these rights to

the Trust; provided, however, that such transfer shall not include the rights of

any of the Insurers to any contribution, indemnity or reinsurance claims against

other insurance, reinsurance or indemnity entities or syndicates.

          E.  Fibreboard Corporation agrees that to the extent Fibreboard

obtains insurance proceeds from companies other than the Insurers for asbestos

- -related personal injury claims that are not applied to asbestos-related

                                     - 13 -


indemnity or defense costs and are no longer needed by Fibreboard for such

purposes, such residual proceeds shall be made available to the Trust.

          SECTION 2.5     Releases.
                          --------

          Effective upon Global Approval Judgment:

          A.  The Representative Plaintiffs, on behalf of themselves and as

representatives of the Settlement Class, release each of the Fibreboard,

Continental and Pacific Releasees from each and every Class Member Claim.

          B.  Fibreboard Corporation, on behalf of itself and its Subsidiaries,

releases Continental, CNA Casualty and Columbia, their parents, Subsidiaries,

Affiliates, directors, employees, officers, agents and attorneys (the

"Continental Releasees") from any and all claims of whatsoever description by

Fibreboard Corporation and its Subsidiaries, including bad faith claims, except

that such release shall not include any claims arising out of this Agreement,

the Settlement Agreement (or the related agreements referred to therein) or any

obligation of a Party pursuant to an agreement or agreements entered into after

this Agreement is executed.  Notwithstanding the foregoing exceptions, such

release shall include any and all claims arising from paragraphs 1 and 2 of the

April 9 Agreement.  Nothing herein shall affect the validity or effectiveness of

the releases provided for in the April 9 Agreement, all of which are hereby

ratified by Fibreboard Corporation, Continental, CNA Casualty and Columbia.

          C.  Fibreboard Corporation, on behalf of itself and its Subsidiaries,

releases Pacific, its parents, Subsidiaries, Affiliates, directors, employees,

officers, agents and attorneys (the "Pacific Releasees") from any and all claims

of whatsoever

                                     - 14 -


description by Fibreboard Corporation and its Subsidiaries, including bad faith

claims, except that such release shall not include any claims arising out of

this Agreement, the Settlement Agreement (or the related agreements referred to

therein) or any obligation of a Party pursuant to an agreement or agreements

entered into after this Agreement is executed.  Nothing herein shall affect the

validity or effectiveness of the releases provided for in the Pacific Indemnity

Agreement, all of which are hereby ratified by Fibreboard Corporation and

Pacific.

          D.  Continental, CNA Casualty and Columbia, on behalf of themselves

and their Subsidiaries, release Fibreboard Corporation, its parents,

Subsidiaries, Affiliates, directors, employees, officers, agents and attorneys

from any and all claims of whatsoever description by Continental, CNA Casualty

and Columbia and their Subsidiaries, except that such release (i) shall not

include any claims arising out of this Agreement, the Settlement Agreement (or

the related agreements referred to therein) or any obligation of a Party

pursuant to an agreement or agreements entered into after this Agreement is

executed, and (ii) shall not prevent Continental, CNA Casualty or Columbia from

raising any defenses to claims brought against them by any person or entity

claiming an interest in the Insurance Policies, including, without limitation,

defenses against the validity or enforceability of assignments or settlements to

which Continental, CNA Casualty or Columbia is not a party.  Notwithstanding the

foregoing exceptions, such release shall include any and all claims arising from

paragraphs 1 and 2 of the April 9 Agreement.  Nothing herein shall affect the

validity or effectiveness of the releases

                                     - 15 -


provided for in the April 9 Agreement, all of which are hereby ratified by

Fibreboard Corporation, Continental, CNA Casualty and Columbia.

          E.  Pacific, on behalf of itself and its Subsidiaries, releases

Fibreboard Corporation, its parents, Subsidiaries, Affiliates, directors,

employees, officers, agents and attorneys from any and all claims of whatsoever

description by Pacific and its Subsidiaries, except that such release (i) shall

not include any claims arising out of this Agreement, the Settlement Agreement

(or the related agreements referred to therein) or any obligation of a Party

pursuant to an agreement or agreements entered into after this Agreement is

executed, and (ii) shall not prevent Pacific from raising any defenses to claims

brought against Pacific by any person or entity claiming an interest in the

Insurance Policies.  Nothing herein shall affect the validity or effectiveness

of the releases provided for in the Pacific Indemnity Agreement, all of which

are hereby ratified by Fibreboard Corporation and Pacific.

          F.  The releases required by Sections 2.5(A)-(E) above shall be

effective as a bar to each and every claim, demand and cause of action

encompassed thereby and shall include, as necessary to effectuate that purpose,

waivers by the Parties of any and all benefits conferred on any of them by

Section 1542 of the California Civil Code or similar provisions in other

jurisdictions.

          SECTION 2.6     Final Settlement of the Insurance Policies.
                          ------------------------------------------

          Fibreboard Corporation and the Insurers agree that upon Global

Approval Judgment, except for obligations that an Insurer has specifically

assumed or preserved under this Agreement, or under the Settlement Agreement (or

the related agreements referred to therein), the Insurers shall be discharged

from any


                                     - 16 -


and all of their obligations (whether direct or indirect) under or in connection

with the Insurance Policies, including any obligations imposed by judgment,

decree, statute, regulation or common law.  Upon Global Approval Judgment,

Fibreboard Corporation shall execute and deliver a stipulation for the dismissal

with prejudice of the Coverage Case as to Continental, CNA Casualty, Columbia

and Pacific.

          SECTION 2.7     Indemnity Obligation of the Trust After Global
                          Approval Judgment.
                          ----------------------------------------------

          A.  Except as provided in Section 2.4(A) as to Fibreboard Corporation,

the Trust shall defend and indemnify the Fibreboard, Continental and Pacific

Releasees against, and hold them harmless from, any costs, fees, claims,

liabilities, settlements or judgments incurred or occurring after Global

Approval Judgment and resulting, directly or indirectly, from the assertion

against any of them of any Class Member Claim or Third Party Claim.  This

obligation shall include, without limitation, any such claim to the extent that,

after Global Approval Judgment, that claim attacks the validity or

enforceability of the Global Approval Judgment.  Fibreboard Corporation and the

Insurers may, at their own expense, elect to participate with the Trust in the

defense of any such action or claim.

          B.  The Trust shall reimburse any Person entitled to reimbursement out

of the Escrow Fund pursuant to Section 3.3(A) to the extent that such Person did

not receive reimbursement from the Escrow Fund.

          SECTION 2.8     Fibreboard Corporation's Indemnity and Related
                          Obligations.
                          ----------------------------------------------

          Upon Global Approval Judgment, the Continental and Pacific Releasees

shall not have any liability for, and Fibreboard Corporation shall


                                     - 17 -


indemnify the Continental and Pacific Releasees against, and hold them harmless

from, any and all costs, fees, claims or liabilities relating to Personal Injury

Asbestos Claims and Additional Policy Claims of whatsoever kind, including those

attacking the validity or enforceability of the Global Approval Judgment, (a)

except for costs, claims or liabilities that the Insurers have specifically

undertaken to pay under this Agreement, the Settlement Agreement (or the related

agreements referred to therein), and (b) except for Defense Costs directly

attributable to an actual or threatened attack on the validity or enforceability

of the Global Approval Judgment ("Collateral Attack").  As to claims asserted

against Fibreboard Corporation that (a) would not be covered by the foregoing

indemnity (e.g., claims unrelated to asbestos) and (b) could be claimed to give

rise to a direct action against any of the Insurers, Fibreboard Corporation

agrees to reasonably and diligently defend and promptly pay or bond judgments so

as to preclude any such direct action claims.  In the event of a Collateral

Attack, Continental and Pacific shall pay Fibreboard Corporation the reasonable

costs incurred by Fibreboard Corporation in defending against a Collateral

Attack to the extent not paid by the Trust (provided that Continental's and

Pacific's obligation shall extend only to those costs directly attributable to

litigation with respect to the validity and enforceability of the Global

Approval Judgment, not to those attributable to litigation with respect to any

underlying claims).  Continental, Pacific and Fibreboard Corporation shall

jointly defend against a Collateral Attack and will cooperate reasonably with

one another in this regard.

                                     - 18 -


                                   ARTICLE 3

                ACTIONS TO BE TAKEN TO IMPLEMENT THIS AGREEMENT

          SECTION 3.1     Applications for Initial Court Orders, Settlement
                          Class Order, Defendant Class Order and Global
                          Approval Judgment.
                          -------------------------------------------------

          Promptly upon the execution of this Agreement, the Parties shall, by

joint motions, in form and substance satisfactory to counsel for each of the

Parties:

          A.  request entry of an order (i) preliminarily approving this

Agreement and the settlement contemplated by this Agreement for the purpose of

the Rule 23 Notice and settlement hearing contemplated therein, (ii)

preliminarily approving the Defendant Class Settlement Agreement and the

settlement contemplated by that agreement, and (iii) approving the contents and

methods for the dissemination of the Rule 23 Notice (which notice shall be in

form and substance satisfactory to the above counsel; and

          B.  request (i) entry of the Settlement Class Order and the Defendant

Class Order and (ii) entry of Global Approval Judgment.

          SECTION 3.2     Effect of Class Certification.
                          -----------------------------

          The certification of the Settlement Class pursuant to this Agreement

shall be binding if Global Approval Judgment is entered.  In the event this

Agreement is terminated prior to Global Approval Judgment, Fibreboard

Corporation and the Insurers shall retain their right to object to the continued

prosecution of the Class Action as a class action under Rule 23.  Neither this

                                     - 19 -


Agreement, nor its exhibits, nor the settlement negotiations, nor the

proceedings seeking approval of the settlement, may be used (i) in support of

any application for a determination that the Class Action or any other action

shall proceed as a class action except for the purposes of the settlement in

accordance with this Agreement or (ii) as evidence in any litigation (other than

an action to enforce the terms of this Agreement or any of its exhibits) or

proceeding against Fibreboard Corporation, Continental, CNA Casualty, Columbia

or Pacific in any court at any time.

          SECTION 3.3     Execution and Delivery of Escrow Instructions.

          A.  Class Counsel (or, after appointment of the Trustees, the

Trustees), Fibreboard Corporation, Continental and Pacific shall each execute

and deliver from time to time to the Escrow Agent instructions sufficient to

order the disbursement from the Escrow Fund of funds needed to pay the following

obligations:

          (1)  To pay sums payable out of the Escrow Fund pursuant to Article 7

               of this Agreement.

          (2)  To reimburse monthly to any of the Fibreboard, Continental or

               Pacific Releasees amounts, if any, paid by any of them for costs,

               fees, claims, liabilities, settlements, arbitration awards or

               judgments with respect to (i) Class Member Claims or Third Party

               Claims which receive approval from the Court during the Interim

               Period to proceed to trial or (ii) Interim Claims.

          (3)  To reimburse monthly any cost or expenses of the Trust incurred

               during the Interim Period, including the fees and expenses of the

               Interim Trustee, the Trustees or Class Counsel's

                                     - 20 -


               designee to the Interim Committee and other reasonable

               expenditures.

          (4)  To reimburse monthly any cost or expense of the SCB (in their

               capacity as such, and not in their capacity as Class Counsel)

               incurred during the Interim Period and determined by the Court or

               agreed by the Trustees to be reasonable.

          B.  Notwithstanding the provisions of Section 3.3(A)(2), (i) the cost

of compliance with Fibreboard Corporation's obligations under Section 2.4(A),

the cost of any in-house employees of Fibreboard or the Insurers, and the use of

more outside personnel than are reasonably necessary in connection with the

economical defense or settlement of a claim shall not be reimbursed, and (ii)

any non-indemnity fees or costs subject to reimbursement shall be reasonably

necessary for the resolution of an Interim Claim, Class Member Claim or Third

Party Claim as determined by the Court or agreed by the Trustees or their

designee.  Until the third anniversary after Global Approval Judgment, the Trust

may seek reimbursement from any Person to whom amounts were disbursed from the

Escrow Fund pursuant to Section 3.3(A)(2) which the Trust alleges, based on the

actual experience of the Trust in processing and resolving claims, were in fact

unreasonable and thus improperly paid from the Escrow Fund.  After a hearing on

notice to all of the Parties, the Court shall finally determine the eligibility

of any contested expenditure for reimbursement under Section 3.3(A)(2).

          C.  Fibreboard Corporation, the Insurers and the SCB agree to keep

separate billing accounts for all fees and expenses subject to reimbursement

                                     - 21 -


pursuant to Section 3.3(A)(2) or 3.3(A)(4) and, if requested by the Trustees or

Class Counsel's designee to the Interim Committee, submit them to the Court for

a determination as to the reasonableness and eligibility for reimbursement.

          D.  Class Counsel, Fibreboard Corporation, Continental and Pacific

shall each execute and deliver a written notice of termination of the Escrow

Agreement and execute and deliver escrow instructions to the Escrow Agent

sufficient to order distribution of the balance of the Escrow Fund to the

following persons upon occurrence of the following events:

          (1)  to the Trust upon occurrence of Global Approval Judgment

               (including Global Approval Judgment as to which an effective

               waiver of one or more elements has been given);

          (2)  to the trust or other entity described in Section 2.3(c) of the

               Settlement Agreement if (i) Settlement Agreement Approval

               Judgment occurs and Global Court Disapproval occurs, and (ii) the

               conditions to the establishment of such trust or other entity set

               forth in Section 2.3(c) of the Settlement Agreement are satisfied

               in the opinion of counsel for Fibreboard Corporation, Continental

               and Pacific;

          (3)  to Continental and Pacific in the percentages of 64.71% and

               35.29%, respectively, if (i) Settlement Agreement Approval

               Judgment occurs and Global Court Disapproval occurs, and (ii) the

               conditions to the establishment of such trust or other entity set

               forth of Section 2.3(c) of the Settlement Agreement are not

                                     - 22 -


               satisfied in the opinion of counsel for Fibreboard Corporation,

               Continental and Pacific; or

          (4)  to Continental and Pacific in the percentages of 64.71% and

               35.29%, respectively, if both Settlement Agreement Court

               Disapproval and Global Court Disapproval occur.

                                   ARTICLE 4

                                  TERMINATION

          SECTION 4.1     Termination.
                          -----------

          This Agreement shall automatically terminate without any further

action by any of the Parties, upon Global Court Disapproval or upon a

stipulation terminating this Agreement signed by all parties and filed with this

Court.  Upon such termination, the Settlement Class Members and the other

Parties shall, as far as may be practicable, be restored to their respective

positions, rights and obligations that existed as if this Agreement had not been

entered into.  Notwithstanding the foregoing, the following provisions of this

Agreement and the Trust Distribution Process, and the rights, obligations, and

liabilities created therewith shall survive such termination:  Sections 3.2,

3.3, 4.1, 8.2, 8.3, 8.4, 8.5, 8.8, 8.9, 8.10, 8.11, 8.13 and Article 7 of this

Agreement and section D.2.f(i) of the Trust Distribution Process.

                                     - 23 -


                                   ARTICLE 5

                                SETTLEMENT TRUST

          SECTION 5.1     Trust Agreement.
                          ---------------

          A Trust shall be created in accordance with the provisions of the

Trust Agreement attached as Exhibit B hereto.  The funds in the Trust shall be

invested and expended in accordance with the terms of the Trust Agreement and

Trust Distribution Process.  The Trust shall be separate and independent from

Fibreboard Corporation.  Neither the Trust nor Fibreboard Corporation shall be

bound by any adjudications rendered in any litigation (other than the Class

Action, the related class action respecting the Defendant Class and any future

litigation to which both the Trust and Fibreboard Corporation are parties) to

which one, but not the other, has been a party or privy.  Neither Fibreboard

Corporation nor the Trust shall be bound by any stipulations or agreements

entered into by the other.

          SECTION 5.2     Continuing Jurisdiction of the Court.
                          ------------------------------------

          The Court shall retain continuing jurisdiction over the maintenance,

administration and distribution of the Trust and the funds contained therein,

subject to and in accordance with the provisions of the Trust Agreement, the

Trust Distribution Process, and the Defendant Class Settlement Agreement.

However, the Court shall not have such continuing jurisdiction of Settlement

Class Members, Defendant Class Members, Fibreboard Corporation or the Insurers

beyond that necessary to enforce this Agreement, the Trust Agreement, the Trust

Distribution Process, and the Defendant Class Settlement Agreement.

                                     - 24 -


          SECTION 5.3     Preservation of Funds.
                          ---------------------

          To ensure that adequate Trust funds remain available to pay claims of

all Settlement Class Members, the Parties agree that they will support the goals

and purposes of the Trust and that they will cooperate in taking such steps as

may be appropriate from time to time to require the Trustees to comply with the

spending limitations, budgeting requirements, financial reporting, accounting

and audit requirements set forth in the Trust Agreement and Trust Distribution

Process.
                                   ARTICLE 6

                               THIRD PARTY CLAIMS

          SECTION 6.1     Bar Orders.
                          ----------

          All Third Party Claims shall be barred and permanently enjoined from

prosecution against any of the Fibreboard, Continental and Pacific Releasees in

any proceeding or court.  Third Party Claims against the Trust in its own

capacity or in Fibreboard Corporation's stead shall be governed by section H of

the Trust Distribution Process and the Defendant Class Settlement Agreement.

          SECTION 6.2     Judgment Reduction and Subrogation Rights.
                          -----------------------------------------

          Defendant Class Members shall have such rights to obtain credits, set

- -offs, judgment reductions and subrogation to claims of Settlement Class Members

as are provided for in the Defendant Class Settlement Agreement and the Trust

Distribution Process.

                                     - 25 -


          SECTION 6.3     Actions Necessary to Obtain Discharges and Bar Orders.
                          -----------------------------------------------------

          A.  In exchange for the subrogation and the credit and set-off rights

accorded them under the Trust Distribution Process, the Defendant Class Members

in the Defendant Class Settlement Agreement are releasing all Third Party Claims

against the Fibreboard, Continental and Pacific Releasees and have agreed that

those releases be enforced by the Global Approval Judgment.  Notwithstanding the

provisions of the Defendant Class Settlement Agreement, and except as set forth

in Section 6.3(C) below, in the event that Global Approval Judgment cannot be

obtained because of failure to obtain the discharge of, or an injunction

against, one or more Express Indemnity or Additional Policy Claims, then each

and every such Express Indemnity or Additional Policy Claim against the

Fibreboard, Continental and Pacific Releasees shall (as a sole and exclusive

remedy, in lieu of any claims or remedies at law or in equity against the

Fibreboard, Continental and Pacific Releasees, which claims or remedies are and

will be forever barred and enjoined) be resolved with and compensated by the

Trust as Residual Claims under the provisions of the Trust Distribution Process.


          B.  Except as set forth in Section 6.3(C) below, in the event the

Parties receive notice that notwithstanding the right to compensation under the

provisions of Section 6.3(A) above, Global Approval Judgment cannot be obtained

because of failure to obtain the discharges of, or injunctions against, any

Third Party Claim against the Fibreboard, Continental and Pacific Releasees,

Settlement Class Members agree to reduce judgments in their favor against

Defendant Class Members

                                     - 26 -


in such amounts as may be necessary to obtain the discharges of and injunctions

against Third Party Claims as against the Fibreboard, Continental and Pacific

Releasees which are required for the entry of Global Approval Judgment.  Any

such reduction of judgment may be up to (but may not exceed) the full amount

that a Defendant Class Member would have been entitled to recover from any of

the Fibreboard, Continental and/or Pacific Releasees in the event that a valid

Third Party Claim arising from the judgment or payment thereof could have been

brought against any of them in the absence of Global Approval Judgment.

          C.  The Parties believe that there are no valid Express Indemnity

Claims or Additional Policy Claims arising from the distribution of asbestos or

asbestos-containing materials or products manufactured by Fibreboard and sold or

distributed under a label, trade name or brand name of a Person unaffiliated

with Fibreboard pursuant to an agreement with Fibreboard.  Fibreboard

Corporation represents that, except as disclosed to the Insurers and to Class

Counsel in writing, it knows of no Persons unaffiliated with Fibreboard who sold

or distributed such materials or products.  In the event the Parties receive

notice that Global Approval Judgment cannot be obtained because of failure to

obtain the discharge of, or an injunction against, any Express Indemnity Claim

or Additional Policy Claim asserted by any Person listed in the writing referred

to in the second sentence of this Section 6.3(C), then (i) the obligations

imposed on Settlement Class Members set forth in Section 6.3(B) do not apply to

those claims, (ii) Continental, Pacific and Fibreboard Corporation may advise

Class Counsel within seven days of receipt of such notice that they have waived

such failure to obtain the discharge of, or

                                     - 27 -


injunction against, such claim or claims, and (iii) in the event that

Continental, Pacific and Fibreboard Corporation have not so advised Class

Counsel, then the Attorney Ad Litem shall for 14 days following expiration of

the seven-day period have the option, but not the obligation, to elect to have

Section 6.3(B) apply to such claim or claims.  If Continental and Pacific elect

pursuant to the foregoing sentence to waive failure to obtain the discharge of,

or an injunction against, any of the Express Indemnity Claims or Additional

Policy Claims described in the preceding sentence, Fibreboard Corporation shall

be deemed to have waived such failure if Continental and Pacific agree to

indemnify and hold harmless Fibreboard Corporation against any cost or liability

resulting from the assertion of any such claims against Fibreboard Corporation.

                                   ARTICLE 7

                      INTERIM CLAIM LIQUIDATION PROCEDURES

          SECTION 7.1     Interim Claims.
                          --------------

          The provisions of this Article 7 specify the procedures to be followed

in handling certain Class Member Claims presented during the "Interim Period,"

which is the period commencing at the later of January 1, 1994 or the execution

of this Global Settlement Agreement, and ending at Global Approval Judgment or

Global Court Disapproval.  Third Party Claims of Defendant Class Members arising

out of Interim Claims shall be resolved in accordance with the terms of the

Defendant Class Settlement Agreement.  An "Interim Committee," consisting of a

designee of Class Counsel, a designee of Fibreboard Corporation, and a designee

of

                                     - 28 -


the Insurers, shall perform the functions specified for it in this Article in

connection with Liquidation of Interim Claims.

          An "Interim Claim" is a Class Member Claim which a Settlement Class

Member seeks to Liquidate during the Interim Period and which meets one of the

following criteria:

          A.  it is an Exigent Health Claim;

          B.  it is an Extreme Hardship Claim; or

          C.  the Settlement Class Member establishes to the satisfaction of the

Interim Committee that his or her asbestos-related personal injury claim in the

tort system against a Defendant Class Member will be tried to judgment during

the Interim Period and that the trial will adjudicate issues unique to that

Settlement Class Member (e.g., damages, legal causation), as distinguished from

issues common to a number of plaintiffs (e.g., negligence, strict liability,

punitive damages).

          SECTION 7.2     Processing Interim Claims.
                          -------------------------

          A.  Any Settlement Class Member electing to submit an Interim Claim

shall forward a notice of Interim Claim and a proof of claim to the Interim

Committee, on forms to be prescribed by the Interim Committee.

          B.  Interim Claims shall be processed in accordance with the claims

procedures set forth in the Trust Distribution Process, except as follows:

          (1)  Negotiations and any arbitration with respect to any Interim

               Claim shall be between the Interim Claimant, on the one hand, and

               Fibreboard Corporation and the Insurers (and not the Trust), on

 the other hand.

                                     - 29 -


          (2)  Each Interim Claimant asserting an Exigent Health Claim or

               Extreme Hardship Claim shall present a written demand within

               seven days of submitting the notice of Interim Claim and

               properly completed proof of claim.  Fibreboard Corporation and

               the Insurers shall evaluate such Interim Claim.  Fibreboard

               Corporation and the Insurers shall jointly respond with a written

               offer in no more than seven days from receipt of the written

               demand.  If settlement negotiations fail to produce a settlement

               within 14 days from receipt of the initial offer, such Interim

               Claimant may proceed to binding arbitration.  The arbitration

               shall be held within 30 days after arbitration is requested by

               such Interim Claimant.

          (3)  Each Interim Claimant asserting an Interim Claim other than an

               Exigent Health Claim or Extreme Hardship Claim shall within seven

               days of receipt of a trial date submit a properly completed proof

               of claim form and a notice of the date that trial is  scheduled

               to commence.  A settlement demand shall also be submitted by such

               Interim Claimant at that time.  Fibreboard Corporation and the

               Insurers shall evaluate such Interim Claim.  Fibreboard

               Corporation and the Insurers shall jointly respond with a written

               offer in no more than 28 days from receipt of the written demand.

               The parties shall negotiate in good faith, and, if a settlement

               is not reached by 14 days prior to trial, such

                                     - 30 -


               Interim Claim shall be set for binding arbitration to be

               conducted and concluded prior to entry of judgment in the trial

               court; provided, however, that such Interim Claimant may, as

               early as 30 days prior to the scheduled trial date, request

               binding arbitration.

          (4)  The arbitration shall consist of an abbreviated hearing which may

               be conducted by conference call, with the award based upon the

               oral presentations, and any written submissions, of the parties'

               respective settlement positions.  Neither party may submit any

               evidence in the arbitration that was not submitted to the other

               party at least seven days prior to the earlier of the

               commencement of the arbitration or the submission of its final

               offer or demand.  The written demands and offers required by

               subsections (B) (2) and (B) (3) above shall be included in such

               submissions.

          (5)  The Interim Committee shall establish and maintain a list of

               Qualified Arbitrators.  An arbitrator shall be told the amount of

               the final offer and the amount of the Interim Claimant's final

               demand at the commencement of arbitration.  The arbitrator shall

               only have discretion to award one of those two amounts.

           C.  Any settlement of an Interim Claim shall be with the consent of

               Class Counsel's designee, which consent shall not be unreasonably

               withheld.

                                     - 31 -


          SECTION 7.3     Payment of Exigent and Extreme Hardship Claims.
                          ----------------------------------------------

          Interim Claims that are Exigent Health Claims or Extreme Hardship

Claims shall be paid as follows:

          A.  50% of the amount for which such Interim Claim has been Liquidated

shall be paid 30 days after the Interim Claim is Liquidated.

          B.  The remaining 50% of such amount shall be paid 60 days after the

first to occur of (i) Global Approval Judgment, (ii) Settlement Agreement

Approval Judgment or (iii) entry of the Final Decision in the Coverage Case;

provided that (x) any amount to be paid under this Section 7.3(B) by reason of

the fact that the Final Decision is the first to occur of the foregoing

triggering events shall be paid 60 days after that event only to the extent of

the Insurer's coverage obligations as determined by the Final Decision and (y)

any portion of such amount that remains unpaid after that time shall be paid 60

days after the first to occur of (a) any of the other triggering events or (b)

both Global Court Disapproval and Settlement Agreement Court Disapproval.

          SECTION 7.4     Payment of Interim Claims Other Than Exigent Health
                          Claims and Extreme Hardship Claims.
                          ---------------------------------------------------

          Interim Claims other than Exigent Health Claims or Extreme Hardship

Claims shall be paid as follows:

          A.  If Global Approval Judgment is entered on or before June 30, 1996,

these Interim Claims shall be paid in accordance with the Trust Distribution

Process in the same manner as other Class Member Claims.

                                     - 32 -


           B.  If Global Approval Judgment has not been entered on or before

June 30, 1996,

          (1)  50% of the amount for which such Interim Claim has been

               Liquidated shall be paid upon the later of (i) the first to occur

               of November 30, 1996 or 30 days after Settlement Agreement

               Approval Judgment, or (ii) 60 days after receipt by the Insurers

               and Fibreboard Corporation of a declaration or affidavit stating

               that the case against a Defendant Class Member has been tried to

               judgment or has been settled against all non-bankrupt defendants

               in such case, unless both Global Court Disapproval and Settlement

               Agreement Court Disapproval have occurred by such time.

          (2)  Any unpaid balance of such amount shall be paid 60 days after the

               first to occur of (i) Global Approval Judgment, (ii) Settlement

               Agreement Approval Judgment or (iii) entry of the Final Decision

               in the Coverage Case; provided that (x) any amount to be paid

               under this Section 7.4(B)(2) by reason of the fact that the Final

               Decision is the first to occur of the foregoing triggering events

               shall be paid 60 days after that event only to the extent of the

               Insurer's coverage obligations as determined by the Final

               Decision and (y) any portion of such amount that remains unpaid

               after that time shall be paid 60 days after the first to occur of

               (a) any of the other triggering events or

                                     - 33 -


               (b) both Global Court Disapproval and Settlement Court Agreement

               Disapproval.

          (3)  Notwithstanding the provisions of subsections B(1) and B(2)

               above, if an Interim Claim against one or more Defendant Class

               Members is consolidated for trial with the claims of more than 50

               other Settlement Class Members, (i) the Interim Committee, at the

               request of the Trustees, shall pay amounts payable out of the

               Escrow Fund with respect to such Interim Claims in such manner

               and over such a longer time period (not to exceed 10 years) as

               the Trustees shall determine is in the best interests of the

               Trust and the Beneficiaries and (ii) the Trustees shall have

               discretion to pay amounts payable by the Trust with respect to

               such Interim Claims in such manner and over such a longer time

               period (not to exceed 10 years) as the Trustees shall determine

               is in the best interests of the Trust and the Beneficiaries.

          SECTION 7.5     Sources of Payment of Liquidated Amounts for Interim
                          Claims.
                          ----------------------------------------------------

          The amounts due for payment under Sections 7.3 and 7.4 shall be paid:

          A.  by the Trust if Global Approval Judgment has been entered by the

date payment is due;

          B.  by Fibreboard Corporation if both Settlement Agreement Approval

Judgment and Global Court Disapproval have occurred by the date payment is due;

                                     - 34 -


          C.  by the Insurers to the extent of their coverage obligations as

determined by the Final Decision in the Coverage Case, with any remaining

balance paid by Fibreboard Corporation, if each of Global Court Disapproval,

Settlement Agreement Court Disapproval and the Final Decision has occurred by

the date payment is due; and

          D.  out of the Escrow Fund if neither (A), (B), nor (C) is applicable

by the date a payment is due.

          SECTION 7.6     Miscellaneous Interim Claim Provisions.
                          --------------------------------------

          Any Interim Committee decision shall require the unanimous approval of

all members of the Interim Committee.  In the event that unanimity cannot be

achieved, disputes over the handling of Interim Claims shall be submitted to the

Court for resolution.  Class Counsel's designee shall not disclose any

privileged or confidential information supplied to such designee by Fibreboard

Corporation or the Insurers except as required by court order and shall promptly

notify the Party which designated such information as privileged or confidential

upon receipt of any subpoena or other formal request for such information.  The

members of the Interim Committee shall not disclose any settlement information

with respect to Interim Claims to anyone other than Fibreboard Corporation,

Continental, Pacific or the Trust, except as required by court order and upon

reasonable prior notice to Fibreboard Corporation, Continental, Pacific and the

Trust.

                                     - 35 -


                                   ARTICLE 8

                                 MISCELLANEOUS

          SECTION 8.1     Designated or Qualified Settlement Fund.
                          ---------------------------------------

          Fibreboard Corporation's, Continental's, CNA Casualty's, Columbia's

and Pacific's obligation to proceed with this Agreement are expressly

conditioned upon the receipt by Fibreboard Corporation and the Insurers of a

letter ruling from the Internal Revenue Service pursuant to which the Internal

Revenue Service confirms that the Trust will be treated either (i) as a

Designated Settlement Fund or (ii) as a Qualified Settlement Fund.  In the event

that the Internal Revenue Service has not issued such a ruling within twelve

months after execution of this Agreement and has not expressed substantial

concerns about the merits of the ruling request, then Fibreboard Corporation's

and the Insurers' obligations to proceed are expressly conditioned upon receipt

of a written opinion reasonably satisfactory to Fibreboard Corporation no later

than twelve months after the date of this Agreement from an independent and

distinguished professional tax advisor that either (i) the Trust will be treated

either as a Designated Settlement Fund or as a Qualified Settlement Fund or (ii)

Fibreboard Corporation will not recognize any net taxable income as a result of

the Global Approval Judgment and the transactions contemplated thereby,

establishment of the Trust, or any payments (other than those paid to Fibreboard

Corporation) made by the Trust for Trust Expenses, Class Member Claims or Third

Party Claims.  Fibreboard Corporation and the Insurers shall use good faith

efforts to obtain such a ruling or advice, as the case may be, as promptly as

practicable after

                                     - 36 -


the date of this Agreement.  Class Counsel shall be kept fully informed about,

and may participate in, the efforts to obtain such a ruling.

          The tax advisor will be selected in the following manner.  Fibreboard

Corporation shall name three tax advisors.  Within 5 days of receipt of such

names, Class Counsel or the Insurers may notify Fibreboard Corporation that

either of them objects to any such person on the ground that he or she is not an

independent and distinguished professional tax advisor.  Fibreboard Corporation

shall select the final tax advisor from those persons remaining.  If no persons

remain, Fibreboard Corporation may name a substitute or substitutes, or may

apply to Judge Patrick H. Higginbotham for (i) his binding determination that

any of the persons objected to is an independent and distinguished professional

tax advisor, and if he determines that any of the persons selected is an

independent and distinguished tax advisor Fibreboard Corporation shall select

the final tax advisor, from those persons remaining, and (ii) if he determines

that none of the persons remaining is an independent and distinguished tax

advisor, he will give his determination how any future naming of candidates by

Fibreboard Corporation and objections by Class Counsel and the Insurers will

proceed.  If Fibreboard Corporation names a substitute or substitutes, within

five days of receipt of such name(s), Class Counsel or the Insurers may notify

Fibreboard Corporation that either of them objects to any such person on the

ground that he or she is not an independent and distinguished professional tax

advisor.  Objections to any such substitute may be brought to Judge Higginbotham

as described above.

                                     - 37 -


          SECTION 8.2     Counsel.
                          -------

          Any act or consent required by or which may be given by Representative

Plaintiffs pursuant to this Agreement may be accomplished by Class Counsel

acting on behalf of all Representative Plaintiffs.  Class Counsel may act or

give their consent with the approval of any three or more of Class Counsel and,

in such event, the Representative Plaintiffs shall be deemed to have so acted or

consented.  Continental, Pacific, CNA Casualty, Columbia and Fibreboard

Corporation shall be entitled to rely upon such act or consent by Class Counsel

in any case where the act or consent is evidenced in a writing reflecting the

approval of any three of Class Counsel.

          SECTION 8.3     No Oral Representations.
                          -----------------------

          This Agreement, together with its accompanying exhibits, supersedes

and renders unenforceable all earlier oral representations, warranties or

promises made by any Party to any other Party with respect to the subject matter

of this Agreement.

          SECTION 8.4     Payment of Costs.
                          ----------------

          Except as otherwise agreed, each of Fibreboard Corporation,

Continental, CNA Casualty, Columbia and Pacific shall pay its own legal and

other costs and expenses incurred in connection with the preparation,

negotiation, execution and delivery of this Agreement and the consummation of

the settlement contemplated hereby.

                                     - 38 -


          SECTION 8.5     Modification and Waiver.
                          -----------------------

          A.  Subject to any necessary court approvals, this Agreement and any

of the exhibits hereto may be amended, supplemented or modified from time to

time by a writing executed by each of the Parties or, in the case of

Representative Plaintiffs, by Class Counsel (prior to Global Approval Judgment)

or the SCB (after Global Approval Judgment); provided, however, that the Trust

Agreement and the exhibits thereto, including the Trust Distribution Process,

may be amended only in accordance with the requirements and procedures contained

therein.

          B.  Fibreboard Corporation, Continental, CNA Casualty, Columbia,

Pacific or the Representative Plaintiffs (on behalf of the Settlement Class), as

the case may be, may from time to time by written instrument waive any provision

of this Agreement or any of the exhibits hereto which inures to its or their

benefit; provided, however, that the provisions of the Trust Agreement and

exhibits thereto, including the Trust Distribution Process, may be waived only

in accordance with the requirements and procedures contained therein.  Any such

waiver or consent shall be effective only in the specific instance, for the

specific provision of this Agreement or exhibit hereto and for the specific

purpose for which it is given.

          SECTION 8.6     Further Actions.
                          ---------------

          Each of Fibreboard Corporation, Continental, CNA Casualty, Columbia,

Pacific and the Representative Plaintiffs and their respective counsel shall

take such actions and execute such additional documents as may be reasonably

necessary or appropriate to consummate or implement the settlement contemplated

by this Agreement.


                                     - 39 -


          SECTION 8.7     Effectiveness of Agreement Notwithstanding
                          Developments.
                          ------------------------------------------

          The Parties understand and contemplate that during the period

necessary to obtain Global Approval Judgment there will almost certainly be

developments that bear on the issues being resolved and compromised by this

Agreement, including but not limited to, decisions on issues common to other

parties in the Coverage Case, controlling decisions by the California Supreme

Court issued in other cases, changes in estimates as to volume and severity of

future asbestos personal injury claims, procedural rulings or legislative

actions that may make it easier or more difficult successfully to prosecute

claims against asbestos defendants or their insurers and changes in the

financial condition of other asbestos defendants, any of which may appear to

have a bearing on the settlement of issues resolved herein.  The Parties have

carefully weighed potential developments of this nature and have taken them into

account in reaching the compromise recited on the record on August 27, 1993 and

reflected in this Agreement and no such event subsequent to that date shall be

the basis for modifying this Agreement or relieving any of the Parties from any

of its terms.  The fairness and reasonableness of this Agreement shall be

assessed as of August 27, 1993.

          SECTION 8.8     No Admission or Use.
                          -------------------

          This Agreement and the provisions thereof, whether or not Global

Approval Judgment is entered, shall in no event be offered as or be deemed to be

evidence or an admission or a concession on the part of any of the Parties of or

with respect to any claim or any fault, liability or damages whatsoever.  This

Agreement

                                     - 40 -


and the settlement provided for herein, whether or not consummated, and any

actions or proceedings taken to enter into or pursuant to this Agreement or

otherwise, are not, and shall not in any event be construed, interpreted or used

as evidence of a presumption, concession or admission by any Party of the truth

of any fact alleged or the validity of any claim or defense which has, could

have been or could be asserted in any litigation, or of any deficiency in any

claim or defense which was, could have been or could be asserted in any

litigation, or of any liability, fault or dereliction of duty or breach of

contract of any Party.  Notwithstanding the foregoing, any Party shall be

entitled to introduce this Agreement in evidence for the purpose of enforcing

its terms.  Nothing herein is intended to suggest that any asbestos-related

personal injury claim may be asserted against Fibreboard, the Settlement Trust

or the Insurers by a person who cannot prove exposure to asbestos-containing

materials manufactured by Fibreboard.

          SECTION 8.9     No Breach of Other Obligations.
                          ------------------------------

          Neither this Agreement nor any acts, statements or omissions of the

Parties in connection with the negotiation, execution or performance thereof

shall be claimed to constitute a breach of any contract, policy of insurance or

law or the basis for any claim of bad faith.  Nothing in this Agreement calls

for or obligates any of the Parties in any way to violate or breach its

obligations under any agreement and no term or provision of this Agreement shall

be so construed.

          SECTION 8.10     Third Party Beneficiaries.
                           -------------------------

          There shall be no third party beneficiaries of this Agreement other

than the non-Party Releasees hereunder.  No Person other than the Parties


hereto,

                                     - 41 -


the Settlement Class Members and the Releasees hereunder, shall have any right

or claim under or in respect of this Agreement.

          SECTION 8.11     Rights and Obligations of Fibreboard Corporation and
                           the Insurers Under the Settlement Agreement and
                           Related Agreements.
                           ----------------------------------------------------

          This Agreement shall not abridge or in any way modify or affect the

rights or obligations of Fibreboard Corporation, Pacific, Continental, CNA

Casualty or Columbia in relation to each other under the Settlement Agreement or

related agreements referred to therein.  All such rights and obligations shall

be in addition to those created by this Agreement even where they pertain to the

same subject matter.  The definitions contained in the Glossary and in the

provisions of this Global Settlement Agreement and its exhibits shall have no

application to the Settlement Agreement or the related agreements referred to

therein unless incorporated explicitly by written addendum to such agreements.

          SECTION 8.12     Headings.
                           --------

          The section headings contained in this Agreement and its exhibits are

inserted for convenience only and shall not affect in any way the meaning or

interpretation of this Agreement or its exhibits.

          SECTION 8.13     Notices.
                           -------

          All notices, requests, demands, claims and other communications

hereunder shall be in writing.  Any notice, request, demand, claim or other

communication hereunder shall be deemed duly given if it is sent by registered

or certified mail, postage prepaid, or sent by prepaid overnight courier or

confirmed telecopier, and addressed to the intended recipient as set forth

below:

                                     - 42 -


               If to Fibreboard Corporation, addressed to:

                    Fibreboard Corporation
                    2121 North California Blvd.
                    Walnut Creek, CA  94596
                    Attention: Michael R. Douglas
                               Senior Vice President and
                               General Counsel
                    Telecopier:  (510) 274-0714

                                       and

                    BROBECK, PHLEGER & HARRISON
                    Spear Street Tower
                    One Market Plaza
                    San Francisco, California  94105
                    Attention:  Stephen M. Snyder, Esq.
                    Telecopier:  (415) 442-1020

               If to Continental, addressed to:

                    Continental Casualty Co.
                    Specialty Claims Office, 12th Floor
                    50 Fremont Street
                    San Francisco, CA  94105
                    Attention:  Claim Manager
                    Telecopier:  (415) 512-4899

                                       and

                    WACHTELL, LIPTON, ROSEN & KATZ
                    51 West 52nd St.
                    New York, New York  10019
                    Attention:  Herbert M. Wachtell, Esq.
                    Telecopier:  (212) 403-2000

                                       and

                    CARROLL, BURDICK & McDONOUGH
                    44 Montgomery St., Suite 400
                    San Francisco, CA  94104
                    Attention:  Rodney L. Eshelman, Esq.
                    Telecopier:  (415) 989-0932

                                     - 43 -


               If to Columbia, addressed to:

                    Columbia Casualty Company
                    c/o Continental Casualty Co.,
                    Specialty Claims Office, 12th Floor
                    50 Fremont Street
                    San Francisco, CA  94105
                    Attention:  Claim Manager
                    Telecopier:  (415) 512-4899

                                       and

                    WACHTELL, LIPTON, ROSEN & KATZ
                    51 West 52nd St.
                    New York, New York  10019
                    Attention:  Herbert M. Wachtell, Esq.
                    Telecopier:  (212) 403-2000

                                       and

                    CARROLL, BURDICK & McDONOUGH
                    44 Montgomery St., Suite 400
                    San Francisco, CA  94104
                    Attention:  Rodney L. Eshelman, Esq.
                    Telecopier:  (415) 989-0932

               If to CNA Casualty, addressed to:

                    CNA Casualty Company of California
                    c/o Continental Casualty Co.
                    Specialty Claims Office, 12th Floor
                    50 Fremont Street
                    San Francisco, CA  94105
                    Attention:  Claim Manager
                    Telecopier:  (415) 512-4899

                                       and

                    WACHTELL, LIPTON, ROSEN & KATZ
                    51 West 52nd St.
                    New York, New York  10019
                    Attention:  Herbert M. Wachtell, Esq.
                    Telecopier:  (212) 403-2000

                                     - 44 -




                                       and

                    CARROLL, BURDICK & McDONOUGH
                    44 Montgomery St., Suite 400
                    San Francisco, CA  94104
                    Attention:  Rodney L. Eshelman, Esq.
                    Telecopier:  (415) 989-0932

               If to Pacific, addressed to:

                    Pacific Indemnity Company
                    Chubb & Son Inc.
                    15 Mountain View Road
                    P.O. Box 1615
                    Warren, NJ  07061-1615
                    Attention:  Malcolm B. Burton
                    Telecopier:  (908) 580-3030

                                       and

                    WHITE & CASE
                    1155 Avenue of the Americas
                    New York, NY 10036 
                    Attention:  Paul J. Bschorr, Esq.
                    Telecopier:  (212) 354-8113

               If to the Representative Plaintiffs, addressed to:

                    NESS, MOTLEY, LOADHOLT,
                     RICHARDSON & POOLE
                    151 Meeting Street, Suite 600
                    P.O. Box 1137
                    Charleston, South Carolina  29402
                    Attention:      Joseph F. Rice, Esq.
                                    Joseph B. Cox, Jr., Esq.
                    Telecopier:  (803) 577-7513

                    CARTWRIGHT, SLOBODIN, BOKELMAN, BOROWSKY,
                     WARTNICK, MOORE & HARRIS, INC.
                    101 California Street, Suite 2600
                    San Francisco, California  94111
                    Attention:  Harry F. Wartnick, Esq.
                    Telecopier:  (415) 391-5845

                                     - 45 -

                    KAZAN, McCLAIN, EDISES & SIMON
                    171 Twelfth Street, Suite 300
                    Oakland, California  94607
                    Attention:  Steven Kazan, Esq.
                    Telecopier:  (510) 835-4913

                    CAPLIN & DRYSDALE, CHARTERED
                    399 Park Avenue
                    New York, New York  10022
                    Attention:  Elihu Inselbuch, Esq.
                    Telecopier:  (212) 644-6755


Such communications shall be effective when they are received by the addressee

thereof.  Any party may change the address to which notices, requests, 

demands, claims, and other communications hereunder are to be delivered by 

giving the other party notice in the manner herein set forth.

                                     - 46 -


          SECTION 8.14     Counterparts.
                           ------------

          This Agreement may be executed in one or more counterparts, each of

which shall be deemed an original but all of which together will constitute one

and the same instrument.

          IN WITNESS WHEREOF, this Agreement has been executed on December

23, 1993 by the undersigned, thereunto duly authorized.

On behalf of the

Representative Plaintiffs


        By:                      Joseph Rice
           ----------------------------------------------------------------
                               Joseph Rice, Esq.


        By:                     Joseph B. Cox
           ----------------------------------------------------------------
                            Joseph B. Cox, Jr., Esq.


        By:                   Harry F. Wartnick
           ----------------------------------------------------------------
                            Harry F. Wartnick, Esq.


        By:                      Steven Kazan
           ----------------------------------------------------------------
                               Steven Kazan, Esq.


        By:                    Elihu Inselbuch
           ----------------------------------------------------------------
                             Elihu Inselbuch, Esq.

                                     - 47 -


FIBREBOARD CORPORATION



     By:                        Michael R. Douglas
        -------------------------------------------------------------------
     Title            Senior Vice President & General Counsel
          -----------------------------------------------------------------


CONTINENTAL CASUALTY COMPANY



     By:                          Laurens F. Terry
        -------------------------------------------------------------------
     Title                         Vice President
          -----------------------------------------------------------------


CNA CASUALTY COMPANY OF CALIFORNIA



     By:                          Laurens F. Terry
        -------------------------------------------------------------------
     Title                         Vice President
          -----------------------------------------------------------------


COLUMBIA CASUALTY COMPANY



     By:                          Laurens F. Terry
        -------------------------------------------------------------------
     Title          Vice President-Continental Casualty Company

                                     - 48 -


PACIFIC INDEMNITY COMPANY



     By:                          John J. Degnan
        -------------------------------------------------------------------
     Title                    Senior Vice President
          -----------------------------------------------------------------

                                     - 49 -


                                                                   EXHIBIT 10.10

                                                                       EXHIBIT A












                               GLOSSARY OF TERMS
                                       IN
                          GLOBAL SETTLEMENT AGREEMENT,
                                TRUST AGREEMENT,
                          TRUST DISTRIBUTION PROCESS,
                                      AND
                      DEFENDANT CLASS SETTLEMENT AGREEMENT



                               TABLE OF CONTENTS

Additional Policy Claim ....................................................   1
Affiliate ..................................................................   1
April 9 Agreement ..........................................................   1
Asbestos Lung Disease I or ALD-1 ...........................................   2
Asbestos Lung Disease II or ALD-2 ..........................................   3
Attorney Ad Litem ..........................................................   4
Beneficiary ................................................................   4
B-reader Report ............................................................   4
Claimant ...................................................................   4
Claims Resolution Facility .................................................   4
Class Action ...............................................................   4
Class Counsel ..............................................................   5
Class Member Claim .........................................................   5
CNA Casualty ...............................................................   5
Columbia ...................................................................   5
Continental ................................................................   5
Continental-Pacific Agreement ..............................................   5
Continental Releasees ......................................................   6
Court ......................................................................   6
Coverage Case ..............................................................   6
Defendant Class ............................................................   6
Defendant Class Counsel ....................................................   6
Defendant Class Member .....................................................   7
Defendant Class Order ......................................................   7
Defendant Class Settlement Agreement .......................................   7
Defense Costs ..............................................................   7
Designated Settlement Fund or DSF ..........................................   7
Distributable Amount .......................................................   7
Distribution Date ..........................................................   8
Earnings Amount ............................................................   8
Escrow Agent ...............................................................   8
Escrow Agreement ...........................................................   8
Escrow Fund ................................................................   8
Exigent Health Claim .......................................................   8
Expedited Review Claim .....................................................   9
Exposed Person .............................................................   9
Express Indemnity Claim ....................................................   9
Extreme Hardship Claim .....................................................   9
Fibreboard .................................................................  10
Fibreboard Releasees .......................................................  10
FIFO .......................................................................  11
Final Decision .............................................................  11

                                      -i-


Fiscal Year ................................................................  11
Fund I .....................................................................  12
Fund II ....................................................................  12
Fund III ...................................................................  12
Global Approval Judgment ...................................................  12
Global Court ...............................................................  16
Global Court Disapproval ...................................................  16
Global Settlement Agreement ................................................  16
Glossary
 ...................................................................  17
Increased Principal Amount .................................................  17
Initial Trustee ............................................................  17
Insurance Policies .........................................................  17
Insurers ...................................................................  18
Interim Claim ..............................................................  18
Interim Claimant ...........................................................  18
Interim Committee ..........................................................  18
Interim Period .............................................................  18
Judgment Forum Law .........................................................  18
Liquidation ................................................................  18
Lung Cancer ................................................................  19
Malignancy Claim ...........................................................  19
Medical Report .............................................................  19
Mesothelioma ...............................................................  19
Non-Malignancy Claim .......................................................  20
Other Cancer ...............................................................  20
Other Claims Resolution Facility ...........................................  20
Pacific ....................................................................  20
Pacific Indemnity Agreement ................................................  20
Pacific Releasees ..........................................................  20
Permitted Investments ......................................................  21
Person .....................................................................  21
Personal Injury Asbestos Claim .............................................  21
PFT Report .................................................................  22
Principal Amount ...........................................................  22
Qualified Arbitrator and Qualified Mediator ................................  24
Qualified Settlement Fund or QSF ...........................................  24
Released Parties ...........................................................  24
Representative Defendant ...................................................  24
Representative Plaintiffs ..................................................  25
Reserve Account ............................................................  25
Residual Claim .............................................................  25
Rule 23 Notice .............................................................  25
Select Counsel for the Beneficiaries .......................................  25
Schedule Category ..........................................................  26

                                      -ii-


Scheduled Disease ..........................................................  26
Second Injury Claim ........................................................  26
Settled Claims .............................................................  26
Settlement Agreement .......................................................  27
Settlement Agreement Approval Judgment .....................................  27
Settlement Agreement Court Disapproval .....................................  27
Settlement Class ...........................................................  27
Settlement Class Member ....................................................  30
Settlement Class Order .....................................................  30
Settlement Conference Designee .............................................  30
Subsidiary .................................................................  30
Surplus ....................................................................  30
Termination Date ...........................................................  31
Third Party Claim ..........................................................  31
Third Party Claimant .......................................................  31
Trust ......................................................................  31
Trust Agreement ............................................................  31
Trust Distribution Process .................................................  31
Trust Estate ...............................................................  31
Trust Expenses .............................................................  32
Trustees ...................................................................  32
Trustors ...................................................................  32
Unreimbursed Borrowings ....................................................  32
Unsettled Claims ...........................................................  33

                                     -iii-


          1.  "Additional Policy Claim" means each and every claim, demand,
               ------------------------

action or suit of any kind (i) which arises under, pursuant to or related to the

Insurance Policies by any person or entity, whether directly or indirectly

asserted against the Insurers or any third party, or arising under any term or

terms or alleged coverage provided by the Insurance Policies and (ii) which

arises directly or indirectly from personal injury resulting from exposure to

asbestos or asbestos-containing materials for which Fibreboard may bear legal

liability.

          2.  "Affiliate" of a Person means (i) a Subsidiary of such Person,
              -----------

(ii) a Person which owns, either alone or with or through one or more

Affiliates, directly or indirectly, securities or other ownership interests

having ordinary voting power to elect a majority of the board of directors or

other persons performing similar functions of such Person, and (iii) a

Subsidiary of any Affiliate of such Person.

          3.  "April 9 Agreement" means the agreement between Continental and
              -------------------

Fibreboard Corporation dated April 9, 1993, as it has been amended, pursuant to

which Continental and Fibreboard Corporation agreed, among other things, upon

terms and conditions set forth therein, to use their best efforts jointly to

negotiate and finalize a global class action settlement with personal injury

claimants and Continental agreed, whether or not a global settlement was

reached, to pay certain defense and other costs of certain asbestos-related

claims on an interim basis.

                                      -1-


          4.  "Asbestos Lung Disease I" or "ALD-1" means either:
              -------------------------     ------

               (1)  a diagnosis of pulmonary asbestosis by a board-certified

     internist or pulmonary specialist based on the following minimum objective

     criteria:

                    (i)  Chest X-rays for which a B-reader report is furnished

          showing small irregular opacities of ILO Grade 1/0 and pulmonary
                                                             ---

          function testing and physical examination that shows either:

                         a.  FVC <80% of predicted with FEV-1/FVC >75% (actual
                                                   ----           -

                          value);

                              or
                              --

                         b.  TLC <80% of predicted, with either DLCO <76% of
                                                    ----              -

               predicted or bilateral basilar crackles, and also the absence of
                         --                             ---

               any probable explanation for this DLCO result or bilateral

               basilar crackles finding other than the presence of asbestos lung

               disease; or

                    (ii)  Chest X-rays for which a B-reader report is furnished

          showing small irregular opacities of ILO Grade 1/1 or greater; and

                                                                         ---

          pulmonary function testing that shows either:

                                      -2-


                         a.FVC <80% of predicted with FEV-1/FVC >72% (actual
                                                 ----           -

               value) or, if the individual tested is at least 68 years old at

               the time of the testing, with FEV-1/FVC >65% (actual value);
                                        ----           -

                              or
                              --

                         b.  TLC <80% of predicted.

                              or
                              --

               (2)  A statement by a board-certified pathologist that more than

     one representative section of lung tissue otherwise uninvolved with any

     other process (e.g., cancer or emphysema) demonstrates a pattern of

     peribronchiolar or parenchymal scarring in the presence of characteristic

     asbestos bodies, and also that there is no other more likely explanation
                      ---

     for the presence of the fibrosis.

          5.  "Asbestos Lung Disease II" or "ALD-2" means a diagnosis by a
              --------------------------    -------

qualified physician that indicates other abnormalities of the parenchyma or

pleura attributed to prior asbestos exposure, including pleural plaques, pleural

thickening, pleural encasement and mild parenchymal fibrosis not meeting the

definition of ALD-1.

                                      -3-


          6.  "Attorney Ad Litem" means Professor Eric Green of Boston
              -------------------

University Law School or such successor as may be appointed by the Court.

          7.  "Beneficiary" means any Settlement Class Member who asserts a
              -------------

Class Member Claim, now or at any time in the future.

          8.  "B-reader Report" means a report of a B-reader certified at the
              -----------------

time the report is prepared (or of an individual who at one time was a certified

B-reader and who has not subsequently failed the examination for certification

or recertification as a B-reader) based on chest x-rays of an Exposed Person.

          9.  "Claimant" means any Person, or legal representative of a Person,
              ----------

who seeks recovery from the Trust for a Personal Injury Asbestos Claim of any

kind.

          10.  "Claims Resolution Facility" means a facility that establishes a
               ----------------------------

method for the liquidation and resolution of claims that is administered by the

Trust.

          11.  "Class Action" means Ahearn et al. v. Fibreboard Corp. et al.,
               --------------       ----------------------------------------

6:93 cv 526 (E.D. Tex.), filed by Representative Plaintiffs in the Global Court

on behalf of themselves and the Settlement Class against Fibreboard Corporation

on September 9, 1993.

                                      -4-


          12.  "Class Counsel" means Joseph F. Rice and Joseph B. Cox, Jr., of
               ---------------

the firm of Ness, Motley, Loadholt, Richardson & Poole, P.C.; Harry F. Wartnick,

of the firm of Cartwright, Slobodin, Bokelman, Borowsky, Wartnick, Moore &

Harris, Inc.; and Steven Kazan, of the firm of Kazan, McClain, Edises & Simon;

or successors of the foregoing individuals.

          13.  "Class Member Claim" means any Personal Injury Asbestos Claim of
               --------------------

a Settlement Class Member.

          14.  "CNA Casualty" means CNA Casualty Company of California, a
               --------------

California corporation.

          15.  "Columbia" means Columbia Casualty Company, an Illinois
               ----------

Corporation.

          16.  "Continental" means Continental Casualty Company, an Illinois
               -------------

Corporation.

          17.  "Continental-Pacific Agreement" means the agreement between
               -------------------------------

Continental and Pacific dated as of October 12, 1993 pursuant to which

Continental and Pacific settled the dispute between them and agreed upon terms

for the sharing of liabilities of each of them with respect to certain asbestos-

related claims.

                                      -5-


          18.  "Continental Releasees" are as defined in Section 2.5(B) of the
               -----------------------

Global Settlement Agreement.

          19.  "Court" means the Honorable Robert M. Parker, now the Chief Judge
               -------

for the United States District Court for the Eastern District of Texas.  In the

event that for any reason Judge Parker ceases to be a Judge of the United States

as defined in Article III of the United States Constitution or otherwise cannot

fulfill the responsibilities of the Court, the term "Court" shall mean any

United States Circuit or District Judge designated by the Chief Judge of the

United States Court of Appeals of the Fifth Circuit to exercise continuing

jurisdiction over the Trust and the Global Settlement Agreement.

          20.  "Coverage Case" means the action bearing the caption Asbestos
               ---------------                                      --------

Insurance Coverage Cases, Judicial Council Coordination Proceeding No. 1072,
- ------------------------

which was pending as of the date of the Global Settlement Agreement in the Court

of Appeal of the State of California, First Appellate District, Division One,

Nos. A049419 et al.
             -----

          21.  "Defendant Class" means all Persons with Third Party Claims.
               -----------------

          22.  "Defendant Class Counsel" means Richard Josephson of Baker &
               -------------------------

Botts and R. Bruce Shaw of Nelson, Mullins, Riley & Scarborough or their

successors.

                                      -6-


          23.  "Defendant Class Member" means any Person who or which is a
               ------------------------

member of the Defendant Class.

          24.  "Defendant Class Order" means an order of the Court finally
               -----------------------

certifying the Defendant Class as a class for settlement purposes under Rule

23(b)(1) and/or (b)(2) of the Federal Rules of Civil Procedure.

          25.  "Defendant Class Settlement Agreement" means the agreement
               --------------------------------------

annexed to the Global Settlement Agreement as Exhibit C.

          26.  "Defense Costs" mean Fibreboard Corporation's defense fees and
               ---------------

costs, including case management system fees and costs, as more fully defined in

the Settlement Agreement.

          27.  "Designated Settlement Fund" or "DSF" as defined in Section 468B
               ----------------------------    -----

of the Internal Revenue Code of 1986.

          28.  "Distributable Amount" means, with respect to Fund I, Fund II or
               ----------------------

Fund III, for any Fiscal Year, the sum of the Earnings Amount for that Fund for

that Fiscal Year plus (i) the Principal Amount or (ii) in the event that the

provisions of Appendix 1 to the Trust Distribution Process apply, the Increased

Principal Amount, for that Fiscal Year.

                                      -7-


          29.  "Distribution Date" is as defined in paragraph E.4 of the Trust
               -------------------

Distribution Process.

          30.  "Earnings Amount" means, with respect to Fund I, Fund II or Fund
               -----------------

III, as the case may be, all elements of current periodic income from such Fund

(other than any such income on the amounts in the Reserve Account), including

interest, periodic dividends (but not special, liquidating or wasting

dividends), rent, royalty and other similar payments which represent earnings or

profit on an asset, and do not represent elements of appreciation or gain or

depreciation or loss (whether realized or unrealized) on an asset, all

determined on an accrual basis in accordance with generally accepted accounting

principles.

          31."Escrow Agent" means the Person acting as escrow agent pursuant to
             --------------

the Escrow Agreement.

          32."Escrow Agreement" means an Escrow Agreement substantially in the
             ------------------

form attached to the Global Settlement Agreement as Exhibit D.

          33.  "Escrow Fund" means the escrow account established pursuant to
               -------------

Section 2.3(A) of the Global Settlement Agreement.

          34.  "Exigent Health Claim" means a Class Member Claim that is
               ----------------------

supported by an affidavit or declaration made under penalty of perjury from a

physician who has examined the Settlement Class Member within 120 days of the

                                      -8-


date of the affidavit or declaration, which states that the physician believes

that because of asbestos-related disease there is substantial medical doubt that

the Settlement Class Member will survive beyond six months from the date of the

declaration or affidavit.

          35.  "Expedited Review Claim" is as defined in Section B.2 of the
               ------------------------

Trust Distribution Process.

          36.  "Exposed Person" means the individual whose exposure to asbestos
               ----------------

results in a Personal Injury Asbestos Claim.

          37.  "Express Indemnity Claim" means a Third Party Claim (i) which
               -------------------------

asserts that Fibreboard is liable to indemnify or reimburse the holder of such

claim for payments made or liabilities, expenses or costs incurred by such claim

holder on account of an asbestos-related personal injury claim asserted against

such claim holder by a Settlement Class Member and (ii) which would not be

barred under applicable law by a court determination that a settlement between

Fibreboard (or the Trust) and the Settlement Class Member asserting such

asbestos-related personal injury claim was made in good faith.

          38.  "Extreme Hardship Claim" means a Class Member Claim as to which
               ------------------------

the Interim Committee (if the Class Member Claim is submitted during the Interim

Period) or the Trust (if the Class Member Claim is submitted after entry of

                                      -9-


Global Approval Judgment), in its sole discretion, determines that because of an

asbestos-related disease the Settlement Class Member is suffering a severe

financial hardship.

          39.  "Fibreboard" means Fibreboard Corporation; Fibreboard Paper
               ------------

Products Corporation; Fibreboard Products, Incorporated; Paraffine Companies,

Incorporated; Plant Rubber & Asbestos Works; Pabco Products, Incorporated; and

Pabco Insulation Corporation; and each of their respective predecessors,

Subsidiaries and divisions, and with regard to Fibreboard Corporation's

liability only, each of their respective successors in interest.

          40.  "Fibreboard Releasees" mean the following entities, each of their
               ----------------------

respective predecessors, Subsidiaries, divisions, current and former attorneys,

officers, directors and employees, and, with regard to Fibreboard Corporation's

liability only, each of their respective successors in interest:

          (i)  Fibreboard Corporation; Fibreboard Paper Products Corporation;

                Fibreboard Products, Incorporated; Paraffine Companies,

                Incorporated; Plant Rubber & Asbestos Works; Pabco Products,

                Incorporated; and Pabco Insulation Corporation;

                                      -10-


         (ii)   Louisiana-Pacific Corporation (other than for asbestos-related

                claims against Louisiana-Pacific which (a) state a basis for

                liability by Louisiana-Pacific wholly independent of any

                relationship between Louisiana-Pacific and Fibreboard

                Corporation or any act or omission in connection with such a

                relationship, and (b) as to which there is no basis for any

                claim against Fibreboard Corporation by the claimant or by

                Louisiana-Pacific).

         41.  "FIFO" means first in, first out.
              ------

         42.  "Final Decision" means the final decision or decisions obtained
              ----------------

when all the issues that are pending in the Coverage Case by Fibreboard

Corporation against certain of the Insurers have been finally resolved and no

further appellate review or remand proceedings are possible with respect to such

claims.

          43.  "Fiscal Year" means the calendar year, except that the first
               -------------

Fiscal Year shall be that portion of a calendar year commencing with the date of

execution of the Trust Agreement and ending on the last day of the calendar year

in which such execution occurs, and references to a number of Fiscal Years after

Global Approval Judgment shall be determined based on the assumption that the

first Fiscal Year after Global Approval Judgment shall be the Fiscal Year during

which Global Approval Judgment occurs.

                                      -11-


          44.  "Fund I" is as defined in paragraph E of the Trust Distribution

               --------

Process.

          45.  "Fund II" is as defined in paragraph E of the Trust Distribution
               ---------

Process.

          46.  "Fund III" is as defined in paragraph E of the Trust Distribution
               ----------

Process.

          47.  "Global Approval Judgment" means a judgment, order or other
               --------------------------

decree issued and entered by the Global Court in an action in which Fibreboard

Corporation, Continental, CNA Casualty, Columbia, Pacific, the Settlement Class

and all persons having or who may have Third Party Claims have been made

parties, either directly or in a representative capacity, as to which judgment,

order or decree any appeal (and subsequent remand, if any) has been finally

decided and no further appeal or petition for certiorari can be taken or granted

and which judgment, order or decree:

          (a)  approves the terms and provisions of the Global Settlement

               Agreement, including the releases and indemnities contained

               therein;

          (b)  approves the Trust Agreement and the Trust Distribution Process

               incorporated in the Global Settlement Agreement;

                                      -12-


          (c)  orders the parties to implement the Global Settlement Agreement;

          (d)  determines and awards the fees and expenses of Class Counsel;

          (e)  declares that the settlement reflected by the Global Settlement

               Agreement, with respect to both Class Member Claims and Third

               Party Claims, is fair, reasonable and adequate and was entered

               into in good faith;

          (f)  declares that the Settlement Class Members and the Defendant

               Class Members have received adequate notice of the settlement

               contemplated by the Global Settlement Agreement and Rule 23 of

               the Federal Rules of Civil Procedure;

          (g)  declares that the Settlement Class Members have been adequately,

               professionally and ethically represented by Class Counsel;

          (h)  orders all Class Member Claims, except for claims for punitive or

               exemplary damages, directed to the Trust for disposition pursuant

               to the Trust Agreement and Trust Disposition Process;

                                      -13-


          (i)  declares that, as provided in Section 2.2(B) of the Global

               Settlement Agreement, only payment of funds pursuant to the

               Settlement Class Members' individual settlements with the Trust

               shall trigger the notice, approval and forfeiture provisions of

               the Longshore and Harbor Workers Compensation Act and other

               similar state and federal workers compensation provisions;

          (j)  orders dismissal on the merits, without costs and with prejudice,

               of the Class Action and all of the Class Member Claims (including

               all punitive and exemplary damage claims) against the Fibreboard,

               Continental and Pacific Releasees;

          (k)  declares the provision contained in the Global Settlement

               Agreement whereby Fibreboard Corporation and the Insurers agree

               that the Insurers shall be discharged from any further obligation

               under or in connection with the Insurance Policies, except as an

               Insurer has specifically assumed under the Global Settlement

               Agreement or has preserved under the Settlement Agreement (and

               the related agreements referred to therein), to be fair,

               reasonable and non-collusive;

                                      -14-


          (l)  discharges the Fibreboard, Continental and Pacific Releasees from

               any further liability with respect to any Class Member Claim or

               Third Party Claim;

          (m)  permanently enjoins Fibreboard Corporation from asserting any

               claim released or discharged under the Global Settlement

               Agreement against any Continental or Pacific Releasee;

          (n)  permanently enjoins any Settlement Class Member or Third Party

               Claimant from asserting any claim released or discharged under

               the Global Settlement Agreement against any Fibreboard,

               Continental or Pacific Releasee;

          (o)  approves the provisions set forth in the Global Settlement

               Agreement and the Trust Distribution Process for the resolution

               of Third Party Claims; and

          (p)  retains exclusive jurisdiction in the Court rendering such

               judgment, order or decree (1) to enforce the provisions of such

               judgment, order or decree, (2) to resolve any disputes as to the

               performance or interpretation of the Global Settlement Agreement,

               or such judgment, order or

                                      -15-


               decree, (3) to adjudicate any attempt by any person to challenge

               such judgment, order or decree in any respect, and (4) over the

               maintenance, administration and distribution of the Trust and the

               funds contained therein, subject to and in accordance with the

               provisions of the Trust Agreement and the Trust Distribution

               Process incorporated therein;

provided that Global Approval Judgment shall not be deemed to have been entered

unless and until either Settlement Agreement Approval Judgment has been entered

or Settlement Agreement Court Disapproval occurs.

          48.  "Global Court" means the United States District Court for the
               --------------

Eastern District of Texas.

          49.  "Global Court Disapproval" means a judgment, order or other
               --------------------------

decree of the Global Court or other court of competent jurisdiction in an action

in which Fibreboard Corporation, Continental, CNA Casualty, Columbia, Pacific

and the Settlement Class have been made parties, as to which judgment, order or

decree any appeal (and subsequent remand, if any) has been finally decided and

no further appeal or petition for certiorari can be taken or granted and which

judgment, order or decree disapproves or declines to approve the Global

Settlement Agreement.

          50.  "Global Settlement Agreement" means the settlement agreement as
               -----------------------------

of August 27, 1993 among Continental, CNA Casualty, Columbia, Pacific,

                                      -16-


Fibreboard Corporation and the Representative Plaintiffs as representatives of

the Settlement Class.

          51.  "Glossary" means this Exhibit A to the Global Settlement
               ----------

Agreement.

          52.  "Increased Principal Amount," (i) for any of the third through
               -----------------------------

the twelfth Fiscal Years after Global Approval Judgment, means 125% of the

Principal Amount for such Fiscal Year and (ii) for any of the sixteenth through

the twentieth Fiscal Years after Global Approval Judgment, means 112.5% of the

Principal Amount for such Fiscal Year.

          53.  "Initial Trustee"  is as defined in Section 7.18 of the Trust
               -----------------

Agreement.

          54.  "Insurance Policies" mean policy number CLP 3197650 issued by
               --------------------

Continental effective May 4, 1957, in favor of Fibreboard Corporation under its

former name, Fibreboard Paper Products Corporation, policy number RD 951 90 81

issued by Continental, policy number RDU 975 65 87 issued by CNA Casualty and an

endorsement thereto issued by Continental, policy number RDU 186 27 82 issued by

Columbia, policy number RDU 186 30 62 issued by Columbia, policy number RDU 365

32 19 issued by Columbia, the policy that was alleged by Fibreboard Corporation

to have been issued by Continental in the period 1954-1956, and policy number

LAC 88700 found to have been issued by Pacific to Fibreboard Corporation

                                      -17-


effective May 4, 1956, and any other policies that were, or may be alleged to

have been, issued to Fibreboard Corporation by any of the Insurers, including

those set forth in the Pacific Indemnity Agreement.

          55.  "Insurers" mean (i) Continental, CNA Casualty, Columbia and all
                ---------

insurance or indemnity companies controlling, controlled by or under common

control with any of them and (ii) Pacific and all insurance or indemnity

companies controlling, controlled by or under common control with it.

          56.  "Interim Claim" is as defined in Section 7.1 of the Global
               ---------------

Settlement Agreement.

          57.  "Interim Claimant" is a Person asserting an Interim Claim.
               ------------------

          58.  "Interim Committee" is as defined in Section 7.1 of the Global
               -------------------

Settlement Agreement.

          59.  "Interim Period" is as defined in Section 7.1 of the Global
               ----------------

Settlement Agreement.

          60.  "Judgment Forum Law" is as defined in Section H.1.a of the Trust
               --------------------

Distribution Process.

          61.  "Liquidation" occurs with respect to any Class Member Claim or
               -------------

Third Party Claim on the date on which the validity and amount thereof is

finally

                                      -18-


determined pursuant to the Trust Distribution Process or the date on which a

final, nonappealable judgment is entered against the Trust with respect to such

Class Member Claim or Third Party Claim.

          62.  "Lung Cancer" means a diagnosis by a qualified physician of a
               -------------

malignant primary tumor of any cell type, originating within the lung, caused or

contributed to by exposure to asbestos.

          63.  "Malignancy Claim" means a claim for Mesothelioma, Lung Cancer,
               ------------------

or Other Cancer as defined in this Glossary.

          64.  "Medical Report" means a written narrative report by a physician
               ----------------

confirming that (i) an Exposed Person has an asbestos-related personal injury or

disease, based on a physical examination (as reflected in medical records or

performed by the physician preparing the narrative report) of the Exposed

Person, or (ii) following review of pertinent medical records and information,

that an asbestos-related personal injury or disease caused or substantially

contributed to the death of an Exposed Person.

          65.  "Mesothelioma" means a diagnosis by a board certified pathologist
               --------------

of a malignant tumor caused or contributed to by exposure to asbestos

originating in the mesothelial cells of the pleura, peritoneum or like tissue,

or

                                      -19-


reasonable equivalent clinical diagnosis in the absence of adequate tissue for

pathological diagnosis.

          66.  "Non-Malignancy Claim" means a claim for ALD-1 or ALD-2 as
               ----------------------

defined in this Glossary.

          67.  "Other Cancer" means a diagnosis by a qualified physician that
               --------------

indicates a malignant tumor originating in the larynx, pharynx, stomach,

esophagus, colon or rectum, caused or contributed to by exposure to asbestos.

          68.  "Other Claims Resolution Facility" means a facility that
               ----------------------------------

establishes a method for the liquidation and resolution of asbestos-related

personal injury claims administered by a Person other than the Trust.

          69.  "Pacific" means Pacific Indemnity Company, a California
               ---------

corporation.

          70.  "Pacific Indemnity Agreement" collectively means the Agreement
               -----------------------------

and a Rescission of Insurance Policies, both dated March 27, 1992, between

Fibreboard Corporation and Pacific, pursuant to which Pacific and Fibreboard

Corporation agreed to settle their insurance coverage dispute.

          71.  "Pacific Releasees" are as defined in Section 2.5(C) of the
               -------------------

Global Settlement Agreement.

                                      -20-


          72.  "Permitted Investments" are as defined in Section 4.3 of the

                -----------------------

Trust Agreement.

          73.  "Person" means any individual, corporation, partnership or
               --------

association, whether or not incorporated, and any federal, state or local

government or agency thereof, or any other entity and his, her or its legal

representative.

          74.  "Personal Injury Asbestos Claim" means:
               --------------------------------

          (i)  each and every claim, demand, action or suit of any kind for

          personal injury arising, directly or indirectly, from exposure to

          asbestos-containing products (including, without limitation, any

          direct action claim, wrongful death claim, punitive or exemplary

          damages claim, loss of consortium claim, fear of disease claim, bad

          faith claim, or surviving personal injury claim), and whether such

          injury manifested itself heretofore or hereafter, or (ii) any claim,

          demand, action or suit of any kind arising, directly or indirectly,

          from any such claim, demand, action or suit referred to in (i) above

          (including without limitation any bad faith claim, contribution claim,

          indemnity claim, warranty claim, direct action claim or Additional

          Policy Claim)

against Fibreboard, against the Insurance Policies or against the Insurers in

any way predicated on obligations created by the Insurance Policies; provided,

however, that

                                      -21-


a Personal Injury Asbestos Claim shall not include any claim for benefits

brought by an employee or his or her personal representative under any federal

or state workers compensation statute (including, but not limited to, the United

States Longshore and Harbor Workers Compensation Act and the Federal Employees

Compensation Act), but shall include any subrogation, contribution or indemnity

claim arising from such claim for benefits.

          75.  "PFT Report" means a report by a pulmonary specialist or a board-
               ------------

certified internist interpreting the results of pulmonary function testing of an

Exposed Person.

          76.  "Principal Amount" means, for any Fiscal Year after Global
               ------------------

Approval Judgment:

     (i)  (a) (x) the aggregate fair market value of all of the investment

          assets contained in the Fund for which the Distributable Amount is

          being determined (excluding the then outstanding balance of the

          Reserve Account) at the close of business on the last business day of

          the Fiscal Year for which the calculation is made, minus (y) the
                                                             -----

          Earnings Amount for such Fiscal Year, plus (z) all amounts, if any,
                                                 ----

          paid during such Fiscal Year for Trust Expenses, Class Member Claims,

          Third Party Claims and payments made pursuant to Section 7.16 of the

          Trust Agreement, in each case for such Fiscal Year (other than any

          such payments made out of the Reserve Account), minus
                                                          -----

          (b) for any Fiscal Year prior to the 21st Fiscal Year after Global

          Approval Judgment, the greater of (i) Zero and (ii) the lesser of (Y)

          the aggregate Surplus for all prior Fiscal Years and (Z) Zero minus

          Unreimbursed Borrowings; multiplied by
                                   -------------

     (ii)  a fraction, the numerator of which is one and the denominator of

          which is the number of Fiscal Years that will occur from the beginning

                                      -22-


          of the Fiscal Year for which the calculation is made through and

          including the end of the 25th Fiscal Year after Global Approval

          Judgment in the case of Fund I, the 20th Fiscal Year after the end of

          Fund I (or, if the Trustees have determined to delay the transfer of

          the remaining balance in Fund II beyond the twentieth Fiscal Year

          after the end of Fund I pursuant to Section E.2.c(ii) of the Trust

          Distribution Process, the end of Fund II so determined by the

          Trustees) in the case of Fund II and the 15th Fiscal Year after the

          end of Fund II in the case of Fund III (so that, for example, for the

          Principal Amount applicable to the tenth Fiscal Year after Global

          Approval Judgment, such denominator would be 16);

provided, however, that

     (1) for the first Fiscal Year after Global Approval Judgment (a) the

     numerator in the fraction stated in clause (ii) above shall be a fraction

     in which the numerator is the number of full weeks in such Fiscal Year (but

     not less than one) and the denominator is 52 (to adjust for the length of

     such Fiscal Year) and (b) the Principal Amount determined as provided

     above, including as set forth in clause (1)(a) of this proviso shall be

     multiplied by 0.4;

     (2) for the second Fiscal Year after Global Approval Judgment the Principal

     Amount shall be the sum of (A) the Principal Amount otherwise determined as

     provided in this definition of Principal Amount multiplied by 0.4, plus (B)

     the Principal Amount with respect to the first Fiscal Year after Global

     Approval Judgment as determined in clause (1) above multiplied by 0.75; and

                                      -23-


     (3) for each of the twenty-first through the twenty-fifth Fiscal Years

     after Global Approval Judgment, the Distributable Amount may be increased

     by the Trustees up to an amount not in excess of the Principal Amount and

     the Earnings Amount that was in effect for the twentieth Fiscal Year after

     Global Approval Judgment.

          77.  "Qualified Arbitrator" and "Qualified Mediator" shall each be an
               ----------------------     --------------------

impartial, neutral person.  No person shall serve as an arbitrator or mediator

if he/she has any financial or personal interest in the proceedings or, except

when otherwise agreed by the parties, in any asbestos-related matters.  Prior to

accepting an appointment, the prospective arbitrator or mediator shall disclose

any circumstances likely to create a reasonable inference of bias or prevent a

prompt hearing or conference with the parties.

          78.  "Qualified Settlement Fund" or "QSF" is as defined in the
               ---------------------------    -----

Treasury Regulations under Section 468.B of the Internal Revenue Code of 1986.

          79.  "Released Parties" collectively, and "Released Party"
               ------------------                   ----------------

individually, mean the Fibreboard, Continental and Pacific Releasees.

          80.  "Representative Defendant" means Owens-Illinois, Inc., a Delaware
               --------------------------

corporation, or such other Person or Persons as may be certified by the Global

Court, in the capacity as representative(s) of the Defendant Class Members.

                                      -24-


          81.  "Representative Plaintiffs" mean Gerald Ahearn, James Dennis and
               ---------------------------

Charles W. Jeep, the named plaintiffs in the Class Action, or such other, lesser

or greater number of Representative Plaintiffs as may be certified by the Global

Court, in their capacities as representatives of the interests of the Settlement

Class Members.

          82.  "Reserve Account" means the reserve (which shall be part of Fund
               -----------------

I) in the original principal amount described on Appendix I to the Trust

Distribution Process as such amount may be increased or decreased from time to

time in accordance with the provisions described on Appendix 1 to the Trust

Distribution Process and by earnings, capital gains or losses or other similar

items.

          83.  "Residual Claim" means any Express Indemnity Claim or Additional
               ----------------

Policy Claim, the disposition of which becomes the responsibility of the Trust

pursuant to the Global Approval Judgment.

          84.  "Rule 23 Notice" means the notice to be given to the Settlement
               ----------------

Class Members and Defendant Class Members pursuant to Rule 23 of the Federal

Rules of Civil Procedure.

          85.  "Select Counsel for the Beneficiaries" or "SCB" means four
               --------------------------------------    -----

lawyers, initially:  Joseph B. Cox, Jr., Steven Kazan, Joseph F. Rice and Harry

F.

                                      -25-


Wartnick, and a fifth to be selected unanimously by the other four lawyers as

provided in Section 6.1 of the Trust Agreement.

          86.  "Schedule Category" means:  1) Mesothelioma and Lung Cancer; 2)
               -------------------

ALD-1 and Other Cancer; 3) ALD-2; and 4) Residual Claims.

          87.  "Scheduled Disease" means Mesothelioma, Lung Cancer, Other
               -------------------

Cancer, Asbestos Lung Disease I and Asbestos Lung Disease II.

          88.  "Second Injury Claim" is a Malignancy Claim by a Claimant who
               ---------------------

settled a Non-Malignancy Claim in exchange for a limited release which allowed

subsequent Malignancy Claims.

          89.  "Settled Claims" mean claims of individuals for asbestos-related
               ----------------

personal injuries (a) that are not Class Member Claims and (b) that as of August

27, 1993 had been settled (by Fibreboard Corporation or by Fibreboard

Corporation and Continental) or were the subject of a verdict or judgment.

          For the purposes of this definition, a claim included within the terms

of a settlement agreement (whether written, oral or placed on a court record)

prior to August 27, 1993 shall be deemed to have been settled before August 27,

1993 even if (i) an opt-out right with respect to that claim has been or is

exercised, or (ii) the settlement is subsequently repudiated by the Plaintiff;

provided, however, that no claim which was included within the terms of a

settlement agreement and

                                      -26-


which was not filed prior to August 27, 1993 shall be deemed settled unless it

was eligible to be processed and liquidated prior to August 27, 1993.

          90.  "Settlement Agreement" means the agreement among Fibreboard
               ----------------------

Corporation, Continental, CNA Casualty, Columbia and Pacific dated as of October

12, 1993 pursuant to which they agreed, among other things, to settle and

compromise all claims and potential claims against the Insurers under the

Insurance Policies.

          91.  "Settlement Agreement Approval Judgment" is as defined in the
               ----------------------------------------

Settlement Agreement.

          92.  "Settlement Agreement Court Disapproval" is as defined in the
               ----------------------------------------

Settlement Agreement.

          93.  "Settlement Class" means:
               ------------------

          (a)  All persons (or their legal representatives) who prior to August

               27, 1993 were exposed, directly or indirectly (including but not

               limited to exposure through the exposure of a spouse, household

               member or any other person), to asbestos or to asbestos-

               containing products for which Fibreboard may bear legal liability

               and who have not, before August 27, 1993, (i) filed a lawsuit for

               any asbestos related personal injury, or damage, or

                                      -27-


               death arising from such exposure in any court against Fibreboard

               or persons or entities for whose actions or omissions Fibreboard

               bears legal liability;  or (ii) settled a claim for any asbestos-

               related personal injury, or damage, or death arising from such

               exposure with Fibreboard or with persons or entities for whose

               actions or omissions Fibreboard bears legal liability;

          (b)  All persons (or their legal representatives) exposed to asbestos

               or to asbestos-containing products, directly or indirectly

               (including but not limited to exposure through the exposure of a

               spouse, household member or any other person), who dismissed an

               action prior to August 27, 1993 without prejudice against

               Fibreboard, and who retain the right to sue Fibreboard upon

               development of a nonmalignant disease process or a malignancy;

               provided, however, that the Settlement Class does not include

               persons who filed and, for cash payment or some other negotiated

               value, dismissed claims against Fibreboard, and whose only

               retained right is to sue Fibreboard upon development of an

               asbestos-related malignancy; and

          (c)  All past, present and future spouses, parents, children and other

               relatives (or their legal representatives) of the class members

                                      -28-


               described in paragraphs (a) and (b) above, except for any such

               person who has, before August 27, 1993, (i) filed a lawsuit for

               the asbestos-related personal injury, or damage, or death of a

               class member described in paragraph (a) or (b) above in any court

               against Fibreboard (or against entities for whose actions or

               omissions Fibreboard bears legal liability), or (ii) settled a

               claim for the asbestos-related personal injury, or damage, or

               death of a class member described in (a) or (b) above with

               Fibreboard (or with entities for whose actions or omissions

               Fibreboard bears legal liability).

          For the purposes of this definition, a claim included within the terms

of a settlement agreement (whether written, oral, or placed on a court record)

prior to August 27, 1993 shall be deemed to have been settled before August 27,

1993 even if (i) an opt-out right with respect to that claim has been or is

exercised, or (ii) the settlement is subsequently repudiated by the Plaintiff;

provided, however, that no claim which was included within the terms of a

settlement agreement and which claim was not filed prior to August 27, 1993

shall be deemed settled unless it was eligible to be processed and liquidated

prior to August 27, 1993.

          94. "Settlement Class Member" means any Person who is a member of the
              -------------------------

Settlement Class.

                                      -29-


          95.  "Settlement Class Order" means an order of the Court finally
                ------------------------

certifying the Settlement Class as a class under Rule 23(b)(1)(B) of the Federal

Rules of Civil Procedure for settlement purposes.

          96.  "Settlement Conference Designee" is as defined in paragraph D.1
               --------------------------------

of the Trust Distribution Process.

          97.  "Subsidiary" means, with respect to any Person, any corporation
               ------------

or other entity in which that Person owns, directly or indirectly, securities or

other ownership interest having ordinary voting power to elect a majority of the

board of directors or other Persons performing similar functions.

          98.  "Surplus" means, as of any Distribution Date:
               ---------

               (i)  the Distributable Amount for the prior Fiscal Year, minus

               (ii)  the aggregate amounts (other than payments from the Reserve

Account) actually paid by the Trust for Trust Expenses, Class Member Claims,

Third Party Claims and payments made pursuant to Section 7.16 of the Trust

Agreement, in each case for such prior Fiscal Year.

               99.  "Termination Date" is as defined in Section 7.2 of the Trust
                    ------------------

Agreement.

                                      -30-


          100.  "Third Party Claim" shall mean any Personal Injury Asbestos
                -------------------

Claim that is not a Class Member Claim, except for Settled Claims, Unsettled

Claims or any claims arising directly or indirectly from any such Settled Claims

or Unsettled Claims.

          101.  "Third Party Claimant" shall mean any Person having a Third
                ----------------------

Party Claim.

          102.  "Trust" means the trust referred to in Article V of the Global
                -------

Settlement Agreement.

          103.  "Trust Agreement" means the Fibreboard Asbestos Compensation
                -----------------

Trust Agreement among Continental, CNA Casualty, Columbia, Pacific, Fibreboard

Corporation and the Trustees attached as Exhibit B to the Global Settlement

Agreement.

          104.  "Trust Distribution Process" means Annex A to the Trust
                ----------------------------

Agreement.

          105.  "Trust Estate" at any time means all assets of the Trust at such
                --------------

time.

          106.  "Trust Expenses" means all expenses of the Trust (including,
                ----------------

without limitation, compensation, legal, accounting and other professional fees,

                                      -31-


expenses relating to the operation of a Claims Resolution Facility, an Other

Claims Resolution Facility, disbursements and related expenses, administrative

expenses, taxes and related expenses, the cost of liability insurance and

reimbursement and indemnification payments), other than payments in respect of

Class Member Claims and Third Party Claims and payments made pursuant to Section

7.16 of the Trust Agreement.

          107.  "Trustees" are as defined in Section 7.18 of the Trust
                ----------

Agreement.

          108.  "Trustors" mean Continental, CNA Casualty, Columbia, Pacific and
                ----------

Fibreboard Corporation.

          109.  "Unreimbursed Borrowings" means, as of any Distribution Date:
                -------------------------

          (a)  the aggregate of the Principal Amounts (not including any

Increased Principal Amounts) and Earnings Amounts for all Fiscal Years prior to

the Fiscal Year to which such Distribution Date relates, minus

          (b)  the aggregate amounts (other than payments from the Reserve

Account) actually paid by the Trust for Trust Expenses, Class Member Claims and

Third Party Claims for all such prior Fiscal Years.

                                      -32-


          110.  "Unsettled Claims" shall mean claims of individuals for
                ------------------

asbestos-related personal injuries brought against Fibreboard in lawsuits filed

prior to August 27, 1993 and that are not Settled Claims.  For purposes of this

definition, "Unsettled Claims" shall include claims of persons who filed and for

cash payment or some other negotiated value dismissed claims against Fibreboard

and whose only retained right is to sue Fibreboard upon development of an

asbestos-related malignancy.

                                      -33-





                                                                   EXHIBIT 10.11
                                                                       EXHIBIT B

- --------------------------------------------------------------------------------
                        FIBREBOARD ASBESTOS COMPENSATION
                                TRUST AGREEMENT
- --------------------------------------------------------------------------------


                               TABLE OF CONTENTS

                                                                           Page

     ARTICLE I     DEFINITIONS .........................................     1
                                                                           
     ARTICLE II    DECLARATION OF TRUST .................................    1
                   2.1     Name .........................................    1
                   2.2     Purposes .....................................    1
                   2.3     Transfer of Assets ...........................    2
                   2.4     Acceptance of Assets and Assumption of
                           Liabilities ..................................    2
                   2.5     Maintenance of Trustor Privileges and
                           Confidences ..................................    2

     ARTICLE III   POWERS; TRUST ADMINISTRATION .........................    3
                   3.1     Powers .......................................    3
                   3.2     Administration ...............................   10
                   3.3     Actions by Trustors ..........................   14
                   3.4     Protection of Confidential Information from
                           Disclosure to the Beneficiaries ..............   14

     ARTICLE IV    FUNDS, PAYMENTS AND INVESTMENTS ......................   14
                   4.1     Funds ........................................   14
                   4.2     Payments .....................................   16
                   4.3     Investments ..................................   16
                   4.4     Source of Payments ...........................   20

     ARTICLE V     TRUSTEES .............................................   21
                   5.1     Number .......................................   21
                   5.2     Term of Service ..............................   21
                   5.3     Appointment of Successor Trustees ............   22
                   5.4     Liability of Trustees, Officers and Employees    23
                   5.5     Compensation and Expenses of Trustees ........   23
                   5.6     Indemnification of Trustees, Officers and
                           Employees ....................................   24
                   5.7     Trustees' Employment of Experts ..............   24

     ARTICLE VI    SELECT COUNSEL FOR THE BENEFICIARIES ................   25
                   6.1     Formation; Duties ............................   25
                   6.2     Term of Office ...............................   26
                   6.3     Appointment of Successor .....................   26

                                     - i -


                   6.4     Compensation, Expenses and Liability of SCB
                           Members ......................................   27
                   6.5     Resolution of Disputes Involving Approval of
                           the Select Counsel for the Beneficiaries .....   28

     ARTICLE VII   GENERAL PROVISIONS
 ...................................   29
                   7.1     Irrevocability ...............................   29
                   7.2     Termination ..................................   29
                   7.3     Amendments ...................................   30
                   7.4     Severability .................................   30
                   7.5     Notices ......................................   31
                   7.6     Counterparts .................................   31
                   7.7     Successors and Assigns .......................   31
                   7.8     No Waiver ....................................   32
                   7.9     Headings; Section References .................   32
                   7.10    Governing Law ................................   32
                   7.11    Dispute Resolution ...........................   33
                   7.12    Enforcement and Administration ...............   33
                   7.13    Settlement of Trustees' Accounts .............   33
                   7.14    No Bond Required .............................   33
                   7.15    Service of Process ...........................   34
                   7.16    Lawsuits Against Trustors ....................   34
                   7.17    No Disqualification of SCB ...................   35
                   7.18    Initial Trustee; Powers ......................   35

                                     - ii -


                        FIBREBOARD ASBESTOS COMPENSATION
                                TRUST AGREEMENT


          Trust Agreement ("Trust Agreement") dated as of December 23, 1993,

among Continental, CNA Casualty, Columbia, Pacific, and Fibreboard Corporation,

as Trustors and Francis McGovern, as Initial Trustee as provided in Section

7.18.

          NOW, THEREFORE, THIS TRUST AGREEMENT WITNESSETH AND IT IS HEREBY

DECLARED as follows:


                                   ARTICLE I

                                  DEFINITIONS

          1.1  Capitalized terms used in this Trust Agreement are defined herein

or in the Glossary.


                                   ARTICLE II

                              DECLARATION OF TRUST

          2.1  Name.  The Trust shall be known as the "Fibreboard Asbestos
               ----

Compensation Trust," and the Trustees may transact the business and affairs of

the Trust in that name.

          2.2  Purposes.  The purposes of the Trust are:
               --------

               (a)  to use the assets in the Trust Estate efficiently to deliver

fair and equitable compensation to all qualified Beneficiaries consistent with

Trust resources, without overpaying or underpaying any Beneficiary and with

settlement to be preferred

                                     - 1 -


over mediation, mediation to be preferred over arbitration, and arbitration to

be preferred over resort to the tort system, all pursuant to the provisions of

this Trust Agreement and the Trust Distribution Process;

               (b)  to enhance and preserve the Trust Estate;

               (c)  otherwise to carry out the provisions of this Trust

Agreement and the Trust Distribution Process.

          2.3  Transfer of Assets.  On the date of Global Approval Judgment, the
               ------------------

Trustors shall transfer and assign to the Trust the amounts provided for in

Section 2.3(B) of the Global Settlement Agreement, having heretofore taken any

and all steps necessary and prerequisite to such transfer.

          2.4  Acceptance of Assets and Assumption of Liabilities.  In
               --------------------------------------------------

connection with and in furtherance of its purposes, and subject to Section 5.4,

the Trustees hereby agree to accept on behalf of the Trust the transfer of the

assets described in Section 2.3 above and hereby further expressly agree on

behalf of the Trust to assume liability or undertake responsibility for all

Class Member Claims and those Third Party Claims for which the Trust is

responsible under the Global Settlement Agreement and Trust Distribution

Process.  Except as otherwise provided in the Trust Distribution Process, the

Trust shall have all defenses, cross claims, and rights to liens, offsets and

recoupment that Fibreboard or any other Trustor would have had under applicable

law with respect to the Class Member Claims and Third Party Claims to be assumed

by the Trust.

          2.5  Maintenance of Trustor Privileges and Confidences.  The Trust
               -------------------------------------------------

shall maintain as privileged and confidential all information expressly

designated as such

                                     - 2 -


which is provided to it by or on behalf of Fibreboard Corporation or any other

Trustor, including without limitation information relating to Fibreboard's

products and their distribution, the history of the conduct of Fibreboard's or

any other Trustor's business, and Fibreboard's or any other Trustor's defenses

and the history of Fibreboard's settlements in asbestos-related personal injury

lawsuits.  The Trust will not waive the privileged and confidential status of

such information without the prior written consent of the Trustor which

designated such information privileged and confidential.  The Trust shall

promptly upon receipt of any subpoena or other formal request for such

information notify the Trustor which designated such information as privileged

or confidential.


                                  ARTICLE III

                          POWERS; TRUST ADMINISTRATION

          3.1  Powers.
               ------

               (a)  Subject to the limitations set forth in this Trust Agreement

and the Trust Distribution Process, the Trustees shall have the powers to take

any and all actions as in the judgment of the Trustees are necessary or

convenient to effectuate the purposes of the Trust, including, without

limitation, each power expressly granted in Subsection (b) below and any power

reasonably incidental thereto.  Unless otherwise specified in this Trust

Agreement or the Trust Distribution Process, the Trustees may act by the vote of

a majority.  All actions by the Trustees shall be taken at a meeting (which may

be by conference telephone call at which all participants may hear, and be heard

by,

                                     - 3 -


each other) of all Trustees or by unanimous written consent that a particular

action may be taken without a meeting; provided, however, that any such meeting

at which at least two Trustees are present shall be deemed to satisfy the

requirement of this sentence if notice of such meeting was given to all Trustees

not less than five business days' prior thereto, or if all Trustees have

executed, at or prior to such meeting, a waiver of such notice, and all Trustees

are given the opportunity to participate in person or by such a conference

telephone call.

               (1)  The following actions may be taken only with the unanimous

     consent of the Trustees:

                    (i)  Joining in, engaging in or disengaging from an Other

          Claims Resolution Facility pursuant to Section 3.1(b)(iii), except

          that this action shall also require SCB approval.

                    (ii)  Appointment or removal of the chief executive officer,

          chief financial officer or general counsel pursuant to Section

          3.1(b)(ix).

                    (iii)  Taking of structural or other actions to minimize tax

          on the Trust Estate pursuant to Section 3.2(b)(iv), except that this

          action shall also require SCB approval.

                    (iv)  Approval of annual and quarterly financial statements

          of the Trust pursuant to Sections 3.2(c)(i) and (ii); provided,

          however, that after a good faith effort to act unanimously, a majority

          of the Trustees may grant approval in a writing that shall include

          either comments of the Trustee who did not join in the approval

          reflecting the reasons for his or

                                     - 4 -


          her failure to join in the approval or, if such Trustee is not willing

          to provide such comments, comments from the other Trustee or Trustees

          reflecting their understanding as to such reasons.

                    (v)  Approval of reports of claims dispositions pursuant to

          Section 3.2(c)(iii); provided, however, that after a good faith effort

          to act unanimously, a majority of the Trustees may grant approval in a

          writing that shall include either comments of the Trustee who did not

          join in the approval reflecting the reasons for his or her failure to

          join in the approval or, if such Trustee is not willing to provide

          such comments, comments from the other Trustee or Trustees reflecting

          their understanding as to such reasons.

                    (vi)  Approval of budgets and cash flow projections pursuant

          to Section 3.2(d); provided, however, that after a good faith effort

          to act unanimously, a majority of the Trustees may grant approval in a

          writing that shall include either comments of the Trustee who did not

          join in the approval reflecting the reasons for his or her failure to

          join in the approval or, if such Trustee is not willing to provide

          such comments, comments from the other Trustee or Trustees reflecting

          their understanding as to such reasons.

                    (vii)  Amendment or waiver of the Trust Agreement other than

          Sections 2.2, 2.3, 2.4, 2.5, 3.1, 3.2, 3.3, 4.1, 4.2, 4.3, 4.4, 5.1,

          5.2, 5.3, 5.4, 5.6, 5.7, 7.1, 7.2, 7.3, 7.4, 7.7, 7.8, 7.11, 7.12,

          7.13, 7.16, 7.17 and 7.18, except

                                     - 5 -


          that any amendment or waiver of any provision of Article VI shall also

          require SCB approval.

                    (viii)  Approval of the fixed cash payment for Expedited

          Review Claims pursuant to Trust Distribution Process Section B.2.

                    (ix)  Approval of additional categories of Expedited Review

          Claims pursuant to Trust Distribution Process Section B.2, except that

          this action shall also require SCB approval.

                    (x)  Elimination or suspension of the Expedited Review

          Option for one or more categories of Class Member Claims pursuant to

          Trust Distribution Process Section B.2.

                    (xi)  Increase in the amount distributable in any Fiscal

          Year from the Principal Amount to the Increased Principal Amount in

          accordance with Appendix 1 to the Trust Distribution Process.

                    (xii)  Amendment or waiver of Section B.6 of the Trust

          Distribution Process (but only as to the amounts referred to therein,

          and except that any such amendment or waiver shall also require SCB

          approval) or Section F.3.a of the Trust Distribution Process (provided

          that no such amendment or waiver can advance the time for any payments

          referred to therein for any Fiscal Year in which any of the Increased

          Principal Amount was utilized).

                                     - 6 -


                    (xiii)  Permitting another Person to join in any claims

          resolution facility established pursuant to Section 3.1(b)(ii), except

          that this action shall also require SCB approval.

               (2)  The following actions shall require the approval of a

     majority of the Trustees and, unless the unanimous approval of the Trustees

     has been obtained, shall also require the approval of the SCB pursuant to

     Section 6.1:

                    (i)   Approval of the claim forms pursuant to Trust

          Distribution Process Section B.1.

                    (ii)  Approval of the Expedited Review Claim form pursuant

          to Trust Distribution Process Section B.2.

                    (iii)  Approval of form of release pursuant to Trust

          Distribution Process Section B.4.

                    (iv)  Requirement that Beneficiaries submit additional kinds

          of medical evidence in support of Class Member Claims pursuant to

          Trust Distribution Process Section B.4.

                    (v)  Selection of locations for mediations and arbitrations

          pursuant to Trust Distribution Process Section C.3.

               (3)  Any provision of the Trust Agreement, the Trust Distribution

     Process, or the Glossary not expressly described above in Sections

     3.1(a)(1) and (2) may be amended or waived with the unanimous approval of

     each of the Trustors and the Trustees, the approval of a majority of the

     SCB, and the approval of the Court, and not otherwise.

                                     - 7 -


               (b)  Without limiting the generality of Subsection (a) above, the

Trustees shall have the power to:

                    (i)  receive and hold the Trust Estate, and invest monies

          held from time to time therein;

                    (ii)  establish, supervise and administer a Claims

          Resolution Facility;

                    (iii)  join in or with or engage an Other Claims Resolution

          Facility to reduce the costs of liquidating Class Member Claims and

          Third Party Claims;

                    (iv)  pay Trust Expenses, Class Member Claims and Third

          Party Claims Liquidated in accordance with the Trust Distribution

          Process;

                    (v)  borrow money and issue notes and other evidences of

          indebtedness (which notes or other evidences of indebtedness may

          exonerate the Trustees from personal liability with respect thereto)

          in the ordinary course of operations in order to finance the

          acquisition of equipment or to pay Trust Expenses; provided, however,

          that no such borrowing shall be for a term in excess of five years or

          for an amount in excess of $2 million outstanding at any time;

                    (vi)  take all actions contemplated hereunder with respect

          to the Funds of the Trust and establish such reserves and accounts

          within such Funds as may be useful in carrying out the purposes of the

          Trust;

                                     - 8 -


                    (vii)  sue and be sued and participate, as a party or

          otherwise, in any judicial, administrative, arbitration or other

          proceeding, including, without limitation, in connection with any

          Claims Resolution Facility administered by or for the Trust;

                    (viii)  adopt and amend bylaws to govern the affairs of the

          Trust which are consistent with this Trust Agreement, the Trust

          Distribution Process and the Global Settlement Agreement;

                    (ix)  appoint such officers, including a chief executive

          officer, chief financial officer and general counsel, hire such

          employees and engage such legal, financial and other advisors and

          agents as the business of the Trust requires, pay the Trustees and the

          SCB subject to Sections 5.5 and 6.4 and pay such officers, employees,

          advisors and agents reasonable compensation;

                    (x)  enter into such other arrangements with third parties

          as are deemed by the Trustees to be useful in carrying out the

          purposes of the Trust (including, without limitation, engaging a

          Person to act as paying agent, depositary or custodian and pay such

          third parties reasonable compensation);

                    (xi)  enter into the indemnification agreements referred to

          in Sections 5.6, 6.4(c) and 7.16;

                    (xii)  enter into any contract or otherwise engage in any

          transaction with any Trustee or any Person affiliated with any

          Trustee,

                                     - 9 -


          provided that such contract or such transaction is approved by the

          unanimous vote of the Trustees who are not parties to or otherwise

          involved in, and do not have an interest in, such contract or

          transaction; it being understood that the usual rules prohibiting

          fiduciaries from dealing with themselves as individuals or from

          dealing with respect to any matter in which they have a personal

          interest shall apply to the Trustees; and

                    (xiii)  make such elections and determinations with respect

          to taxes as are deemed by the Trustees to be useful in carrying out

          the purposes of the Trust.

               (c)  The Trustees shall not have the power to guarantee or

assume, directly or indirectly, any debt or borrowings of other Persons.

          3.2  Administration.
               --------------

               (a)  The accounting period for the Trust shall be the Fiscal

Year.  The first Fiscal Year shall begin on the date of this Agreement and end

on December 31 of the same year.  The Trust shall use the accrual method of

accounting under generally accepted accounting principles.

               (b)  (i)  The Trustees shall timely file such income tax and

          other returns and statements, and shall provide for and pay such Trust

          taxes, as are required to comply with applicable provisions of the

          Internal Revenue Code and of any state or local law and the

          regulations promulgated thereunder.

                                     - 10 -


                    (ii)  For federal income tax purposes, the Trustees and the

          Trustors intend that the Trust will be taxable either as a Qualified

          Settlement Fund or a Designated Settlement Fund.  Trustors agree to

          cooperate in providing such information or documents as the Trustees

          determine are useful for the preparation and filing of tax returns by

          the Trust.  Each of the Trustors agrees to do such other and further

          things as may be reasonably requested by the Trustees in connection

          with the tax affairs of the Trust which shall not result in any tax

          liability or other material liability to any of the Trustors.

                    (iii)  The Trustees are hereby designated as the

          "administrator" of the Qualified Settlement Fund or Designated

          Settlement Fund for federal income tax purposes within the meaning of

          Treasury Regulations section 1.468B-2(k)(3).  For federal income tax

          purposes, the taxable year of the Trust shall be the calendar year and

          the Trust shall use an accrual method of accounting.

                    (iv)  The Trustees are authorized to take such structural

          changes or other actions, as the Trustees deem prudent and appropriate

          in reducing or minimizing the effect of taxes on the Trust Estate,

          provided that such changes or actions do not result in any additional

          tax liability or other material liability to any of the Trustors or

          directly or indirectly amend any provision of this Agreement or the

          Trust Distribution Process that cannot be amended except pursuant to

          Section 3.1(a)(3).

                                     - 11 -


               (c)  (i)  The Trustees shall cause to be prepared, and file with

          the Court, as soon as available and in any event within 90 days

          following the end of each Fiscal Year, an annual report containing

          financial statements of the Trust (including, without limitation, a

          balance sheet of the Trust as of the end of such Fiscal Year and a

          statement of operations for such Fiscal Year) audited by a nationally

          recognized firm of independent public accountants selected by the

          Trustees and certified by such firm.

                    (ii)  The Trustees shall cause to be prepared and file with

          the Court as soon as available and in any event within 45 days

          following the end of each of the first three quarters of each Fiscal

          Year, a quarterly report containing financial statements of the Trust

          (including, without limitation, an unaudited balance sheet of the

          Trust as of the end of such quarter and a statement of operations for

          such quarter), certified, subject to normal year-end adjustments

          (including without limitation as to consistency with the prior Fiscal

          Year's audited financial statements), by an appropriate officer of the

          Trust.

                    (iii)  Simultaneously with delivery of each set of financial

          statements referred to in Subsections (i) and (ii) above, the Trustees

          shall cause to be prepared, approve and file with the Court a report

          containing a summary (in reasonable detail) of the following

          information with respect to the period covered by the financial

          statement:

                                     - 12 -


                    (1)  the number of Class Member Claims Liquidated;

                    (2)  the amount of investment income earned by the Trust and

          the fair market value of the assets of the Trust as of the last

          business day of the applicable accounting period;

                    (3)  the amount of Trust Expenses incurred by the Trust; and

                    (4)  a certification as to compliance with the Trust

          Agreement and Trust Distribution Process, specifically identifying any

          lack of compliance.

               (d)  The Trustees shall cause to be prepared and approve not

     later than 30 days nor more than 60 days prior to the commencement of each

     Fiscal Year annual budgets and cash flow projections for the next five

     years of the Trust and budgets and cash flow projections for the remaining

     life of the Trust.  The budgets and cash flow projections shall be based on

     the actual number and type of claims filed against the Trust, the income,

     expense and claims payment history of the Trust to date as well as

     projected trends in such items.

               (e)  A copy of all financial statements, reports, budgets and

     cash flow projections (including any general historical information upon

     which such budgets and projections are based) prepared by the Trustees

     pursuant to this Section 3.2 shall be delivered to the SCB and each of the

     Trustors or their successors and assigns at the time of filing with the

     Court or, if not filed with the Court, at the time such documents are

     prepared.  The Trustees shall petition the Court each year for approval of

     the annual

                                     - 13 -


     financial statements and reports required by Section 3.2(c).  The SCB and

     any of the Trustors shall have standing to object to and be heard on such

     financial statements and reports.  The Trust will provide to any of the

     Insurers information which it may need in order to pursue any reinsurance

     claim.

          3.3  Actions by Trustors.  All actions by the Trustors shall be taken
               -------------------

by unanimous vote, unless otherwise provided to the contrary in this Trust

Agreement or the Trust Distribution Process.

           3.4  Protection of Confidential Information from Disclosure to the
                -------------------------------------------------------------

Beneficiaries.  Consistent with the purposes of the Trust, the Trustees have the
- -------------

authority and power to keep confidential from the Beneficiaries such information

as the Trust may determine should be protected from disclosure in order to avoid

prejudicing the Trust's position in negotiation, mediation, arbitration or

litigation of claims presented to the Trust.  Nothing contained in this Section

3.4 shall affect the right of the SCB, the Trustees or the Trustors to receive

any such confidential information, provided that they shall only use such

confidential information for the purpose of conducting their activities in such

capacities.


                                   ARTICLE IV

                        FUNDS, PAYMENTS AND INVESTMENTS

          4.1  Funds.
               -----

               (a)  There are hereby created within the Trust Estate three

Funds, Fund I, Fund II and Fund III.

                                     - 14 -


               (b)  Fund I shall consist of all of the assets transferred to the

Trust (including all accrued interest) less $210,000,000 which will be

segregated and allocated to Funds II and III.  The Trust shall invest the

amounts in Fund I subject to the limitations set forth in Section 4.3.

               (c)  Fund II shall consist of $200,000,000 segregated from the

assets transferred to the Trust.  The Trust shall invest the $200,000,000

subject to the limitations set forth in Section 4.3.  No payments of any kind

may be made from Fund II until at least 21 years after Global Approval Judgment.

               (d)  Fund III shall consist of $10,000,000 segregated from the

assets transferred to the Trust.  The Trust shall invest the $10,000,000,

subject to the limitations set forth in Section 4.3.  No payments of any kind

may be made from Fund III until at least 41 years after Global Approval

Judgment.

               (e)  Subject to Section 2.2 hereof, the Trustees may, from time

to time, create additional reserves and accounts (all of which shall remain part

of the Fund from which such amounts were created) within the Trust Estate as

they may deem necessary, prudent or useful in order to provide for the payment

of Trust Expenses, Class Member Claims and Third Party Claims assumed by the

Trust, and may, with respect to any such reserve or account, restrict the use of

monies therein.

               (f)  Any investment earnings received with respect to, or other

proceeds of, any asset held within any Fund (including any reserve or account

which is a part thereof) created hereby or pursuant hereto shall be credited to,

and shall be a part of, such Fund.

                                     - 15 -


          4.2  Payments.  Payments of Trust Expenses, Class Member Claims and
               --------

Third Party Claims shall be made from Funds I, II and III and such other

reserves or accounts as the Trustees may from time to time establish pursuant to

Section 4.1(e).  The maximum annual payments which may be made from such Funds

for such Trust Expenses, Class Member Claims and Third Party Claims are set

forth in Section E of the Trust Distribution Process.

          4.3  Investments.  Investment of monies held in the Trust Estate shall
               -----------

be administered in the manner in which individuals of ordinary prudence,

discretion and judgment would act in the management of their own affairs with

the goal of constructing a reasonably conservative portfolio which minimizes

volatility.  The Trust shall retain at least two nationally recognized,

independent, professional investment advisers or managers to assist in investing

the Trust Estate subject to the limitations contained in this Section 4.3.  The

Trust's investments shall be subject to each and every one of the following

limitations and provisions, and, notwithstanding anything to the contrary in

this Trust Agreement, the Trust shall not purchase or otherwise acquire the

equity, debt obligations or other securities of, assets of, or any interest in

any Person, or otherwise extend any credit to or make any investments in any

Person other than the investments described below ("Permitted Investments"):

               (a)  The Trust shall not (i) acquire, directly or indirectly, any

equity interest in any Person if, immediately following such acquisition, the

Trust would hold more than 5% of the equity in such Person or business

enterprise, or (ii) hold, directly or indirectly, more than 10% of the equity

interest in any Person.

                                     - 16 -


               (b)  The Trust may acquire and hold commercial paper if such

commercial paper is rated "Prime-1" or higher by Moody's Investors Service, Inc.

("Moody's"), "A-1" or higher by Standard and Poor's Corporation ("S&P") or has

been given an equivalent rating by another nationally recognized statistical

rating agency.

               (c)  The Trust may acquire and hold other corporate debt

securities if such securities are rated "A1" or higher by Moody's, "A+" or

higher by S&P, or have been given an equivalent investment grade rating by

another nationally recognized statistical rating agency.

               (d)  The Trust may acquire and hold equity securities

constituting preferred stock if such preferred stock is rated "a1" or higher by

Moody's, "A+" or higher by S&P or has been given an equivalent investment grade

rating by another nationally recognized statistical rating agency.

               (e)  The Trust shall not acquire or hold any equity securities of

any Person unless such equity is in the form of securities which are traded on a

national securities exchange in the United States or over the National

Association of Securities Dealers Automated Quotation System.

               (f)  The Trust may acquire and hold any equity securities

constituting common stock if the long-term debt securities of the issuer are

rated "A1" or higher by Moody's, or "A+" or higher by S&P or have been given an

equivalent rating by another nationally recognized statistical rating agency.

               (g)  The Trust may acquire and hold certificates of deposit

issued by and bankers' acceptances of and interest bearing deposits with any

U.S. commercial

                                     - 17 -


bank or any branch or agency of a non-U.S. bank licensed to conduct business in

the U.S. having combined capital and surplus of not less than $1,000,000,000, if

all publicly held long-term debt securities, if any, of such bank and the

holding company, if any, of which such bank is a Subsidiary meet the standards

set forth in Section 4.3(c).

               (h)  The Trust may acquire and hold repurchase obligations if (1)

in the opinion of the Trustees, they are adequately collateralized, (2) the

collateral constitutes investment instruments that would otherwise constitute

Permitted Investments hereunder and (3) such obligations are entered into with

either a nationally recognized investment banking firm or a commercial bank

meeting the requirements set forth in Section 4.3(g).

               (i)  The Trust may acquire and hold marketable direct obligations

issued or unconditionally guaranteed by the United States government or issued

by any agency or instrumentality thereof.

               (j)  The Trust may acquire and hold marketable direct obligations

issued by any state of the United States or any political subdivision of any

such state or any public instrumentality thereof if such securities are rated

"A1" or higher by Moody's, "A+" or higher S&P, or have been given an equivalent

rating by another nationally recognized statistical rating agency.

               (k)  The Trust may acquire and hold equity, bond, money market

and other funds organized under the laws of the United States or any state

thereof that invest solely in any of the foregoing investments permitted under

Sections 4.3(b) through (j).

                                     - 18 -


               (l)  The Trust may enter into futures and options arrangements,

and interest rate and currency swap agreements, cap, floor and collar

agreements, interest rate insurance, currency spot and forward contracts and

other agreements or arrangements solely for the purposes of protecting against

fluctuations in the principal of, or interest or currency exchange rates on, the

Trust's investments, provided that the net obligations of the Trust in respect

thereof shall not exceed 5% of the Trust Estate at any time.

               (m)  The Trust shall not acquire or hold any obligations or

securities denominated in a currency other than U.S. Dollars without

substantially hedging against fluctuations in such currency, provided that the

net obligations of the Trust in respect thereof shall not exceed 5% of the Trust

Estate at any time.

               (n)  The Trust shall not acquire or hold any equity, debt

securities or other instruments or obligations of any Person (other than debt

securities or other debt instruments described in Section 4.3(i) or any fund

described in Section 4.3(k) investing solely in the foregoing) if the aggregate

market value of all equity, debt securities and other instruments and

obligations of such Person held by the Trust would exceed 5% of the aggregate

value of the Trust Estate.

               (o)  The Trust shall not (i) acquire any equity securities of any

Person if, following such acquisition, the aggregate market value of all equity

securities held by the Trust would exceed 50% of the aggregate value of the

Trust Estate, or (ii) hold any equity securities to the extent that the

aggregate market value of all equity

                                     - 19 -


securities held by the Trust would exceed 60% of the aggregate value of the

Trust Estate.

               (p)  The Trust may acquire and hold mutual funds investing in

"baskets" of securities designed to track the performance of the S&P 500 stock

index or the Lehman Brothers Aggregate Bond Index, provided that the aggregate

obligations of the Trust in respect thereof, together with the aggregate market

value of all equity securities held by the Trust, shall not exceed 60% of the

aggregate value of the Trust Estate at any time.

               (q)  The Trust may acquire and hold investments of a type not

permitted under Subsections (b)-(l) or (p) above in an aggregate amount not to

exceed 5% of the aggregate value of the Trust Estate at any time.

          4.4  Source of Payments.  All Trust Expenses and payments in respect
               ------------------

of Class Member Claims and Third Party Claims shall be payable solely out of the

Trust Estate.  Neither the Trustees nor any officer, agent or employee of the

Trust nor any of the Trustors nor any of their Subsidiaries nor any Affiliate,

director, officer, employee or agent of the Trustors or any of their

Subsidiaries nor any member of the SCB shall be liable for the payment of any

Trust Expense, Class Member Claim or Third Party Claim or other liability of or

on account of the Trust, and no Person shall look to any of the foregoing

Persons for payment of any such expense or liability.

                                     - 20 -



                                   ARTICLE V

                                    TRUSTEES

          5.1  Number.  Prior to the appointment of the Trustees hereunder, the
               ------

provisions of Section 7.18 shall govern.  Thereafter, there shall be three

Trustees at all times (other than during the period contemplated by Section

5.3(b)), described as the Class A, B and C Trustees.  Each Trustee shall be an

individual who has substantial professional experience related to one or more of

the purposes of the Trust and who is able to devote the necessary time and

resources to his or her duties hereunder, it being understood that whenever

possible any person named to serve as a Trustee will have experience concerning

asbestos litigation, although failure to have such experience will not in and of

itself disqualify any Person from service as a Trustee.  No Trustee may

simultaneously hold another office or position in the Trust.

          5.2  Term of Service.
               ---------------

               (a)  The initial term of the Class A, B and C Trustees are four,

five and six years, respectively.  Thereafter, each Trustee shall serve a five-

year term.  In each case the term of the Trustee shall be terminated upon death,

resignation pursuant to Subsection (b) below or removal pursuant to Subsection

(c) below.

               (b)  Any Trustee may resign at any time by written notice to each

of the remaining Trustees.  Such notice shall specify a date when such

resignation shall take effect, which shall not be less than 90 days after the

date such notice is given unless all of the Persons entitled to appoint the

resigning Trustee's successor under Section 5.3(a) consent to a different date.

                                     - 21 -


               (c)  Any Trustee may be removed for cause by the Court upon

application of any of the Trustors or a majority of the SCB.

               (d)  Any Trustee may be reappointed for additional terms.

               (e)  Any successor Trustee filling an unexpired term shall serve

until the end of such term.

          5.3  Appointment of Successor Trustees.
               ---------------------------------

               (a)  In the event of a vacancy in the position of a Trustee, the

vacancy shall be filled by the SCB in the case of a Class A or Class B Trustee

or by the Trustors in the case of the Class C Trustee.

               (b)  If the SCB or the Trustors, as the case may be, fail to

appoint a successor Trustee pursuant to Subsection (a) above who accepts such

appointment in writing within 90 days after the occurrence of the vacancy in the

position of a Trustee, the remaining Trustees shall apply to the Court, which

shall appoint a successor Trustee or successor Trustees.  For a period of 10

days after the occurrence of the vacancy in the position of a Trustee, no vote

on any action requiring the unanimous consent of the Trustees shall be permitted

to occur.

               (c)  Immediately upon the appointment of any successor Trustee,

all rights, titles, duties, powers and authority of the predecessor Trustee

hereunder shall be vested in and undertaken by the successor Trustee without any

further act.  No successor Trustee shall be liable personally for any act or

omission of his or her predecessor, or for any Trust act or omission which

occurred prior to his or her

                                     - 22 -


appointment, unless such act or omission is expressly ratified by the successor

Trustee after his or her appointment.

          5.4  Liability of Trustees, Officers and Employees.  No Trustee,
               ---------------------------------------------

officer or employee of the Trust shall be liable to the Trust, any Beneficiary

or any other Person except for his own gross negligence or willful misconduct.

No Trustee, officer or employee of the Trust shall be liable for any act or

omission of any other officer, agent or employee of the Trust unless the

Trustee, officer or employee acted with gross negligence or willful misconduct

in the selection or retention of such officer, agent or employee.

          5.5  Compensation and Expenses of Trustees.
               -------------------------------------

               (a)  Each of the Trustees shall receive compensation from the

Trust for his or her services as Trustee in the amount of $100,000 per annum

plus, after the first 12 days during which the Trustee has performed the

services described below in this sentence, $1,000 per diem for each meeting of

the Trustees or any committee or subcommittee thereof attended by such Trustee,

reduced proportionately to account for any fraction of a day spent on such

duties in the case of any such meeting not attended in person, or for special

duties performed by such Trustee on behalf of the Trust, reduced

proportionately to account for any fraction of a day spent on such duties, and

$500 for each day of substantial travel in connection with attendance at any

such meeting or performance of any such special duties.  Such compensation

amounts shall be increased or decreased annually at the rate of the Consumer

Price Index for urban wage earners and clerical workers (U.S. City Average)

unadjusted for seasonal variation,

                                     - 23 -


published by the Bureau of Labor Statistics of the United States Department of

Labor, or otherwise by the Trustees with the approval of the Court.  In the

event that at any time the Trustees determine that the amount of time required

to perform their duties as Trustees has substantially decreased, they shall in

good faith determine whether a reduction in their compensation is warranted.

               (b)  All reasonable out-of-pocket costs and expenses incurred by

the Trustees in connection with the performance of their duties hereunder shall

be paid by the Trust or, if paid by a Trustee, shall be promptly reimbursed to

such Trustee by the Trust.

          5.6  Indemnification of Trustees, Officers and Employees.  The
               ---------------------------------------------------

Trustees, officers and employees of the Trust shall be indemnified by the Trust

to the fullest extent permitted under applicable law against any and all

liabilities, expenses, claims, damages or losses incurred by them in the

performance of their duties hereunder, except any liability, expense, claim,

damage or loss as to which they are liable under Section 5.4.  The Trustees,

officers and employees of the Trust shall be entitled to advancement of

attorneys' fees and expenses from the Trust for the purposes set forth in this

Section 5.6 to the fullest extent permitted under applicable law.

          5.7  Trustees' Employment of Experts.  The Trustees may, but shall not
               -------------------------------

be required to, consult with independent, outside counsel, accountants,

appraisers, investment bankers and other parties reasonably selected and

determined in good faith by the Trustees to be qualified as experts on the

matters submitted to them, except as otherwise expressly provided in this Trust

Agreement, and the opinion of any such

                                     - 24 -


parties on any matters submitted to them by the Trustees shall be full and

complete justification for any action taken or not taken by the Trustees

hereunder in good faith and in reasonable reliance upon the written opinion of

any such expert.


                                   ARTICLE VI

                      SELECT COUNSEL FOR THE BENEFICIARIES

          6.1  Formation; Duties.  The SCB shall consist of five lawyers chosen
               -----------------

to represent the interests of the Beneficiaries, and the initial four SCB

lawyers shall be Joseph Rice; Joseph Cox; Harry Wartnick; and Steven Kazan.  The

fifth SCB lawyer shall be selected unanimously by the initial four lawyers on or

before January 14, 1994.  If the initial four SCB members are unable to reach

unanimous agreement on the identity of the fifth SCB member, the four SCB

members shall appear in Court on January 17, 1994, and with the assistance of

the Court, work day to day until agreement is reached.  In giving their approval

or in acting pursuant to this Agreement the members of the SCB shall act in the

best interest of the Beneficiaries and consistent with the purposes of the

Trust.  The SCB shall hold an annual meeting to which all lawyers who have

submitted a Class Member Claim to the Trust during the past five years shall be

invited and be entitled to be present.  The SCB shall give a report to the

annual meeting describing the activities of the Trust for the prior year,

including any approvals given by the SCB pursuant to this Agreement and/or the

Trust Distribution Process and all matters on which the Trustees have indicated

that they intend to seek the approval of the SCB during the following year.  In

giving approval to the Trustees, the SCB shall

                                     - 25 -


consider in good faith all recommendations made at such annual meeting.  The

Trustees shall consult with the SCB on the implementation and administration of

the Trust Distribution Process.  The Trustees may consult with the SCB on any

matter affecting the Trust, and, as provided in Section 3.1(a), certain actions

by the Trustees shall require the prior approval of the SCB.  All approvals of

the SCB shall be by majority vote.

          6.2  Term of Office.
               --------------

               (a)  Each member of the SCB shall serve for the duration of the

Trust, subject to the earlier of his or her death, resignation, or removal.

               (b)  Subject to Section 6.3(a) hereof, any member of the SCB may

resign at any time by written notice to each of the remaining members specifying

the date when such resignation shall become effective.

               (c)  Any member of the SCB may be removed for cause by the

Court upon joint application of all of the other SCB members.

          6.3  Appointment of Successor.
               ------------------------

               (a)  A vacancy in the SCB caused by the resignation of an SCB

member shall be filled with an individual nominated by the resigning SCB member

and approved by the unanimous vote of all SCB members.  The resigning SCB

member's resignation shall not be effective until such approval is obtained and

the successor SCB member has accepted the appointment.

               (b)  In the event of a vacancy in the membership of the SCB other

than one caused by resignation as aforesaid, the vacancy shall be filled by the

unanimous vote of the remaining member(s) of the SCB.

                                     - 26 -


          6.4  Compensation, Expenses and Liability of SCB Members.
               ---------------------------------------------------

               (a)  Each member of the SCB shall receive compensation from the

Trust for his or her services in the amount of $1,000 per diem for travel

related to and attendance at the SCB meetings attended in person by such member,

and $1,000 per diem (adjusted proportionately to account for any fraction of a

day spent on, or in travel in connection with, such duties) for work done by the

members of the SCB (other than attending SCB meetings in person) in carrying out

their duties and responsibilities under the Trust Agreement.  Such compensation

shall be payable as determined the Trustees, but not less frequently than

quarterly.  Such per diem amount shall be increased or decreased annually pro

rata with the amount that the per diem for meetings paid to the Trustees is

increased or decreased pursuant to Section 5.5.

               (b)  The reasonable out-of-pocket costs and expenses incurred by

SCB members in connection with the performance of their duties hereunder,

together with the reasonable fees and expenses of their counsel, shall be paid

by the Trust or, if paid by a member of the SCB, shall be promptly reimbursed to

such member by the Trust.

               (c)  Liability of SCB.  No present or former member of the SCB
                    ----------------

shall be liable to the Trust, any Beneficiary or any other Person except for his

own gross negligence or willful misconduct.  All present or former members of

the SCB shall be indemnified by the Trust to the fullest extent permitted under

applicable law against any and all liabilities, expenses, claims, damages or

losses incurred by them in the performance of their duties hereunder or in

serving as Class Counsel, except any liability,

                                     - 27 -


expense, claim, damage or loss as to which they are liable under this Section.

No present or former member of the SCB shall be liable personally for any act or

omission of his or her predecessor, or for any act or omission of the SCB which

occurred prior to his or her appointment, unless such act or omission is

expressly ratified by such person after his or her appointment.  The present and

former members of the SCB shall be entitled to advancement of attorneys' fees

and expenses from the Trust for the purposes set forth in this subsection (c)

to the fullest extent permitted under applicable law.

          6.5  Resolution of Disputes Involving Approval of the Select Counsel

               for the Beneficiaries.
               ---------------------------------------------------------------

               (a)  Approval Procedures.  In any circumstance arising under this
                    -------------------

Trust Agreement or the Trust Distribution Process where the Trust makes a

decision with respect to matters which require the approval of the SCB, the

Trust shall:

                    (i)  provide the SCB with reasonable access to experts

          retained by the Trust and to Trust staff during such time as the

          decision is being made;

                    (ii)  bring the proposed decision to the attention of the

          SCB; and

                    (iii)  unless the circumstances prevent, provide the SCB no

          fewer than 10 days to comment with respect to such proposed decision.

          In the event the SCB disagree with the Trust's decision, they shall

express their view as fully as possible to the Trust and make such

counterproposal as may be appropriate.  The Trust and the SCB shall thereupon

consult in an effort to reach agreement.

                                     - 28 -


               (b)  Approval in Writing.  The approval of the SCB, when required
                    -------------------

under the Trust Agreement or the Trust Distribution Process, must be in writing

to be effective; provided, however, that in the event the SCB fails to approve

or disapprove an action requiring SCB approval pursuant to Section 3.1(a) within

30 days of notice of proposed action by the Trust, the SCB shall be deemed to

have approved such action.

               (c)  Access to Financial Information.  Subject to entry into an
                    -------------------------------

appropriate confidentiality agreement where applicable, the Trust shall make

available to the SCB any investment banking or other financial, accounting or

statistical information available to the Trust relating to issues to be

discussed and/or as to which the approval of the SCB is required.


                                  ARTICLE VII

                               GENERAL PROVISIONS

          7.1  Irrevocability.  The Trust is irrevocable.
               --------------

          7.2  Termination.
               -----------

               (a)  The Trust shall terminate on the date (the "Termination

Date") which is the earlier of (1) the first date on which all Class Member

Claims and Third Party Claims filed with or against the Trust have been

resolved, 24 consecutive months have elapsed during which no such claim has been

filed with the Trust and approval of such termination by the Court has been

obtained upon joint application of all of the Trustees and a majority of the

SCB; or (2) 21 years less 91 days pass after the

                                     - 29 -


death of the last survivor of any of the descendants of Joseph P. Kennedy living

on the date hereof.

               (b)  On the Termination Date, after payment of all liabilities of

the Trust have been provided for, the Trust shall be dissolved, and all of the

Trust's assets shall be applied to such charitable purposes as the Trustees in

their reasonable discretion, after consultation with the SCB, shall determine,

which charitable purposes, if practicable, shall relate to occupational health.

          7.3  Amendments.
               ----------

               (a)  This Trust Agreement may only be amended or waived as 

provided in Section 3.1(a).  Thirty days' advance written notice of any proposed

amendment or waiver shall be given to the SCB and the Trustors.

               (b)  The Trust Distribution Process may only be amended or waived

as provided in Section 3.1(a) of this Trust Agreement and, where applicable,

Section H.7 of the Trust Distribution Process.  Thirty days' advance written

notice of any proposed amendment or waiver of the Trust Distribution Process

shall be given to the SCB, the Trustors and, where appropriate, the

Representative Defendant.

               (c)  The definitions used in this Trust Agreement or in the Trust

Distribution Process and contained in the Glossary may be amended or waived only

if and in the same manner as the Section of this Trust Agreement or the Trust

Distribution Process in which such definition is used may be amended or waived.

          7.4  Severability.  Should any provision of this Trust Agreement or
               ------------

the Trust Distribution Process be determined to be unenforceable, such

determination shall

                                     - 30 -


in no way limit or affect the enforceability and operative effect of any and all

other provisions of this Trust Agreement or the Trust Distribution Process.

          7.5  Notices.  Notices to Persons asserting claims shall be given at
               -------

the address of such Person, or, where applicable, such Person's legal

representative, in each case as provided on such Person's proof of claim.  Any

notices or other communications required or permitted hereunder shall be in

writing and (a) delivered at, or sent by telex or telecopy to, the addresses

designated in Section 8.13 of the Global Settlement Agreement or, in the case of

the Trustees, the addresses provided by the Trustees to the Trust, the SCB and

the Trustors, or (b) mailed by registered or certified mail, return receipt

requested, postage prepaid, addressed as aforesaid, or to such other address or

addresses as may hereafter be furnished by any of the Trustors, the Trust or the

Trustees or the SCB to the others.

          All such notices and communications shall be effective when delivered

at the designated addresses or when the telex or telecopy communication is

received at the designated addresses and confirmed by the recipient by return

telex or telecopy in conformity with the provisions hereof.

          7.6  Counterparts.  This Trust Agreement may be executed in any number
               ------------

of counterparts, each of which shall constitute an original, but such

counterparts shall together constitute but one and the same instrument.

          7.7  Successors and Assigns.  The provisions of this Trust Agreement
               ----------------------

shall be binding upon and inure to the benefit of the Trustors, the Trust, the

Trustees, the SCB and their respective successors and assigns, except that

neither the Trustors nor

                                     - 31 -


the Trust nor any Trustee, nor the SCB members may assign or otherwise transfer

any of its, his or her rights or obligations under this Trust Agreement except,

in the case of the Trust and the Trustees, as contemplated by Section 7.2.

          7.8  No Waiver.  No failure to exercise or delay in exercising any
               ---------

right, power or privilege hereunder or under the Trust Distribution Process

shall operate as a waiver thereof, nor shall any single or partial exercise of

any right, power or privilege hereunder or under the Trust Distribution Process

preclude any further exercise thereof or of any other right, power or privilege.

The rights and remedies provided herein or in the Trust Distribution Process are

cumulative and are not exclusive of rights under law or in equity.

          7.9  Headings; Section References.  The headings used in this Trust
               ----------------------------

Agreement and in the Trust Distribution Process are inserted for convenience

only and neither constitute a portion of this Trust Agreement or the Trust

Distribution Process nor in any manner affect the construction of the provisions

of this Trust Agreement or the Trust Distribution Process.  All references in

this Trust Agreement or in the Trust Distribution Process to "Sections," unless

otherwise expressly indicated, shall be deemed to refer to sections of the

document in which such reference appears.

          7.10  Governing Law.  This Trust Agreement and the Trust Distribution
                -------------

Process shall be governed by, administered under and construed in accordance

with, the laws of the State of Texas.

                                     - 32 -

          7.11  Dispute Resolution.  Any disputes which arise under this Trust
                ------------------

Agreement or the Trust Distribution Process shall be resolved by the Court,

except as otherwise provided herein or in the Trust Distribution Process.

          7.12  Enforcement and Administration.  The provisions of this Trust
                ------------------------------

Agreement and the Trust Distribution Process shall be enforced and administered

by the Court.

          7.13  Settlement of Trustees' Accounts.  Notwithstanding any state law
                --------------------------------

to the contrary, the Court shall have exclusive jurisdiction over the settlement

of the accounts of the Trustees, whether such account is rendered by the

Trustees themselves or is sought by any Beneficiary or other Person.  The

Trustees shall render successive accounts covering periods of not more than one

Fiscal Year, commencing on the first completed Fiscal Year of the Trust or the

last day of the prior accounting period, as the case may be, except that an

account shall be rendered for the period ending on the date of the death,

resignation, removal or retirement of any Trustee.  Upon the acceptance of any

such account by the Court after hearing on notice to the SCB, the Trustors and

such other parties as the Court shall designate, the Trustees shall be

discharged from any further liability or responsibility to any Beneficiary or

other Person as to all matters embraced in such account.

          7.14  No Bond Required.  Notwithstanding any state law to the
                ----------------

contrary, each Trustee (including any successor Trustee) shall be exempt from

giving any bond or other security in any jurisdiction.


                                     - 33 -


          7.15  Service of Process.  Service of process upon any of the Trustees
                ------------------

in an action or proceeding under Sections 7.11, 7.12 or 7.13 shall be effective

upon delivery to the address set forth in Section 7.5.  Successor Trustees, by

acceptance of their appointment as such, shall be deemed to have approved this

method of service.

          7.16  Lawsuits Against Trustors.  Except as provided in Section 2.4(a)
                -------------------------

of the Global Settlement Agreement as to Fibreboard Corporation, the Trust shall

defend and indemnify the Fibreboard, Continental and Pacific Releasees against

and hold them harmless from any costs, fees, claims, liabilities, settlements or

judgments incurred or occurring after Global Approval Judgment and resulting,

directly or indirectly, from the assertion against any of them of any Class

Member Claim or Third Party Claim.  This obligation shall include without

limitation any such claim to the extent that, after Global Approval Judgment,

that claim attacks the validity or enforceability of the Global Approval

Judgment, but shall exclude any Additional Policy Claims or Express Indemnity

Claims that are the subject of a waiver by the Insurers or Fibreboard under

Section 6.3(C) of the Global Settlement Agreement.  The defense of any such

lawsuit will be tendered to the Trust and any defense costs or indemnity

obligation will be paid by the Trust for so long as funds remain in Funds I, II

and III.  The Trustors may, at their own expense, elect to participate with the

Trust in the defense of any such action or claim.  Amounts paid to or on behalf

of the Fibreboard, Continental and Pacific Releasees pursuant to this Section

shall not be limited in any manner, including by the provisions of Section E of

the Trust Distribution Process.  The provisions of this

                                     - 34 -


Section 7.16 shall only be applicable after Global Approval Judgment, subject to

Section 2.7(B) of the Global Settlement Agreement.

          7.17  No Disqualification of SCB.  No member of the SCB shall be
                --------------------------

disqualified solely by reason of his or her service as an SCB member from

serving as counsel for any Class Member in connection with the submission of any

Class Member Claim to the Trust, nor shall service as such counsel be deemed to

create a conflict of interest with respect to service to the Trust as an SCB

member.  No SCB member shall take any action in his or her capacity as such that

would prefer the interests of his or her clients over the interests of similarly

situated Beneficiaries generally.

          7.18  Initial Trustee; Powers.  In the event that as of the date of
                -----------------------

execution of the Global Settlement Agreement, the Trustees have not been

selected, then:

               (a)  On that date, the Trustors shall contribute $100 to the

Trust.  Francis McGovern shall be the sole initial trustee ("Initial Trustee").

The Initial Trustee shall have only the power to take those ministerial and

administrative actions necessary or desirable to apply for a letter ruling from

the Internal Revenue Service pursuant to Section 8.1 of the Global Settlement

Agreement and preserve the existence of the Trust until Trustees are appointed

hereunder.  The Initial Trustee shall not have authority to make any

discretionary decisions, waivers or amendments to the Trust Agreement.

               (b)  No later than January 14, 1994, the Trustors and the Class

Counsel (as defined in the Global Settlement Agreement) shall select three

trustees, who shall be the original Class A, Class B and Class C Trustees (such

persons, and their successors appointed pursuant to Section 5.3, being referred

to as the "Trustees").

                                     - 35 -


Trustors and Class Counsel have agreed to confer to attempt to reach joint

agreement as to the selection of all three original Trustees.  If Trustors and

Class Counsel cannot agree, Class Counsel will unanimously select the Class A

and B Trustees and Trustors will unanimously select the Class C Trustee.  Absent

agreement among Class Counsel as to the selection of the Class A and B Trustees,

or among Trustors as to the selection of the Class C Trustee, all Class Counsel

and/or all Trustors agree to appear in Court on January 17, 1994, and with the

assistance of the Court, to work from day to day until agreement on the

selection of the Trustee(s) for whom they are responsible is reached.  Upon

acceptance of this Trust Agreement by the original Class A, Class B and Class C

Trustees, the Initial Trustee shall resign.

          IN WITNESS WHEREOF, the parties have executed this Trust Agreement on

this 23rd day of December, 1993.


                                             TRUSTORS:

                                        FIBREBOARD CORPORATION


                                        By:         Michael R. Douglas
                                               -----------------------------

                                        Title: Senior V.P. & General Counsel
                                               -----------------------------

                                        COLUMBIA CASUALTY COMPANY


                                        By:         Laurens F. Terry
                                               -----------------------------

                                        Title: V.P. Continental Casualty Co.
                                               -----------------------------

                                        CONTINENTAL CASUALTY COMPANY


                                        By:           Laurens F. Terry
                                               -----------------------------

                                        Title:          Vice President
                                               -----------------------------

                                     - 36 -


                                        CNA CASUALTY COMPANY OF
                                        CALIFORNIA


                                        By:           Laurens F. Terry
                                               -----------------------------

                                        Title:         Vice President
                                               -----------------------------

                                        PACIFIC INDEMNITY COMPANY


                                        By:            John J. Degnan
                                               -----------------------------

                                        Title:      Senior Vice President
                                               -----------------------------

                                        INITIAL TRUSTEE:


                                                  Francis McGovern
                                        ------------------------------------


                                     - 37 -



                                                                   Exhibit 10.12











                           TRUST DISTRIBUTION PROCESS

                         Annex A to the Trust Agreement



                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
A.  Overview ..............................................................    1

B.  The Claim Procedure ...................................................    3
    1.  Submitting a Claim ................................................    3
    2.  Expedited Review Option ...........................................    4
    3.  Ordering of Claims for Processing .................................    5
    4.  Initial Evaluation of Claims ......................................    6
    5.  Further Claims Processing .........................................    7
    6.  Second (Malignant) Injury Claims ..................................    8
    7.  Audit Procedures ..................................................    8
    8.  Exigent Health and Extreme Hardship Claims ........................    9
    9.  Withdrawal of Claims ..............................................   10

C.  ADR Procedures ........................................................   10
    1.  Mediation .........................................................   10
    2.  Arbitration .......................................................   11
    3.  Location for ADR Procedures .......................................   13

D.  Litigation ............................................................   13
    1.  Mandatory Settlement Conference ...................................   14
    2.  Procedural Rules ..................................................   15

E.  Funds for Payment of Claims ...........................................   17
    1.  Fund I ............................................................   19
        a.  Commencement of Payments ......................................   19
        b.  Distributable Amount ..........................................   19
        c.  Distribution of Remaining Balance .............................   20
    2.  Fund II ...........................................................   20
        a.  Commencement of Payments ......................................   20
        b.  Distributable Amount ..........................................   21
        c.  Distribution of Remaining Balance .............................   21
    3.  Fund III ..........................................................   21
        a.  Commencement of Payments ......................................   21
        b.  Distributable Amount ..........................................   21
        c.  Distribution of Remaining Balance .............................   22
    4.  Determination of Distributable Amount for Each Fund ...............   22

F.  Order, Timing and Limitations on Payments of Claims ...................   22
    1.  Eligibility for Payment ...........................................   22
    2.  Order of Payment ..................................................   23

                                      -i-

    3.  Terms of Payment ..................................................   25
        a.  Claims Resolved Outside the Tort System .......................   25
        b.  Claims Resolved in the Tort System ............................   25
     4.  Deferral of Payments
 .............................................   26
     5.  Limitation on Payment of Claims ..................................   27

G.  All Claims Resolved Pursuant to the Trust Distribution Process ........   27

H.  Defendant Class Member Procedures .....................................   27
    1.  Claims Liquidated Before Judgment Against Defendant Class Members .   29
        a.  Calculation of Set-Off Amount..................................   29
        b.  Status of the Trust at Trial ..................................   30
        c.  Discovery and Informational Issues ............................   31
    2.  Claims Not Liquidated When Verdict or Judgment Obtained Against
        Defendant Class Members ...........................................   31
        a.  Effect of Verdict or Judgment .................................   31
        b.  Retention of Several Liability Claim ..........................   32
        c.  Payment of Verdict or Judgment ................................   32
    3.  Tort System Claims Against the Trust ..............................   33
    4.  Litigation Between Defendant Class Members and Settlement Class
        Members ...........................................................   34
    5.  Pursuit of Third Party Claims .....................................   35
        a.  Defendant Class Member to Stand in Settlement Class Members'
            Stead .........................................................   35
        b.  Resolution of Claims ..........................................   36
        c.  Processing and Payment of Claims ..............................   37
        d.  Multiple Claims or Multiple Third Party Claims ................   37
    6.  Cooperation for Court Approvals ...................................   40
    7.  No Modification Without Consent ...................................   40

I.  Attorneys' Fees .......................................................   41

J.  Amendment .............................................................   41

APPENDIX 1 TO THE TRUST DISTRIBUTION PROCESS ..............................  A-1

SCHEDULE A ................................................................  B-1

                                      -ii-


                           TRUST DISTRIBUTION PROCESS

                         Annex A to the Trust Agreement


          This Trust Distribution Process creates the procedures for submitting,


processing and paying Class Member Claims and Third Party Claims.  Capitalized


terms used in this Trust Distribution Process are defined herein or in the


Glossary.



A.  Overview.

    --------


          The primary goal of the Trust is fair and equitable treatment for all


Beneficiaries consistent with Trust resources. This Trust Distribution Process


furthers that goal by establishing procedures that are intended to process and


evaluate Class Member Claims of Beneficiaries impartially, pay all Class Member


Claims over time, and maintain reasonable reserves for any Class Member Claims


in excess of projections. The Trustees shall implement and administer this Trust


Distribution Process in accordance with their duties under the Trust Agreement.


          The claims resolution process begins with a proof of claim.  The Trust


then makes a determination whether the claim meets the criteria for any of the


five Scheduled Diseases:  Mesothelioma, Lung Cancer, Other Cancer, Asbestos Lung


Disease I ("ALD-1") and Asbestos Lung Disease II ("ALD-2").  If the claim meets


the criteria for a Scheduled Disease, it will be evaluated based on factors that


have significance in the resolution of similar claims by settlement or trial,


including but not limited to the factors set forth in Schedule A hereto.  If the


claim does not meet the criteria for one of the


                                      -1-


Scheduled Diseases, the Trust will evaluate whether it nonetheless asserts a


compensable claim for an asbestos-related injury.


          After evaluation, the Trust will make a good faith settlement offer or


advise the Beneficiary of the reasons for rejecting the claim. The Beneficiary


may either accept or reject that offer or negotiate further with the Trust. If


the Beneficiary rejects the Trust's offer, he or she may submit supplemental


information to the Trust and have his or her claim reevaluated by the Trust


and/or negotiate further with the Trust. If negotiation with the Trust fails,


the Beneficiary shall, if he or she wishes to pursue the claim, proceed to


mediation and then to binding or nonbinding arbitration.  Beneficiaries may


bring an action against the Trust in the tort system only after they have


participated in good faith in both mediation and nonbinding arbitration and have


rejected the award in a nonbinding arbitration.


          Beneficiaries must also appear at a mandatory settlement conference


under the auspices of the Court before proceeding to the tort system.  If a


Beneficiary rejects settlement following the settlement conference, he or she


may elect immediate binding arbitration or exit to the tort system.  No punitive


damages, pre-judgment or post-judgment interest, damages for risk of cancer, or


compensatory damages beyond Fibreboard's own share will be allowable in the tort


system.  Judgments may be collected only as provided in this Trust Distribution


Process.


          Similar claims-handling procedures (described in Section H below)


apply to certain Third Party Claims including those of Defendant Class Members


who succeed to Class Member Claims.


                                      -2-


          Class Member Claims and Third Party Claims will be eligible for


payment once they are Liquidated, whether by settlement, arbitration, or


judgment.  Judgments or claims settled after exit to the tort system will


normally be paid out over a five-year period, while claims resolved without


resort to the tort system will normally be paid over a three-year period.  Total


payments from the Trust in each year for Trust Expenses, Class Member Claims and


Third Party Claims are limited to the amounts set forth in Section E.  While the


Trust is expected to be able to pay all claims as Liquidated yearly, if amounts


available are insufficient to make all payments due on Liquidated claims in any


year, claims for Mesothelioma and Lung Cancer will be paid first, then Other


Cancer and ALD-1 claims, then ALD-2 claims, and then Residual Claims, whether


any such claims have been Liquidated by settlement, arbitration or judgment.


Within each of those categories, claims will be paid in the order of the date on


which a release is received by the Trust (for settled claims), an arbitration


ruling is rendered (for claims resolved through arbitration) or a judgment


becomes final (for claims resolved in the tort system).  Class Member Claims and


Third Party Claims which cannot be paid because the amount available for that


year is insufficient to make all payments due on such claims will be deferred


for payment (FIFO within their payment categories) until the following year.


B.  The Claim Procedure.

    -------------------


     1.  Submitting a Claim.  Other than Interim Claims submitted pursuant to

         ------------------


Article 7 of the Global Settlement Agreement, commencing on February 14, 1994,


any Beneficiary may submit a claim to the Trust.  To do so, the Beneficiary


shall provide to


                                      -3-


the Trust, on forms approved by the Trustees and the SCB, a proof of claim


including at least the following information concerning the Exposed Person:


name, address, social security number, date of birth, date of death (if


applicable), marital status and number and age of dependents, spouse's name and


social security number, occupation, smoking history, year of first exposure to


any asbestos or asbestos-containing products, identification and source of


identification of asbestos-containing products manufactured or supplied by


Fibreboard to which the Exposed Person was exposed, the work sites where the


Exposed Person was exposed to asbestos or to Fibreboard asbestos, the years of


such exposures including specific descriptive comments concerning the duration


and intensity of such exposure, the status of related workers compensation or


civil litigation regarding asbestos exposure, and the Scheduled Disease, if any,


for which the Beneficiary believes the claim qualifies or a statement of the


disease or injury the Beneficiary asserts he or she has if he or she does not


believe he or she qualifies for a Scheduled Disease.  In addition, the


Beneficiary shall provide the Trust with a Medical Report, a PFT Report and a B-


reader Report, and, in Malignancy Claims, a pathology report (where available).


     2.  Expedited Review Option.  The Trust may establish a process for
         ------------------------


expedited review of ALD-2 claims by persons desiring an accelerated settlement


of their claim at a fixed amount ("Expedited Review Claims").  A Beneficiary


seeking such expedited review shall submit an abbreviated proof of claim for


expedited review by the Trust.  The abbreviated proof of claim shall provide the


following information concerning the Exposed Person:  name, address, social


security number, date of birth, date of death (if applicable), marital status,


spouse's name and social security number, occupation, the


                                      -4-


Scheduled Disease for which the Beneficiary believes the claim qualifies, the


work sites where the Exposed Person was exposed to asbestos or to Fibreboard


asbestos and such information requested by the Trust that adequately


demonstrates exposure to asbestos or asbestos-containing products and to


Fibreboard asbestos or asbestos-containing products.  In addition, the


Beneficiary shall supply the Trust with a Medical Report.  The Trust will


expeditiously review the abbreviated proof of claim and may, but is not required


to, offer to settle such Expedited Review Claims for a single fixed cash payment


of an amount and on a time schedule established from time to time by the Trust.


If the Trust determines not to offer to settle an Expedited Review Claim, the


Beneficiary may submit a proof of claim as set forth in Section B.1.


          The Trust may establish additional categories of Expedited Review


Claims with differing fixed cash payments and differing information


requirements.  In addition, the Trust may eliminate or suspend the Expedited


Review Claim option for one or more categories of Class Member Claims if it


determines that such option is encouraging the filing of claims that would not


otherwise be eligible for payment under these procedures or is using a


disproportionate share of the Trust's assets.


     3.  Ordering of Claims for Processing.  Claims shall be ordered for
         ---------------------------------


processing by the Trust in the manner described in this Section.  As a general


practice, the Trust shall review its claims files on a regular basis and notify


all Beneficiaries whose claims are likely to be processed in the near future.  A


Beneficiary's position in the FIFO queue for processing will be determined by


the date of receipt by the Trust of a properly completed proof of claim form,


and among claims received the same day, by the date of


                                      -5-


diagnosis of the disease on which the claim is based.  Where the Beneficiary has


filed an incomplete proof of claim, the Trust shall notify the Beneficiary of


the need for additional information and shall not process the claim until the


file is complete.  A Beneficiary shall not receive a position in the FIFO


processing queue until his or her proof of claim is properly completed.


     4.  Initial Evaluation of Claims.  As a proof of claim is reached in the
         ----------------------------


FIFO queue, the Trust shall evaluate it to determine whether the claim qualifies


as one of the five Scheduled Diseases.  A Beneficiary's right to assert a valid


claim for an asbestos-related injury or disease is in no way prejudiced by


failure of his or her asbestos-related injury or disease to qualify as one of


the Scheduled Diseases.  If a Scheduled Disease is determined to exist, the


Trust shall evaluate the Beneficiary's claim using factors relevant to the


resolution of asbestos claims for that Scheduled Disease by settlement or trial,


including the factors set forth in Schedule A hereto.  If the Trust concludes


that the Beneficiary's injury or disease does not meet the criteria for a


Scheduled Disease, it shall determine whether the Beneficiary nonetheless


asserts a meritorious claim for an asbestos-related injury or disease and shall


evaluate the claim using factors relevant to the resolution of similar claims by


settlement or trial.  If the Trust accepts for disposition a claim with respect


to a disease which is not a Scheduled Disease, the Trust shall place it in a


Schedule Category based on which Scheduled Disease it most closely resembles.


          In addition to the medical evidence which Beneficiaries are required


to submit with the initial proof of claim or submit as part of any supplemental


information


                                      -6-


provided to the Trust, the Trust may require that additional kinds of medical


evidence be provided.  The Trust may obtain additional medical evidence which it


believes necessary to evaluate any claim.


          Once its evaluation is completed, the Trust shall make a written good


faith offer of settlement based upon such evaluation or advise the Beneficiary


of the reasons for rejecting the claim.  Such responses shall be sent to the


Beneficiary's counsel or representative, if any, or to the Beneficiary.  The


claim shall not be processed further until the Trust receives a response from


the Beneficiary.  The Beneficiary and the Trust shall then negotiate in good


faith toward a resolution of the claim.  Once the Trust receives confirmation of


resolution of the claim, it shall forward an appropriate form of release


approved by the Trust to the Beneficiary's counsel or representative, or to the


Beneficiary.  The claim's eligibility for payment under Section F shall be based


on the date the executed release with respect to a resolved claim is received by


the Trust.


     5.  Further Claims Processing.  If the Beneficiary rejects the Trust's
         -------------------------


initial offer, he or she may elect to negotiate further with the Trust and may


submit additional information to the Trust in support of the claim.


Alternatively, he or she may proceed to mediation as set forth below.  The Trust


shall evaluate claims based on the medical evidence submitted to the Trust as


part of the Beneficiary's proof of claim.  A Beneficiary may, but need not,


supple ment this information from time to time with additional medical evidence.


If he or she does so, the Beneficiary's legal representative or, if he or she


has no legal representative, the Beneficiary shall submit an affidavit or


declaration under penalty of perjury, in a form acceptable to the Trust, stating


that he or


                                      -7-


she has submitted to the Trust all medical reports relating to any alleged


asbestos-related condition other than those subject to attorney work product


privilege.  If the Beneficiary submits supplemental information to the Trust,


the Trust shall reevaluate the claim and either make a written good faith


settlement offer or reject the claim.  The Beneficiary shall then reject or


accept any offer based on reevaluation using the procedures outlined above for


rejection or acceptance of the Trust's initial offer.  If the Beneficiary


rejects such offer, he or she may elect to negotiate further with the Trust or


shall proceed to mediation.


     6.  Second (Malignant) Injury Claims.  The Trust shall offer to settle Non-
         --------------------------------


Malignancy Claims on two alternative bases:  1) in exchange for a general


release; or 2) in exchange for a limited release covering all asbestos-related


personal injury claims other than subsequent Malignancy Claims.  The Trust's


settlement offer for a limited release shall be the amount of its offer for the


general release minus the lesser of:  1) half of its settlement offer for the


general release; and 2) $1,750.  If a Beneficiary accepts the Trust's offer of a


limited release, the Trust shall account for the monetary difference between its


settlement offer for the general release and its settlement offer for the


limited release in a separate account.  A Second Injury Claim shall be ordered


in the FIFO queue for processing based upon the date of receipt by the Trust of


the Second Injury Claim, and shall be treated as a new claim under this Trust


Distribution Process.


     7.  Audit Procedures.  In all cases, the Trust may require that medical
         ----------------


x-rays, tests, laboratory examinations and other medical evidence comply with


recognized medical standards regarding equipment, testing methods, and


procedures to assure that


                                      -8-


such evidence is reliable.  The Trust may develop methods for auditing the


reliability of all data submitted in support of claims, including product


identification and medical evidence, and may require independent interpretation


of CT scans, X-rays, pathology specimens or other physical evidence.  If its


audits show an unacceptable level of reliability for evidence submitted from


specific individuals or institutions, the Trust may refuse to accept evidence


from them.  In addition, the Trust may develop methods for auditing other types


of evidence necessary to support a claim.


     8.  Exigent Health and Extreme Hardship Claims.  Notwithstanding the FIFO
         ------------------------------------------


order processing rules described in Sections B.2 through B.4, the Trust may


process and Liquidate Extreme Hardship Claims and Exigent Health Claims at any


time.


          The Trust shall establish procedures to expedite its processing,


evaluation and negotiation of Exigent Health Claims and Extreme Hardship Claims


as well as the ADR procedures the Beneficiary asserting such a claim shall be


required to follow under Section C.  Such expedited procedures shall be designed


to allow all Exigent Health Claims to be Liquidated within six months of


presentation of a properly completed proof of claim to the Trust, and to ensure,


to the maximum extent practicable, that in jurisdictions in which Beneficiaries


can obtain accelerated trial dates for Exigent Health Claims, the Trust's


negotiation process and the ADR procedures can be completed before a trial of an


Exigent Health claimant's case against Defendant Class Members.


          If the Trust determines, in its sole discretion, that a Beneficiary


asserting an Extreme Hardship Claim needs greater financial assistance than


would be afforded by the payout scheme set forth in Section F.3, the Trust may


accelerate payment to the


                                      -9-


Beneficiary of part or all of the amount for which that claim has been


Liquidated as the Trust deems appropriate.  Payments with respect to Exigent


Health Claims shall be made only in accordance with the payout scheme set forth


in Section F.3.


     9.  Withdrawal of Claims.  If the Beneficiary does not respond to the
         --------------------


Trust's offer on initial evaluation or reevaluation within 30 days, the Trust's


offer and the claim shall be deemed to be withdrawn without prejudice unless the


Beneficiary has requested in writing one or more extensions of time, not to


exceed six months in the aggregate, within which to respond to the offer.  If


the Beneficiary still has not responded to the Trust's offer at the end of the


extension period, the Trust's offer and the claim shall then be deemed to be


withdrawn without prejudice.  A Beneficiary may also elect to withdraw a claim


at any time without prejudice.  A claim that is withdrawn or deemed to have been


withdrawn may be resubmitted at any time, and shall be reordered in the FIFO


queue for processing based on the date of receipt by the Trust of a properly


completed proof of claim with respect to the refiled claim.


C.  ADR Procedures.
    --------------



     1.  Mediation.  If the Beneficiary chooses not to submit supplemental
         ---------


information or rejects the Trust's offer based on its evaluation of such


supplemental information and elects not to negotiate further with the Trust, the


Beneficiary's claim shall be referred to mediation.  The Trust shall establish


and maintain a list of Qualified Mediators, compensated by the Trust.  The Trust


shall refer claims to Qualified Mediators from the list in rotation as soon as


practicable after being notified by the claimant that he wishes to proceed to


mediation.


                                      -10-


          Claims shall be handled by each mediator in the order received by him


or her, to the extent practicable.  Any party may be represented by legal


counsel.  The mediator shall confer with the parties and/or their legal


representatives, individually and jointly.  Such conference may be in person or


by telephone, at the claimant's election.  The Beneficiary and a representative


of the Trust with settlement authority must personally participate in the


conference unless, in the judgment of the mediator, the Beneficiary's physical


or psychological condition precludes such participation.  Such conference shall


be in the nature of a settlement conference.  The mediator shall review the


claim and the positions of the parties, the prior negotiations between the


parties, the offer(s) and demand(s), such information as the parties may wish to


submit as to a fair and equitable settlement, and all documents and medical


reports relevant to the claim.  At least five days prior to the mediation


conference, Beneficiary and the Trust shall each submit to the mediator a


concise, confidential statement outlining the Beneficiary's medical condition,


exposure to Fibreboard products and each party's position on settlement value.


The mediator shall work with both sides toward reaching an acceptable,


reasonable settlement.  The mediator does not have the authority to impose a


settlement on the parties.


     2.  Arbitration.  If the Beneficiary is unable to settle his or her claim
         -----------


with the Trust within 30 days of the mediation conference, the Beneficiary


shall, if he or she wishes to pursue the claim, proceed to arbitration of the


claim.  The arbitration shall be commenced by a written demand for arbitration


by the Beneficiary served on the Trust within 45 days of the mediation


conference.  Such arbitration shall be binding or


                                      -11-


nonbinding at the election of the Beneficiary, which election must be made in


the Beneficiary's written demand for arbitration.  The Trust and the Beneficiary


shall bear their own fees and costs, except that the Trust shall pay the


administrative fees and costs of conducting the arbitration unless the


arbitrator in his or her sole discretion assesses such administrative fees and


costs against any Beneficiary for delaying or abusing the arbitration


procedures.


          The Trust shall maintain a list of Qualified Arbitrators.


Arbitrations shall be conducted by a single Qualified Arbitrator.  The


Beneficiary and the Trust shall attempt to agree on a Qualified Arbitrator who


will preferably, but not necessarily, be selected from the list maintained by


the Trust.  If the parties cannot agree on a Qualified Arbitrator, a Qualified


Arbitrator shall be selected pursuant to the procedures of an independent


arbitration facility to be selected by the Trust or by such other procedures as


may be adopted by the Trust.  The parties shall provide the Qualified Arbitrator


and each other with copies of all relevant materials concerning the claim and


any supplementary information they wish the Qualified Arbitrator to consider not


less than 30 days prior to the date of the arbitration hearing.  The Qualified


Arbitrator may require the parties to submit such additional information as he


or she deems necessary.  The Qualified Arbitrator shall conduct a hearing on the


claim at which testimony may be offered, unless both parties agree to waive such


hearing.  In nonbinding arbitrations, the Beneficiary must attend the hearing in


person, unless in the judgment of the Qualified Arbitrator his or her physical


or psychological condition makes such attendance impossible.  The Qualified


Arbitrator shall issue an award promptly but in no event later


                                      -12-


than 120 days from the date on which he or she receives the last submission of


information from either of the parties relevant to the claim, unless the parties


agree to extend such time.  The Award shall be based on the same factors used by


the Trust in evaluating claims.


          If the Beneficiary elected binding arbitration at the time of the


demand, neither party shall have the right to appeal the award other than on


grounds set forth in the Federal Arbitration Act.  If the Beneficiary elected


nonbinding arbitration at the time of the demand, the award shall become final


and binding if the Beneficiary does not reject the award by so notifying the


Trust in writing within 30 days after receipt of the award.  If the Beneficiary


does not reject the award as provided above, he or she shall be deemed to have


accepted it.  If the Beneficiary rejects the award, the award shall not be


binding on either party and the Beneficiary may proceed to the tort system under


the procedures set forth below.


     3.  Location for ADR Procedures.  The Trust shall establish procedures to
         ---------------------------


conduct mediations and arbitrations at scheduled intervals at such locations


around the United States as the Trust determines will be convenient to the


largest numbers of claimants and will not impose undue burden on the Trust.


D.  Litigation.
    ----------


          A Beneficiary may not proceed to litigate his or her claim against the


Trust in the tort system unless he or she has in good faith:  (1) submitted a


proof of claim and rejected the resulting settlement offer from the Trust; (2)


participated in a mediation conference and failed to settle his or her claim;


(3) participated in nonbinding arbitration


                                      -13-


and rejected the resulting arbitration award; and (4) participated in a


mandatory settlement conference as described below.  The following procedures


shall govern any Beneficiary who elects to litigate in the tort system his or


her claim against the Trust.


     1.  Mandatory Settlement Conference.  Before any Beneficiary may proceed to
         -------------------------------


the tort system, the Beneficiary must request the Court to conduct a mandatory


settlement conference with respect to the claim.  This mandatory settlement


conference may be conducted by the Court, or by another judge or a neutral


special master designated by the Court, or, if both the Beneficiary and the


Trust agree, by a mutually selected, neutral third party other than the Court


(the "Settlement Conference Designee").  The settlement conference may be


conducted by telephone unless the Court or the Settlement Conference Designee


determines, on application by the Trust or the Beneficiary, that the conference


should be conducted in person.  If the Court or the Settlement Conference


Designee so determines, the settlement conference must be attended in person by


the Beneficiary, unless in the judgment of the Court or the Settlement


Conference Designee his or her physical or psychological condition makes such


attendance impossible, and by a representative of the Trust with settlement


authority at such location as the Court or the Settlement Conference Designee


shall determine.  If no settlement is reached within 30 days of the mandatory


settlement conference, the Beneficiary and the Trust shall submit to each other


on that date a written settlement offer that will remain in effect for an


additional 30 days.  If neither party accepts the other party's settlement offer


during this period, then the Beneficiary may, upon certification from the Court


or the Settlement Conference Designee that the


                                      -14-


Beneficiary has completed the settlement conference process and otherwise has


complied with the requirements of the preceding paragraph of this Section D,


commence a lawsuit against the Trust in the tort system or elect binding


arbitration.


     2.  Procedural Rules.
         ----------------


          a.  Any Beneficiary who elects binding arbitration following the


mandatory settlement conference shall follow the procedures set forth in Section


C.2 above.  Payment of any resulting award shall, however, be governed by


Section F of this Trust Distribution Process.


          b.  Any Beneficiary who elects to resolve a claim through the tort


system may pursue the claim in any appropriate forum, subject to the procedures


set forth herein.  Payment of any resulting judgment shall, however, be governed


by Section F of this Trust Distribution Process.


          c.  The Trust may assert any and all defenses available to it or which


would have been available to any Trustor against which the claim could have been


asserted absent Global Approval Judgment with respect to Beneficiaries who elect


to resolve their claims through the tort system.


          d.  In no event shall a Beneficiary be permitted to seek or recover


from the Trust in a lawsuit in the tort system any punitive or exemplary damages


of any sort.  Nor may any claimant seek or recover compensatory damages in


excess of Fibreboard's actual share of responsibility or for the actual


percentage risk of contracting cancer.  Finally, no Beneficiary may seek or


recover pre-judgment interest in a suit in the tort


                                      -15-


system.  Any other damages available under the applicable law shall remain


recoverable except as provided in Section D.2.e below.


          e.  In no event shall the Trust or any other Person be required to


post a bond to stay collection of a judgment in the tort system.  Judgments


shall be paid by the Trust in the order set forth in Section F below, and no


Beneficiary shall be permitted to take any steps to collect a judgment from the


Trust except as set forth in this Trust Distribution Process.  The Trust shall


not be responsible to pay post-judgment interest; in lieu thereof, the


procedures set forth in the last sentence of Section F.1 shall apply.


          f.  (i) The death of a Beneficiary after he or she has filed a proof


of claim with the Trust shall not eliminate compensable elements of his or her


claim accruing prior to the date of death, by, for example, eliminating any


claim for damages for pain and suffering occurring prior to the date of death or


by creating an offset to a lost earnings award for personal consumption


occurring prior to the date of death, notwithstanding applicable state law to


the contrary.  (ii) However, such compensable elements may not be recovered


after exit to the tort system unless the Beneficiary shows that he or she could


have recovered such damages absent compliance with the requirements of the Trust


Distribution Process.


          g.  At trial the defendant shall be the Trust and the Trust and


Beneficiary shall jointly request that the Trust be introduced to the trier of


fact (judge or jury as the case may be) in the following fashion or in another


substantially similar fashion as the trial court may direct, in addition to any


other evidence permitted by the Court about the Trust's identity, goals and


operations:


                                      -16-


               Members of the jury, this is an action for damages for

          [personal injury/ wrongful death] brought by plaintiff[s]

          against [various defendants, including] the Fibreboard

          Asbestos Compensation Trust.

               The Fibreboard Asbestos Compensation Trust was created

          by Order of a United States District Court to provide fair

          and equitable treatment for persons with asbestos injury for

          which Fibreboard Corporation might bear legal liability.

          The Trust has a fixed amount of money with which to

          compensate all persons with an asbestos injury to whom

          Fibreboard is found to be legally liable.  This sum of money

          must cover all victims, past and future.  Under no

          circumstances may you award any sum designed or intended to

          punish or make an example of Fibreboard or the Trust.

               If you should find that Fibreboard or products

          manufactured by Fibreboard were a legal cause of injury to

          plaintiff[s], any payment of damages awarded with respect to

          Fibreboard's products will be made by the Trust, not by

          Fibreboard itself.  The fact that a trust exists is in no

          way an indication that you should impose any liability on

          the Trust.  No sum you might award will be paid by either

          Fibreboard or by insurance; any award will be paid only by

          the Trust.

          h.  Any Beneficiary who elects to resolve a claim through the tort


system shall provide the Trust (without cost to the Trust) with copies of all


pleadings, discovery materials, evaluations, and other similar nonprivileged


documentation requested by the Trust in connection with its defense of the claim


in the tort system, so that the Trust may efficiently and economically prepare


for trial.


E.  Funds for Payment of Claims.
    ---------------------------


          As set forth in the Trust Agreement, the Trust shall administer three


funds, for payment of Trust Expenses, Class Member Claims and Third Party


Claims, to be known as "Fund I," "Fund II," and "Fund III."  Fund I is primarily


intended to pay expenses of, and claims against, the Trust during the first 25


years after Global Approval


                                      -17-


Judgment.  Fund II is primarily intended to pay expenses of, and claims against,


the Trust commencing 26 years after Global Approval Judgment, although it is


available to pay expenses and claims commencing 21 years after Global Approval


Judgment, if Fund I is insufficient for that purpose.  Fund III is primarily


intended to pay any expenses and claims not paid from Fund I or Fund II,


commencing 46 years after Global Approval Judgment, although it is available to


pay expenses and claims commencing 41 years after Global Approval Judgment if


Fund II is exhausted prior to 46 years after Global Approval Judgment.


          In order to assure that, to the maximum extent feasible, Trust


resources are preserved and fairly allocated among all Beneficiaries (i.e.,


those who will have claims in the future as well as those who have claims now)


Appendix 1 describes in detail how Trust surpluses realized in any Fiscal Year


are to be preserved and limits amounts that can be spent in any Fiscal Year to


pay claims from Funds I, II or III.  In general, Appendix 1 specifies that


payments for Trust Expenses, Class Member Claims and Third Party Claims may not


exceed annual earnings on the assets within the relevant Fund plus a portion of


the remaining principal (calculated by allocating remaining Fund principal


equally over the years remaining in the Fund then in use).  If any Surplus


remains after payment of all Trust Expenses, Class Member Claims and Third Party


Claims and certain indemnity expenses for a Fiscal Year (and after restoration


of any increases in Principal Amount used in prior years as described below),


such Surplus will either increase the Reserve Account or build Trust principal.


This Reserve Account will be used to pay expenses or claims for any later year


before Trustees may access any


                                      -18-


Increased Principal Amount to be used in that year.  If, however, in any of the


Fiscal Years 3 through 12 or 16 through 20 after Global Approval Judgment, the


Earnings Amount and Principal Amount together with the funds contained in the


Reserve Account in excess of $10,000,000 are not sufficient to pay Trust


Expenses and to make all payments with respect to Class Member Claims or Third


Party Claims for the first two Schedule Categories that are due or all payments


with respect to Class Member Claims or Third Party Claims for the third Schedule


Category that were due and unpaid on four consecutive prior Distribution Dates,


the Trust may increase the usable portion of the Fund principal by up to 25% for


any of Fiscal Years 3 through 12 after Global Approval Judgment or 12.5% for any


of Fiscal Years 16 through 20 after Global Approval Judgment.


     1.  Fund I.
         ------


          a.  Commencement of Payments.  The Trust shall not pay any Class
              ------------------------


Member Claim or Third Party Claim (other than Extreme Hardship Claims and


Expedited Review Claims) from Fund I until the Distribution Date first occurring


after the end of the first Fiscal Year after Global Approval Judgment.


          b.  Distributable Amount.  Total payments for Trust Expenses, Class
              --------------------


Member Claims and Third Party Claims made from Fund I for any Fiscal Year (i.e.,


payments for Trust Expenses, Extreme Hardship Claims and Expedited Review Claims


made during that Fiscal Year, together with payments for Class Member Claims and


Third Party Claims for that Fiscal Year made on the Distribution Date


immediately following that Fiscal Year) (other than any payments made from the


Reserve Account)


                                      -19-


shall not exceed the Distributable Amount for that Fiscal Year.  For the first


Fiscal Year after Global Approval Judgment the Earnings Amount for Fund I shall


be calculated from the date of Global Approval Judgment.


          c.  Distribution of Remaining Balance.  The transfer from Fund I to
              ---------------------------------


Fund II of any remaining balance in Fund I shall occur on the earlier of (i) the


day after the Distribution Date for the twenty-fifth Fiscal Year after Global


Approval Judgment, or (ii) the day before the Distribution Date for the first


Fiscal Year occurring after the twentieth Fiscal Year after Global Approval


Judgment in which the maximum possible Distributable Amount is less than the


Earnings Amount and the Principal Amount that were in effect for Fund I for the


twentieth Fiscal Year after Global Approval Judgment, the Trust shall transfer


such remaining balance and the remaining balance of the Reserve Account to Fund


II, at which time payments out of Fund II shall commence as provided in Section


E.2.


     2.  Fund II.
         --------



          a.  Commencement of Payments.  No payments shall be made from Fund II
              ------------------------


until the Distribution Date for the twenty-first Fiscal Year after Global


Approval Judgment.  If at that time Fund I still has money left to pay Trust


Expenses, Class Member Claims or Third Party Claims, no payments shall be made


from Fund II until the earlier of:  (1) the day after the Distribution Date for


the twenty-fifth Fiscal Year after Global Approval Judgment; or (2) the Fiscal


Year in which the Distribution Date referred to in Section E.1.c.(ii) occurs.


                                      -20-


          b.  Distributable Amount.  The total amount of payments for Trust
              --------------------


Expenses, Class Member Claims and Third Party Claims made from Fund II for any


Fiscal Year is limited to the Distributable Amount for that Fiscal Year.


          c.  Distribution of Remaining Balance.  The transfer from Fund II to
              ---------------------------------


Fund III of any remaining balance in Fund II shall occur on (i) the day after


the Distribution Date for the twentieth Fiscal Year after the transfer of the


balance in Fund I to Fund II pursuant to Section E.1.c, or (ii) such later date


as the Trustees determine would be in the best interests of all Beneficiaries,


both present and future (but in no event later than the day after the


Distribution Date for the forty-fifth Fiscal Year after Global Approval


Judgment); at which time payments out of Fund III shall commence as provided in


Section E.3.


     3.  Fund III.
         --------

          a.  Commencement of Payments.  No payments shall be made from Fund III
              ------------------------


until the Distribution Date for the forty-first Fiscal Year after Global


Approval Judgment.  If at that time Fund II still has money left to pay Trust


Expenses, Class Member Claims or Third Party Claims, no payments shall be made


from Fund III until the date Fund II is exhausted or the balance of Fund II has


been transferred into Fund III pursuant to Section E.2.c.


          b.  Distributable Amount. The total amount of payments for Trust
              --------------------


Expenses, Class Member Claims and Third Party Claims made from Fund III for any


Fiscal Year is limited to the Distributable Amount for that Fiscal Year.


                                      -21-


          c.  Distribution of Remaining Balance.  If there is a remaining
              ---------------------------------


balance in Fund III on the day after the Distribution Date for the sixty-first


Fiscal Year after Global Approval Judgment, and there are then, or are


anticipated by the Trustees to be in the future, any Trust Expenses, Class


Member Claims, Third Party Claims and other obligations of the Trust which have


not yet been liquidated and/or fully paid, the Trust shall use the remaining


balance of Fund III to pay such Trust Expenses, Class Member Claims, Third Party


Claims and other obligations of the Trust.  Upon the occurrence of the


Termination Date, the Trust shall apply any remaining balance of Fund III to


such charitable purposes as the Trustees in their reasonable discretion, after


consultation with the SCB, shall determine, which charitable purposes, if


practicable, shall be related to occupational health.


     4.  Determination of Distributable Amount for Each Fund.  Within 90 days
         ---------------------------------------------------


following the end of each Fiscal Year after Global Approval Judgment, the Trust


shall determine the Distributable Amount for such Fiscal Year, which


Distributable Amount (after payment of Trust Expenses, Extreme Hardship Claims


and Expedited Review Claims for such Fiscal Year) shall be distributed to pay


Class Member Claims and Third Party Claims, in the order set forth in Section


F.2, on a date, no later than 120 days following the end of each such Fiscal


Year, chosen by the Trust (the "Distribution Date").


F.  Order, Timing and Limitations on Payments of Claims.
    ---------------------------------------------------

     1.  Eligibility for Payment.  All Class Member Claims and Third Party
         -----------------------


Claims become eligible to begin receiving payments from the Trust on the


Distribution Date


                                      -22-


immediately following the Fiscal Year in which such Class Member Claims or Third


Party Claims are Liquidated, provided that in the case of settled Class Member


Claims the Trust has received the release required by Section B.4.  Judgments


obtained in the tort system shall be eligible for payment in the same order as


Claims Liquidated by settlement or arbitration, except as provided in Section


F.3.b, and shall be treated as having been Liquidated on the date the claimant


obtains a final, nonappealable judgment, except that upon an unsuccessful appeal


by the Trust, the date of Liquidation shall be the date of the trial court


judgment.


     2.  Order of Payment.  On each Distribution Date, the Trust shall make
         ----------------


payments on Liquidated Class Member Claims and Third Party Claims in the


following order:  (1) claims for Mesothelioma and Lung Cancer; (2) claims for


Other Cancer and Asbestos Lung Disease I; (3) the first payment on claims for


Asbestos Lung Disease II which was due and unpaid on four or more consecutive


prior Distribution Dates, (4) the second payment on claims for Asbestos Lung


Disease II which was originally due and unpaid on four or more consecutive prior


Distribution Dates; (5) the third payment for claims on Asbestos Lung Disease II


which was originally due and unpaid on four or more consecutive prior


Distribution Dates; (6) any other payments on claims for Asbestos Lung Disease


II; and (7) Residual Claims.  While it is anticipated that the Trust will be


able to pay all Liquidated Class Member Claims and Third Party Claims on each


Distribution Date, all payments due on Liquidated claims for Mesothelioma and


Lung Cancer must be made before any payments due on Liquidated claims for


Asbestos Lung Disease I and Other Cancer may be made, all payments due on


Liquidated claims


                                      -23-


for Asbestos Lung Disease I and Other Cancer must be made before any payments


due on Liquidated claims for Asbestos Lung Disease II may be made, the first


payment on Liquidated claims for Asbestos Lung Disease II which was due and


unpaid on four or more consecutive prior Distribution Dates must be made before


any other payments for other Liquidated claims for Asbestos Lung Disease II may


be made, the second payment on Liquidated claims for Asbestos Lung Disease II


which was originally due and unpaid on four or more consecutive prior


Distribution Dates must be made before any other payments for other Liquidated


claims for Asbestos Lung Disease II may be made, the third payment on Liquidated


claims for Asbestos Lung Disease II which was originally due and unpaid on four


or more consecutive prior Distribution Dates must be made before any other


payments for other Liquidated claims for Asbestos Lung Disease II and all other


payments due on Liquidated claims for Asbestos Lung Disease II must be made


before any payments due on Liquidated Residual Claims may be made.  Within each


of the seven categories, payments due on Class Member Claims and Third Party


Claims shall be made in FIFO order based on when the Class Member Claims and


Third Party Claims were Liquidated, whether by settlement, arbitration or


judgment, except that settled Class Member Claims shall be ordered within each


such category according to when the release required by Section B.4 is received


by the Trust.  Other than by virtue of subrogation to a Class Member Claim


pursuant to Section H.5.a, no contribution claim brought by a Defendant Class


Member shall be paid inasmuch as resolution of a Class Member Claim against the


Trust gives rise to a right of set-off or reduction under


                                      -24-


Section H.1.a of the Trust Distribution Process sufficient to satisfy, and bar


the assertion of, any such contribution claim against the Trust.


     3.  Terms of Payment.
         ----------------

          a.  Claims Resolved Outside the Tort System.  Class Member Claims
              ---------------------------------------


resolved without filing an action against the Trust in the tort system and all


Third Party Claims shall be eligible for payment over a three-year period, 40%


due on the Distribution Date immediately following the Fiscal Year in which such


claim was Liquidated and 30% due on each of the next two Distribution Dates,


except for Expedited Review Claims paid pursuant to Section B.2 and Extreme


Hardship Claims paid pursuant to Section B.8 of this Trust Distribution Process.


          b.  Claims Resolved in the Tort System.
              ----------------------------------


               (i)  Class Member Claims resolved after the filing of an action


against the Trust in the tort system shall be eligible for payment on the


following schedule.  On the Distribution Date following the Fiscal Year in which


such a claim was Liquidated, the Beneficiary shall be eligible to receive the


lesser of:  (1) 100% of the last settlement offer made by the Trust before the


Beneficiary filed an action against the Trust in the tort system, or 100% of the


proposed Award in nonbinding arbitration with the Trust pursuant to Section C,


whichever is greater; and (2) 40% of the amount of the judgment or settlement


after the action was filed.  The remaining balance of the judgment or settlement


shall be eligible for payment on the Distribution Dates following the next four


Fiscal Years in equal installments so long as each such installment does not


exceed $50,000.  In the event that each such installment would exceed $50,000,


the


                                      -25-


Beneficiary shall be eligible to receive $50,000 per year until the Class Member


Claim is fully paid.  In the event that any resulting judgment is less than the


proposed Award in nonbinding arbitration with the Trust pursuant to Section C,


the Trust shall be entitled to recover as a cost of litigation and deduct from


the judgment its cost of mediation and arbitration pursuant to the procedures


set forth in Section C.


               (ii)  Notwithstanding the foregoing, in order to prevent evasion


or abuse of the ADR provisions of this Trust Distribution Process, to conserve


the assets of the Trust for the benefit of all Beneficiaries, and to manage


prudently the cash flow of the Trust in a manner consistent with Section E of


this Trust Distribution Process, the Trustees shall have the discretion, in any


instance in which the Beneficiaries' judgments against the Trust result from a


trial of the claims of more than 15 such Beneficiaries, to pay such judgments in


such manner and over such a longer time period (not to exceed 10 years) as the


Trustees shall determine is in the best interests of the Trust and of all


Beneficiaries.


     4.  Deferral of Payments.  All Class Member Claims or Third Party Claims
         --------------------


eligible for a payment on a Distribution Date which do not receive that payment


on that Date because the Distributable Amount for the Fiscal Year has been


exhausted shall have that payment deferred until the following Distribution


Date.  Any payment obligation so deferred shall retain its position in the FIFO


queue as set forth in Section F.2 and shall be accorded priority as set forth in


Section F.2.  Deferrals may continue from year to year until the Distributable


Amount is sufficient to make the payments due on deferred obligations.


                                      -26-


     5.  Limitation on Payment of Claims.  Aggregate payments on account of
         -------------------------------


Class Member Claims and Third Party Claims arising from any one individual's


exposure to asbestos shall not total more than $500,000, whether the Class


Member Claim or Third Party Claim is Liquidated through settlement, mediation,


arbitration or in the tort system.  Any individual with asbestos-related disease


shall be deemed to be a separate exposure for purposes of this section.


G.  All Claims Resolved Pursuant to the Trust Distribution Process.
    --------------------------------------------------------------


          In order to conserve the assets of the Trust, all Claimants are


enjoined from filing future litigation based on or arising out of a Class Member


Claim or Third Party Claim against the Fibreboard, Continental or Pacific


Releasees.  Any such claim may only be pursued against the Trust as provided in


this Trust Distribution Process.


H.  Defendant Class Member Procedures.
    ---------------------------------


          Pursuant to the Defendant Class Settlement Agreement, and except as


otherwise provided herein, (a) Defendant Class Members are releasing Third Party


Claims against the Trust, Fibreboard Releasees, Continental Releasees and


Pacific Releasees (except that nothing in this Trust Distribution Process or the


Defendant Class Settlement Agreement shall be read as releasing, or be deemed to


release, any claims whatsoever Defendant Class Members may have against the


Continental Releasees and Pacific Releasees other than those arising out of, or


in any way predicated upon obligations created by, the Insurance Policies); (b)


Fibreboard Corporation and the Trust are releasing contribution and indemnity


claims arising out of Class Member Claims; and (c) the Continental Releasees and


Pacific Releasees are releasing any claims (except for


                                      -27-


reinsurance claims) arising out of Class Member Claims they may have against


Defendant Class Members; provided, however, that Defendant Class Members shall


have rights against the Trust and the Trust shall succeed to Fibreboard's rights


against Defendant Class Members to the extent provided for under this Trust


Distribution Process.  Without enlarging any substantive rights accorded them by


this Trust Distribution Process, Defendant Class Members shall have such


procedural rights (relating to procedural issues not expressly dealt with by


this Trust Distribution Process) reasonably necessary to pursue or defend rights


accorded them by this Trust Distribution Process.  Class Member Claims against


the Trust to which Defendant Class Members succeed shall be governed by this


Section H of the Trust Distribution Process.  Settlement Class Members,


Fibreboard Corporation, Continental, Pacific and the Trust are bound by the


terms of this Section and must abide by the following procedures in connection


with suits by Settlement Class Members for asbestos-related injury or disease


against Defendant Class Members.


     1.  Claims Liquidated Before Judgment Against Defendant Class Members.
          -----------------------------------------------------------------


          a.  Calculation of Set-Off Amount.  If a Settlement Class Member
              -----------------------------


Liquidates his or her Class Member Claim against the Trust before judgment is


rendered in litigation between the Settlement Class Member and Defendant Class


Member(s), the Trust (itself or in Fibreboard Corporation's stead) shall be


deemed, in such ongoing litigation, to be (i) a settled defendant within the


meaning of the law which governs the judgment entered by the trial court (or any


underlying verdict) (the "Judgment Forum Law") and (ii) a legally responsible


joint tortfeasor under Judgment Forum Law, without


                                      -28-


introduction of further proof.  Any judgment obtained by a Settlement Class


Member against Defendant Class Member(s) shall be reduced or set off to reflect


the Settlement Class Member's settlement with the Trust in the manner (whether


pro tanto, pro rata, jury allocation or apportionment or otherwise), and in the


amount provided for under Judgment Forum Law.  Where the dollar amount of the


settlement between the Trust and the Settlement Class Member is relevant to the


calculation of any such reduction or set off, that dollar amount shall be the


total amount agreed to by the Settlement Class Member and the Trust in


settlement of the Class Member Claim, including all sums paid and agreed to be


paid, without any reduction to present value for claims paid or to be paid


within three years of Liquidation.  For that portion of any claim not to be paid


within three years of Liquidation, the amount of reduction or set off will be


calculated at present value as of the end of that three year period.  Trust


estimates as to the length of time likely to elapse before future payments will


be made will be binding on Defendant Class Members and Settlement Class Members


alike.  Where the judgment against the Defendant Class Member(s) resolves only a


portion of the Class Member Claim or potential Class Member Claim that the Class


Member has settled with the Trust (for example, personal injury as distinct from


wrongful death claims), the dollar amount of the settlement between the Trust


and the Settlement Class Member used in calculation of any reduction or set off


shall reflect any apportionment made by the Trust and the Settlement Class


Member reasonably and in good faith with regard to rights of the Defendant Class


Members under this Trust Distribution Process, provided (i) that Defendant Class


Members shall retain any rights available to them under Judgment


                                      -29-


Forum Law to challenge such apportionment, and (ii) that wherever Judgment Forum


Law calls for apportionment of economic and non-economic damages, the value


assigned to the Trust's settlement of a Class Member Claim shall be allocated


between economic and non-economic damages in the same proportion that the


subsequent judgment or underlying verdict against Defendant Class Member(s)


allocates such damages, notwithstanding any apportionment set forth in the


settlement documents.


          b.  Status of the Trust at Trial.  The Settlement Class Member and the
              ----------------------------


Trust shall consent to any procedures required in order to enable the trial


court to establish the amount of any judgment reduction or set off in respect of


a Trust settlement as if the Trust, itself or in Fibreboard Corporation's stead,


had been a party to the litigation prior to set tlement.  Should a trial court


require that the Trust or Fibreboard Corporation be a party in order to


establish such amount, no objection shall be made by the Trust or the Settlement


Class Member to the filing by Defendant Class Member(s) of a third-party


complaint or to the joinder of the Trust, for itself or in Fibreboard


Corporation's stead, as a party for this limited purpose only.  The Trust, if


made a party, shall not be required to enter an appearance, be subject to


discovery as a party, or be subject to default or other trial court process or


procedure.  Under no circumstances shall Fibreboard Corporation or the Insurers


be made parties for any purpose.


          c.  Discovery and Informational Issues.  The Trust shall comply with
              ----------------------------------


the rules of discovery under Judgment Forum Law concerning requests for product


exposure and disease information provided by the Settlement Class Member


pertaining



                                      -30-


to such Class Member Claim.  In response to a Defendant Class Member request,


the Trust and the Settlement Class Member shall promptly verify, no later than


the start of jury selection in the trial of an action by the Settlement Class


Member against the Defendant Class Member, the fact of the settlement; and in


accordance with Judgment Forum Law, also shall provide information regarding the


amount and terms of any such settlement of a Class Member Claim.  Without waiver


by the Trust or Settlement Class Members of their rights to object to discovery


of such information, neither product exposure nor disease information provided


pursuant to this Subsection H.1.c shall be considered inadmissible at trial


based on Rule 408 of the Federal Rules of Evidence or any of its state law


counterparts.


     2.  Claims Not Liquidated When Verdict or Judgment Obtained Against
         Defendant Class Members.
         ---------------------------------------------------------------


          a.  Effect of Verdict or Judgment.  Except as provided in Section
              -----------------------------


H.2.b and Section H.3, if a Settlement Class Member goes to judgment or verdict


against one or more Defendant Class Members without having Liquidated his or her


Class Member Claim against the Trust, the Settlement Class Member forever waives


and releases that portion of his or her Class Member Claim against the Trust


which would have been determined (under principles of Judgment Forum Law


unaffected by Global Approval Judgment) by the verdict or judgment had the Trust


for itself or in Fibreboard Corporation's stead been a judgment defendant.


          b.  Retention of Several Liability Claim.  Notwithstanding any other
              ------------------------------------


provision of Section H.2, where (under principles of Judgment Forum Law


unaffected by Global Approval Judgment) the Trust's liability to a Settlement


Class Member would be



                                      -31-


several only, or where the Trust's liability as to a particular category of


damages (for example, non-economic damages) would be several only, a Settlement


Class Member shall retain that several-only aspect of his or her claim against


the Trust, even if the Settlement Class Member goes to judgment or verdict


against a Defendant Class Member without having Liquidated his or her Class


Member Claim.  However, no aspect of the Class Member Claim to which principles


of joint or joint and several liability would apply shall be so retained.


Should the Trust thereafter settle with the Settlement Class Member based only


on the Trust's several liability, the release shall state that Third Party


Claims based on joint, or joint and several, liability are not barred by virtue


of the several liability settlement and may be pursued in accordance with the


provisions of this Trust Distribution Process.


          c.  Payment of Verdict or Judgment.  Upon payment of a verdict or
              ------------------------------


judgment returned prior to Liquidation of the underlying Class Member Claim, the


Defendant Class Member(s) shall succeed in all respects to that portion of the


Class Member Claim against the Trust which would have been determined (under


principles of Judgment Forum Law unaffected by Global Approval Judgment) by the


judgment in the action against the Defendant Class Member had the Trust for


itself or Fibreboard Corporation's stead been a judgment defendant, except to


the extent provided in Sections H.2.b and H.5 hereof, and may pursue such Class


Member Claim in accordance with this Trust Distribution Process.


Notwithstanding any contrary provisions of Judgment Forum Law, a Class Member


Claim to which a Defendant Class Member may succeed under this subsection upon


payment of a verdict or judgment shall not be lost or extinguished


                                      -32-


by virtue of a Defendant Class Member's settlement with a Settlement Class


Member reached after a contested trial resulting in verdict, or a verdict or


jury or court fact finding as to damages or judgment.


     3.  Tort System Claims Against the Trust.  Should a Settlement Class Member
         ------------------------------------


proceed to litigation against the Trust pursuant to Section D of this Trust


Distribution Process, no objection shall be made in such tort system cases by


the Trust or the Settlement Class Member to the filing by Defendant Class


Member(s) of a third-party or cross-complaint against the Trust as successor to


Fibreboard Corporation under the Global Approval Judgment.  Without in any way


waiving or limiting the provisions of this Trust Distribution Process limiting


the Trust's liabilities with respect to Class Member Claims and Third Party


Claims when a Class Member Claim proceeds to litigation against the Trust in the


tort system pursuant to Section D, Defendant Class Members shall retain against


the Trust whatever rights of contribution and/or indemnification they otherwise


would have had against Fibreboard Corporation under Judgment Forum Law and the


Trust shall retain whatever Fibreboard Corporation rights of contribution and/or


indemnification it would have had against Defendant Class Members under Judgment


Forum Law.  In the event that after a verdict or judgment against a Defendant


Class Member, the Defendant Class Member upon assertion of its rights is


determined to have a valid contribution claim or indemnity claim against


Fibreboard or the Trust under Judgment Forum Law, the Settlement Class Member's


verdict or judgment against the Defendant Class Member shall be reduced or set


off in the amount necessary under Judgment Forum Law to satisfy such Defendant


Class Member's claim for contribution


                                      -33-


or indemnity against Fibreboard or the Trust.  Nothing in this Section H.3 or in


Section H.2.a shall prevent the Settlement Class Member from liquidating and


collection pursuant to other provisions of Section D of this Trust Distribution


Process his or her claim against the Trust based on the verdict or judgment


referred to in this Section H.3.


     4.  Litigation Between Defendant Class Members and Settlement Class

         Members.
         ---------------------------------------------------------------


          In any litigation between Defendant Class Members and Settlement Class


Members each shall retain their respective rights under Judgment Forum Law to


introduce evidence at trial.


          Under no circumstances (other than the commencement by the Trust of


formal bankruptcy or insolvency proceedings) shall the Trust (or Fibreboard


Corporation) be treated as a bankrupt or insolvent defendant, nor shall the


Trust (or Fibreboard Corporation) be considered, for purposes of litigation


between Defendant Class Members and Settlement Class Members only, a Person who


cannot be made a party for lack of personal jurisdiction, or otherwise a party


over whom a Settlement Class Member is unable to obtain jurisdiction.


     5.  Pursuit of Third Party Claims.
         -----------------------------

          a.  Defendant Class Member to Stand in Settlement Class Members'

              Stead.
              ------------------------------------------------------------


          In pursuing any Class Member Claim against the Trust to which a


Defendant Class Member has succeeded under subsection H.2.c above, (i) the


Defendant Class Member shall stand in the stead of the Settlement Class Member


in respect of whose Class Member Claim the Defendant Class Member has succeeded,


(ii) such Class


                                      -34-


Member Claim shall be resolved by Defendant Class Members under this Trust


Distribution Process in the same manner as such Class Member Claim would have


been resolved had it been asserted by the Settlement Class Member, and (iii) it


shall be evaluated on the same basis as if the Settlement Class Member directly


presented his or her Class Member Claim to the Trust, without any enhancement,


discount or limitation because it is asserted by a Defendant Class Member.


Defendant Class Members must present evidence of such Class Member Claims in the


same manner as Settlement Class Members; provided, however, that Defendant Class


Members are not required to provide information unavailable to them because such


information is solely within the control of the Settlement Class Member.  In any


event, however, Defendant Class Member Claims are to be evaluated by the same


standards as Class Member Claims.  For the limited purpose of pursuing Class


Member Claims, or otherwise in respect of assertion of other rights specifically


granted under this Trust Distribution Process, Defendant Class Members shall be


treated as beneficiaries of the Trust; provided, however, that under no


circumstances shall Section H.6 below apply to Class Member Claims to which


Defendant Class Members have succeeded.


          b.  Resolution of Claims.  Notwithstanding any other provision of this
              --------------------

subsection, Class Member Claims to which Defendant Class Members have succeeded


under Section H.2.c hereof or Residual Claims shall be decided by binding


arbitration under Section C.2 of this Trust Distribution Process, if not settled


previously, and may not exit to the tort system.  In such arbitrations and in


its negotiations with Defendant Class Members, the Trust shall not assert any


Fibreboard Corporation defenses based on


                                      -35-


the state of the art, or failure to show negligence or product defect (whether


based upon design, manufacture or failure to warn), except in those


circumstances under which the Trust would also have asserted those defenses


against the Settlement Class Member to whose Class Member Claim the Defendant


Class Member has succeeded.  Moreover, the Trust shall not assert failure to


show negligence or product defect as a defense where a Class Member Claim to


which the Defendant Class Member has succeeded is brought by a former


manufacturer and/or distributor of asbestos-containing high-temperature pipe and


block insulation, if the issues of product defect or negligence (as the case may


be) covering such pipe and block insulation were fully litigated to an adverse


result against that Defendant Class Member at trial of the underlying asbestos-


related personal injury action.  Under no other circumstances shall the results


of such trial be given preclusive effect in any such arbitration.  Any


arbitration under this subsection shall be confidential, and no statement made,


or contention advanced, at such arbitration shall be introduced as evidence or


otherwise used against the maker or proponent of such statement or contention in


the course of any proceeding other than arbitrations under this Trust


Distribution Process.


          c.  Processing and Payment of Claims.  Class Member Claims to which
              --------------------------------


Defendant Class Members have succeeded shall be included in the FIFO queue


established pursuant to this Trust Distribution Process.  For purposes of


processing, the position of a Class Member Claim to which a Defendant Class


Member has succeeded in the FIFO queue shall be determined by the earlier of (a)


the date the Settlement Class Member filed with the Trust the underlying Class


Member Claim or (b) the date on


                                      -36-


which the Defendant Class Member paid the Settlement Class Member with respect


to the judgment or verdict.  For purposes of payment, a Class Member Claim to


which a Defendant Class Member has succeeded will be placed within the


appropriate Schedule Category set forth in Section F.2 and, within such


category, in FIFO order, based on the date on which the Defendant Class Member


paid the Settlement Class Member in respect to the judgment or verdict.  Class


Member Claims to which Defendant Class Members have succeeded, shall be paid


under the terms set forth in Section F.3.a.  Prior to receiving payment the


Defendant Class Member shall have provided a release as described in Section


B.4.


          d.  Multiple Claims or Multiple Third Party Claims.  Where Defendant
              ----------------------------------------------


Class Members succeed to a portion of a Class Member Claim by virtue of payment


with respect to any verdict or judgment where a Beneficiary retains an interest


in the several liability aspect of the same Class Member Claim (regardless of


the number of Defendant Class Members who may have succeeded to portions of the


Class Member Claim) ("Partial Claims"), Settlement Class Members and Defendant


Class Members shall comply with procedures established by the Trust to ensure


that all persons with rights under this Trust Distribution Process in respect of


the same Class Member Claim coordinate their effort so that all such Partial


Claims can be processed and Liquidated in a single proceeding, designed to


resolve all elements of such claims, whether malignancy or non-malignancy, and


all causes of action, whether for personal injury, death, loss of consortium, or


otherwise against the Trust; provided, however, that nothing in the foregoing


shall prevent the Trust, a Settlement Class Member or a Defendant Class


                                      -37-


Member, as the case may be, from electing to give or take a limited, non-


malignancy release under this Trust Distribution Process.  In evaluating Partial


Claims in the course of such a single proceeding, the Trust shall not


differentiate among the aspects of such claims based on whether the right to


payment is asserted by a Settlement Class Member or Defendant Class Member.  In


those circumstances where different parties (whether Settlement Class Member and


Defendant Class Member(s), or more than one Defendant Class Member) assert


rights under this Trust Distribution Process in respect of the same Class Member


Claim, any disputes regarding such Class Member Claim shall be presented in a


single arbitration.  Should more than one Defendant Class Member be entitled to


payment from a single settlement or award by the Trust, the Defendant Class


Members shall share such amount in the same proportion that each made payments


to the Settlement Class Member.  Notwithstanding the above or any other


provision of this Trust Distribution Process, (i) a Settlement Class Member


shall not be entitled to take to the tort system a Class Member Claim if any


portion of that claim was resolved as to a Defendant Class Member by settlement


or in binding arbitration pursuant to Section H.5.b of this Trust Distribution


Process; and (ii) Settlement Class Members retain all rights to resolve their


Partial Claims with the Trust after the verdict or judgment against the


Defendant Class Member and before one or more Defendant Class Member's related


Partial Claim(s) is submitted to the Trust in writing for resolution; provided,


however, that the Settlement Class Member's resolution of his or her Partial


Claim shall not bind any Defendant Class Members or the Trust with respect to


any Defendant Class


                                      -38-


Member's related Partial Claim.  The Trust shall settle Partial Claims only in


accordance with Section H.5.d-g.


          e.  If a Settlement Class Member resolves his or her Partial Claim


pursuant to Section H.5.d, the Trust or arbitrator will apportion the settlement


or award among all elements of the claims that are being resolved (for example,


personal injury, wrongful death, loss of consortium, etc.).  Until such time as


the Partial Claim of a Defendant Class Member has been Liquidated and paid or


denied, the related Partial Claim of a Settlement Class Member Liquidated under


Section H.5.d(ii) shall only be entitled to payment of


          (i)  that portion of the Settlement Class Member's Partial Claim


allocated to resolved claims which were not included in the verdict or judgment


against the Defendant Class Member, plus


          (ii)  $500,000 minus the amount in (i) above, multiplied by the ratio


of (x) the several liability portion of the verdict or judgment against the


Defendant Class Member to (y) the total underlying verdict or judgment against


the Defendant Class Member.  Any award of punitive or exemplary damages will be


excluded from the verdict or judgment against the Defendant Class Member when


calculating (x) or (y).


          f.  The provisions of Section H.5.e shall not apply if the underlying


total verdict or judgment in favor of a Settlement Class Member against one or


more Defendant Class Members (excluding any award for punitive or exemplary


damages) is $500,000 or less.


                                      -39-


          g.  The provisions of Section H.5.e will cease to apply if the Partial


Claim of a Settlement Class Member plus the related Partial Claims of all


Defendant Class Members are Liquidated for a total of $500,000 or less.


          h.  The provisions of Section H.5.e will cease to apply as to any


Partial Claim of a Defendant Class Member which is not submitted to the Trust


and served on the Settlement Class Member, or his attorney, if any, within three


months of the date on which the underlying judgment against the Defendant Class


Member becomes final.


     6.  Cooperation for Court Approvals.  Upon liquidation of his or her Class
         -------------------------------


Member Claim, each Beneficiary shall cooperate with the Trust in seeking any


needed trial court approval under Judgment Forum Law of the settlement.


     7.  No Modification Without Consent.  Neither the terms of this Section H
         -------------------------------


nor as they apply to Defendant Class Members the provisions of this Trust


Distribution Process as to arbitration may be modified without the written


concurrence of the Representative Defendant.  Other provisions of the Trust


Distribution Process may be modified (after prior notice to the Representative


Defendant) without the concurrence of the Representative Defendant unless the


modification (i) has an adverse effect on Defendant Class Members and (ii)


discriminates against them vis-a-vis Settlement Class Members, in which case the


modification shall require the written concurrence of the Representative


Defendant.


I.  Attorneys' Fees.
    ---------------


          Attorneys' fees payable in connection with Class Member Claims


Liquidated and paid through this Trust Distribution Process, whether as a result


of


                                      -40-


settlement, an arbitration award, or a judgment obtained in the tort system, and


whether or not calculated as a percentage of recovery, shall be the lower of the


fee provided in the contract between the Beneficiary and counsel and 25%.  Costs


related to the prosecution of the claim shall be subtracted from the recovery


before calculating the attorney's fee.  Legal fees shall be paid pro rata from


the payments due to the Beneficiaries as such payments are made by the Trust.


J.  Amendment.
    ---------


          No amendments or waivers of this Trust Distribution Process will be


permitted except as set forth in Section 3.1 of the Trust Agreement.


                               APPENDIX 1 TO THE


                           TRUST DISTRIBUTION PROCESS
                           --------------------------


     1.  Increased Principal Amount.  The Trustees may increase the Principal
         --------------------------


Amount for any of the third Fiscal Year through the twelfth Fiscal Year after


Global Approval Judgment or the sixteenth Fiscal Year through the twentieth


Fiscal Year after Global Approval Judgment up to the Increased Principal Amount


for that year, if


          (i)  the Distributable Amount (if not increased as provided in this


sentence) for that Fiscal Year, plus the amount, if any, by which the balance


(on the last business day of that Fiscal Year) of the Reserve Account exceeds


$10 million, is insufficient to pay all Trust Expenses for such Fiscal Year plus


all Class Member Claims and Third Party Claims included in any of the first two


Schedule Categories due and payable on the Distribution Date immediately


following that Fiscal Year, or any payments with respect to Class Member Claims


or Third Party Claims included in the third Schedule Category that were due and


unpaid on four or more consecutive Distribution Dates prior to the Distribution


Date immediately following that Fiscal Year, and


          (ii) the Trustees conclude that increasing the Principal Amount would


be in the best interests of all Beneficiaries, both present and future, and that


the sum of the Earnings Amount for Fund I, such amount in the Reserve Account in


excess of $10 million and the amount of the Increased Principal Amount does not


exceed the amount required to pay all such Trust Expenses and Class Member


Claims and Third Party Claims included in the first two Schedule Categories and


any payments with respect to


                                     -A-1-


 Class Member Claims or Third Party Claims included in the third Schedule


Category that were due and unpaid on four or more consecutive Distribution Dates


prior to such Distribution Date.


     2.  Reserve Account.  The Reserve Account shall initially be credited with
         ---------------


the full amount transferred to the Trust pursuant to Section 2.3(B) of the


Global Settlement Agreement, minus the sum of


          (a)  $1.340 billion of the starting balance of Fund I,


          (b)  $200 million, the starting balance of Fund II, and


          (c)  $10 million, the starting balance of Fund III.


The Reserve Account is part of Fund I.


     The Reserve Account shall be increased on each Distribution Date by


          (x)  100%, until the balance of the Reserve Account equals $25


               million,


          (y)  50%, after the balance of the Reserve Account equals $25 million


               and until the balance of the Reserve Account equals the sum of


               the Principal Amount and Earnings Amount for the prior Fiscal


               Year, and


          (z)  0%, after the balance of the Reserve Account equals the sum of


               the Principal Amount and Earnings Amount for the prior Fiscal


               Year,


of either


               (i)    if the Unreimbursed Borrowings as of such date is zero or


                      a positive number, then the Surplus as of such date, or


                                     -A-2-


               (ii)   if the Unreimbursed Borrowings as of such date is a


                      negative number, but such Unreimbursed Borrowings plus the


                      Surplus as of such date is a positive number, then such


                      positive number, or


               (iii)  if Unreimbursed Borrowings as of such date plus the


                      Surplus as of such date is zero or a negative number, then


                      zero (so that this calculation shall not result in a


                      decrease in the Reserve Account).


          The Reserve Account shall be used to pay all Trust Expenses, Class


Member Claims, Third Party Claims and payments made pursuant to Section 7.16 of


the Trust Agreement (it being understood that such payments pursuant to Section


7.16 shall not be limited by the amounts in the Reserve Account) for any Fiscal


Year in which the Principal Amount and the Earnings Amount is insufficient for


such purpose; provided, that the provisions of this sentence shall not be


applied to require the reduction of the balance of the Reserve Account below $10


million.  Notwithstanding the foregoing, during the first Fiscal Year after


Global Approval Judgment, the Trustees shall create and thereafter maintain an


appropriate reserve (to be taken out of the amounts otherwise included in the


Reserve Account) for required payments in later Fiscal Years for Class Member


Claims and Third Party Claims presented in such first Fiscal Year or before,


which reserve shall not be otherwise available for the purposes of the


immediately preceding sentence.  The Trustees shall have the discretion to


utilize any


                                     -A-3-


and all amounts in the Reserve Account to pay Trust Expenses, Class Member


Claims, Third Party Claims and payments pursuant to Section 7.16 of the Trust


Agreement.


                                     -A-4-


                                   SCHEDULE A
                                   ----------


Injury                        Factor
- ------                        ------
Mesothelioma                  Fibreboard share
                              age at diagnosis of mesothelioma
                              venue and status of litigation
                              amount of lost income
                              claimant alive or deceased
                              number of dependents

Lung Cancer                   Fibreboard share
                              year of diagnosis
                              venue and status of litigation
                              degree of functional impairment
                              industry of most significant exposure
                              amount of lost income
                              number of dependents
                              current or former smoker
                              ILO x-ray reading

Other Cancer                  Fibreboard share
                              age at diagnosis of cancer
                              venue and status of litigation
                              degree of functional impairment
                              time since first exposure
                              prior claim of less severe injury
                              employment status
                              number of minor dependents

Asbestos Lung
 Disease I                    Fibreboard share
                              venue and status of litigation
                              degree of functional impairment
                              industry of most significant exposure
                              disputed claim
                              claimant alive or deceased
                              claimant housebound and sedentary
                              claim for lost wages
                              ILO x-ray reading

Asbestos Lung
 Disease II                   Fibreboard share
                              venue and status of litigation
                              degree of functional impairment
                              ILO x-ray reading


                                     -B-1-



                                                                   EXHIBIT 10.13

                                DEFENDANT CLASS
                              SETTLEMENT AGREEMENT
                              --------------------

          This Defendant Class Settlement Agreement is made and entered into as

of December 22, 1993, by and among Owens-Illinois, Inc., a Delaware corporation

("Representative Defendant"), as representative of the Defendant Class, acting

by and through Defendant Class Counsel; Fibreboard Corporation, a Delaware

corporation; the Representative Plaintiffs as representatives of the Settlement

Class, acting by and through Class Counsel; Continental Casualty Company, an

Illinois corporation ("Continental"); CNA Casualty Company of California, a

California corporation ("CNA Casualty"); Columbia Casualty Company, an Illinois

corporation ("Columbia"); and Pacific Indemnity Company, a California

corporation ("Pacific"), together the "Parties."

                                R E C I T A L S
                                ---------------

          A.  On August 27, 1993, Class Counsel, Fibreboard Corporation,

Continental, CNA Casualty, Columbia, and Pacific announced an agreement in

principle to settle all future asbestos-related personal injury claims against

Fibreboard (the "Global Settlement").  The Global Settlement is set forth in the

transcript of a hearing before the Honorable Robert Parker, Chief Judge, United

States District Court for the Eastern District of
 Texas (the "Global Court").

The Global Settlement, as announced, was subject to the execution of definitive

agreements and final court approval, among other conditions.

          B.  In connection with implementing the Global Settlement,

Representative Plaintiffs, on behalf of themselves and the Settlement Class,

filed the Class Action on

                                     - 1 -


September 9, 1993.  On September 9, 1993, the Court provisionally certified the

Settlement Class as a mandatory, non-opt out class under Federal Rules of Civil

Procedure, Rule 23(b)(1)(B), and entered a temporary restraining order

preventing any member of the Settlement Class from initiating any asbestos

- -related claims against Fibreboard.  The relief afforded by the temporary

restraining order was extended by the entry of a preliminary injunction on

September 27, 1993, which shall remain in effect pending notice to the

Settlement Class and the hearing and determination of the fairness,

reasonableness, and adequacy of the proposed settlement of the Class Action.

          C.  In December, 1993 Representative Plaintiffs on behalf of

themselves and as representatives of the Settlement Class, Fibreboard

Corporation, Continental, CNA Casualty, Columbia, and Pacific, entered into a

definitive agreement to implement the Global Settlement (the "Global Settlement

Agreement").  A copy of the Global Settlement Agreement (including exhibits

thereto) is attached as Exhibit A hereto.

          D.  The expenditures necessary to process and resolve asbestos

lawsuits have contributed to more than ten major asbestos defendants filing for

bankruptcy reorganization.  Because some of these defendants represented a

significant portion of the traditional liability share for asbestos personal

injury cases, and since many jurisdictions apply the principle of joint and

several liability, these bankruptcy filings have increased costs substantially

and have caused significant delays to plaintiffs.

          E.  Claims for contribution and/or indemnification are infrequently

litigated in asbestos personal injury cases.  The vast majority of asbestos

- -related personal injury cases are settled by all defendants before trial.  In

those cases where trials result in


                                     - 2 -

judgments against non-settling defendants, the law in most jurisdictions

protects settling defendants against claims for contribution and/or indemnity by

judgment debtors.  Nevertheless, the potential remains for litigation of

contribution and/or indemnity claims.  The parties to the Global Settlement

Agreement and the members of the Defendant Class all have strong and common

interests in preventing a Fibreboard Corporation insolvency, in Fibreboard

Corporation funding a Global Settlement, in Fibreboard Corporation paying its

unfunded settlement obligations and in resolving potential Third Party Claims by

Defendant Class Members without the delay, expense, and uncertainty of

litigating such claims.  Although Defendant Class Members are numerous and

include, among others, manufacturers, distributors, shipowners, premises owners

and/or occupiers, and so-called "peripheral" defendants, any differing interests

that may exist among Defendant Class Members are outweighed by the benefits to

the Defendant Class as a whole afforded by the funds to be provided by the

success of the Global Settlement Agreement.

          F.  Fibreboard Corporation has been engaged in insurance coverage

litigation with Continental and Pacific for a number of years.  Although

Fibreboard Corporation was awarded coverage under a trial court judgment, the

insurers appealed that judgment and the outcome of the appeal remains uncertain.

The interests of the Defendant Class are served by the Global Settlement

Agreement, which provides over $1.5 billion to compensate Settlement Class

members for asbestos-related personal injuries for which Fibreboard Corporation

may bear legal liability, while eliminating the risk that Fibreboard Corporation

may lose insurance coverage, and which also may enable Fibreboard Corporation to

fund existing unfunded settlement obligations totalling over $1.0 billion.


                                     - 3 -

Absent the funds that will be made available by and as a result of the Global

Settlement Agreement, Defendant Class Members could bear a proportionately

greater share of the overall liability for asbestos-related personal injuries.

          G.  Representative Defendant adequately represents the interests of

the Defendant Class, in that Representative Defendant is a publicly held

corporation that has been sued in thousands of asbestos-related personal injury

lawsuits in jurisdictions throughout the country.

          H.  Defendant Class Counsel have extensive experience in asbestos

- -related litigation.  Defendant Class Counsel have reviewed the Global

Settlement Agreement (including the exhibits thereto) and have been advised of

the record to date in the Class Action, and have otherwise conducted a thorough

investigation of the facts and law relevant to the matters set forth herein.

Based upon this experience and investigation, Defendant Class Counsel have

determined that this Agreement is in the best interests of the Defendant Class.

          NOW, THEREFORE, in consideration of the foregoing and the mutual

covenants contained herein, the Parties hereby agree as follows:

                                I.  DEFINITIONS
                                    -----------

          Capitalized terms used, and not otherwise defined, herein are defined

in the Glossary of Terms attached as Exhibit A to the Global Settlement

Agreement.

                   II.  RESOLUTION OF DEFENDANT CLASS CLAIMS

          A.  Defendant Class Members hereby release the Released Parties from

any and all Third Party Claims and agree that the Global Approval Judgment shall

bar and

                                     - 4 -


enjoin permanently Defendant Class Members from prosecution of any Third Party

Claims against any of the Released Parties in any proceeding or court.

          B.  Fibreboard Corporation, Continental, CNA Casualty, Columbia,

Pacific and the Trust release contribution and/or indemnity claims against

Defendant Class Members as set forth in the Trust Distribution Process.

          C.  Defendant Class Members shall have the rights described in Section

H of the Trust Distribution Process.

                   III.  ACTIONS TO IMPLEMENT THIS AGREEMENT
                         -----------------------------------

          A.  Fibreboard Corporation shall commence, as a third-party claim or

other appropriate pleading in the Class Action, a mandatory, non-opt out class

action against the Defendant Class pursuant to Federal Rules of Civil Procedure,

Rule 23(b)(1) and (2) (the "Defendant Class Action").

          B.  The Parties shall join in motions, in form and substance

satisfactory to counsel for each of the Parties, to certify provisionally the

Defendant Class for settlement purposes only, to preliminarily enjoin the

prosecution of any Third Party Claim during the pendency of the Defendant Class

Action and for entry of the Defendant Class Order and Global Approval Judgment.

Should the motions to certify provisionally the Defendant Class for settlement

purposes only and to preliminarily enjoin the prosecution of any Third Party

Claims be granted, while the orders granting those motions are in effect before

entry of Global Approval Judgment, Section H of the Trust Distribution Process

and this Defendant Class Settlement Agreement shall govern -- as if they were

fully operative -- the rights and liabilities of the Parties with respect to

claims of Defendant Class Members arising out of

                                     - 5 -

Interim Claims resolved under Section 7 of the Global Settlement Agreement;


provided that during the Interim Period Fibreboard, the Insurers, the Interim

Committee and the Escrow Fund shall have (as appropriate and consistent with

Section 7 of the Global Settlement Agreement) the rights and responsibilities

assigned to the Trust in Section H of the Trust Distribution Process.  Should

Global Court Disapproval occur, Defendant Class Members shall be restored to any

rights they may have under applicable law to pursue claims otherwise released

under this Defendant Class Settlement Agreement.

          C.  Notice shall be given to the Defendant Class in form and substance

satisfactory to counsel for each of the Parties and approved by the Court.

Pursuant to such notice, a hearing shall be held pursuant to Federal Rules of

Civil Procedure, Rule 23 (e), to determine the fairness and reasonableness of

the settlement contemplated by this Defendant Class Settlement Agreement.

          D.  The certification of the Defendant Class pursuant to this

Defendant Class Settlement Agreement shall be binding if Global Approval

Judgment is entered.

          E.  In the event either (i) Global Court Disapproval occurs; (ii)

Class Counsel move to convert the Class Action or the Defendant Class Action to

a litigation class action; (iii) either the Court or the Global Court enters an

order over objection by the Representative Defendant converting the Class Action

or the Defendant Class Action to a litigation class action; or (iv) before

Global Approval Judgment or Global Court Disapproval, the Trust Distribution

Process is amended without complying with Section H.7 of the Trust Distribution

Process, then the order certifying the Defendant Class shall be vacated, and

Fibreboard Corporation and Representative Defendant shall stipulate to the

                                     - 6 -

dismissal of the Defendant Class Action without prejudice, and the Parties shall


return in all respects to the status quo ante, including, but not limited to,
                              ------ --- ----

the revocation of any releases given in this document or in the Trust

Distribution Process.  The Defendant Class shall retain any and all rights to

object to the continued prosecution of such action as a litigation class action

under Rule 23.  Neither this Defendant Class Settlement Agreement, nor its

exhibits, nor the settlement negotiations, nor the proceedings seeking approval

of the settlement, may be used in support of any application for a determination

that such action or any other action shall proceed as a class action except for

the purposes of the settlement in accordance with this Defendant Class

Settlement Agreement, or as evidence in any litigation or proceeding against any

of the Parties other than an action or proceeding to enforce the provisions of

this Defendant Class Settlement Agreement.

                               IV.  MISCELLANEOUS
                                    -------------

          A.  Amendments.  No amendment of any provision of this Defendant Class
              ----------

Settlement Agreement (or to Section H of the Trust Distribution Process) shall

be valid unless the same shall be in writing and signed by all Parties hereto

and, upon the request of any of them, approved by the Court.

          B.  Counterparts.  This Defendant Class Settlement Agreement may be
              ------------

executed in one or more counterparts, each of which shall be deemed an original

but all of which together will constitute one and the same instrument.

          C.  Further Actions.  The parties shall take such reasonable actions
              ---------------

as may be necessary or appropriate to consummate or implement this Defendant

Class Settlement Agreement.

                                     - 7 -


          D.  The Representative Defendant shall not be responsible for any cost

or expenses (including the expense of any class notice) associated with

obtaining any necessary Court approvals of this Defendant Class Settlement

Agreement.  In the event of Global Approval Judgment, Representative Defendant

may apply to the Court for approval of reimbursement of its own reasonable costs

and expenses, including the reasonable cost and expenses of its counsel, in an

amount not to exceed $250,000, incurred in connection with negotiating and

obtaining any necessary approvals of this Defendant Class Settlement Agreement.

In the event of Global Court Disapproval, Fibreboard and the Insurers will

negotiate in good faith with the Representative Defendant regarding whether, and

to what extent, reimbursement of Representative Defendant's expenses is

appropriate.

          E.  Defendant Class shall not change the identity of Representative

Defendant without consent of Class Counsel, Fibreboard Corporation, Continental

and Pacific without approval of the Court.

          IN WITNESS WHEREOF, this Agreement has been executed as of the date

first above written by the Parties hereto, thereunto duly authorized.

                                             ON BEHALF OF DEFENDANT CLASS


                                             By        Philip McWeeny
                                                ----------------------------
                                                Philip McWeeny


                                             FIBREBOARD CORPORATION


                                             By      Michael R. Douglas
                                                ----------------------------
                                                Title:  Sr. Vice President and
                                                        General Counsel

                                     - 8 -

                                             CONTINENTAL CASUALTY COMPANY



                                             By       Laurens F. Terry
                                                ----------------------------
                                                Title: Vice President

                                             CNA CASUALTY COMPANY OF CALIFORNIA


                                             By       Laurens F. Terry
                                                ----------------------------
                                                Title: Vice President


                                             COLUMBIA CASUALTY COMPANY


                                             By       Laurens F. Terry
                                                ----------------------------
                                                Title: Vice President
                                                       Continental Casualty Co.


                                             PACIFIC INDEMNITY COMPANY


                                             By        John J. Degnan
                                                ----------------------------
                                                Title: Senior Vice President

                                             ON BEHALF OF SETTLEMENT CLASS


                                             By       Joseph F. Rice
                                                ----------------------------
                                                Joseph F. Rice, Esq.


                                             By       Joseph B. Cox
                                                ----------------------------
                                                Joseph B. Cox, Jr., Esq.


                                             By        Steven Kazan
                                                ----------------------------
                                                Steven Kazan, Esq.


                                             By      Harry F. Wartnick
                                                ----------------------------
                                                Harry F. Wartnick, Esq.

                                     - 9 -


                                                                   EXHIBIT 10.14

                                                                       EXHIBIT D

                                ESCROW AGREEMENT


     ESCROW AGREEMENT made this 23rd day of December, 1993, by and among


Continental Casualty Company, an Illinois corporation ("Continental"), Pacific


Indemnity Company, a California corporation ("Pacific"), and The First National


Bank of Chicago (the "Escrow Agent").




     WHEREAS, Continental, Pacific and Fibreboard Corporation, a Delaware


corporation, have entered into an Agreement dated as of October 12, 1993 (as the


same may be amended from time to time, the "Settlement Agreement") relating to


the settlement of lawsuits relating to questions of insurance coverage, all as


described in the Settlement Agreement;




     WHEREAS, Fibreboard Corporation, Continental, Pacific, the Representative


Plaintiffs (acting by and through Class Counsel) (as such terms are defined in


the Glossary attached to the Global Settlement Agreement (as defined below) as


Exhibit A (the "Glossary")) entered into a Global Settlement Agreement as of


August 27, 1993 (as the same may be amended from time to time, the "Global


Settlement Agreement"), relating to the settlement, inter alia, of personal
                                                    ----- ----


injury lawsuits and lawsuits relating to questions of insurance coverage, all as


described in the Global Settlement Agreement;



                                      -1-


     WHEREAS, the Global Settlement Agreement provides for payment of an


aggregate amount of $1,525,000,000 by Continental and Pacific into an escrow


account pending further distribution of such funds; and




     WHEREAS, the parties desire to arrange for such escrow and appoint Escrow


Agent as the escrow agent in accordance with the terms hereof.




     NOW, THEREFORE, in consideration of the mutual promises contained herein


and for other good and valuable consideration, the receipt and sufficiency of


which is hereby acknowledged, and intending to be legally bound, the parties


agree as follows:




     1.  Interpretation and Definitions.  This Escrow Agreement is being

         ------------------------------


executed and delivered pursuant to Section 2.3 of the Global Settlement


Agreement and the Escrow Account created pursuant to this Escrow Agreement is


the Escrow Fund referred to therein.  The provisions of this Escrow Agreement


shall not in any event be construed so as to enlarge or diminish the rights of


any party under the Global Settlement Agreement.  Capitalized terms used and not


defined herein have the meanings given to them in the Glossary.




     2.  Appointment and Compensation of Escrow Agent.  Escrow Agent is hereby

         --------------------------------------------


appointed to act as escrow agent in accordance with the terms hereof, and


                                      -2-


Escrow Agent hereby accepts such appointment.  Escrow Agent shall have all the


rights, powers, duties and obligations provided herein.  All persons dealing


with the Escrow Agent are released from inquiry into the decision or authority


of the Escrow Agent and from seeing to the application of any monies, securities


or other property paid or delivered to the Escrow Fund.  Escrow Agent shall be


entitled to charge the Escrow Account for its fees, as determined in accordance


with the fee letter attached hereto as Exhibit A, and for reimbursement of


reasonable costs and expenses suffered or incurred by Escrow Agent in connection


with the performance of its duties and obligations hereunder including, but not


limited to, any suit in interpleader brought by Escrow Agent.




     3.  Deposit and Investment of Funds.  (a)  On December 30, 1993,

         -------------------------------


Continental shall deliver $986,827,500, and Pacific shall deliver $538,172,500,


for an aggregate amount of $1,525,000,000 (collectively, the "Funds") to Escrow


Agent, by wire transfer of immediately available funds to such account of Escrow


Agent that Escrow Agent identifies in a writing delivered to Continental and


Pacific.




          (b)  On or before the date hereof, Escrow Agent shall establish at the


office of its corporate trust department in Chicago, Illinois and, at all times


thereafter until the escrow created by this Escrow Agreement shall have


terminated pursuant to Section 6 hereof (the "Escrow Termination Date"), shall


maintain a separate account entitled the "Fibreboard Asbestos Claimants Escrow


Account" (the "Escrow Account").


                                      -3-


All funds, securities and other property held by the Escrow Agent (collectively,


the "Escrow Assets") at any time pursuant to this Escrow Agreement, including


the Funds and all investments, interest, earnings and proceeds thereof and


thereon, shall be held in the Escrow Account.  No property other than the Escrow


Assets shall be held in the Escrow Account.  Escrow Agent shall make and


maintain, at all times until the Escrow Termination Date, appropriate entries in


its books and records to reflect that all of the Escrow Assets existing from


time to time are held in the Escrow Account.




          (c)  During the term of this Escrow Agreement, Escrow Agent shall


invest and reinvest the Escrow Assets from time to time in obligations backed by


the full faith and credit of the United States of America which have a maturity


date which is not more than three months from the date of acquisition ("Eligible


Treasury Securities"); provided, however, that pending investment or prompt


distribution Escrow Agent may invest funds in an aggregate amount at any time


not exceeding the lesser of $10,000,000 or 5% of the amount of the Escrow Assets


in (i) a money market fund or funds sponsored by an Eligible Institution (as


defined below) or (ii) repurchase agreements with an Eligible Institution with a


term of not more than one day for Eligible Treasury Securities, with respect to


which such Eligible Treasury Securities are held by Escrow Agent in its account


with a Federal Reserve Bank and maintained on its books and records in the


Escrow Account.  An Eligible Institution shall mean a commercial bank having a


combined capital and surplus of at least Five Hundred Million Dollars


                                      -4-


($500,000,000) and which is well capitalized or adequately capitalized (as such


terms are defined in applicable federal regulations).




     The Escrow Agent shall liquidate investments in order to comply with the


provisions of this Escrow Agreement without liability for any resulting losses.


Any losses incurred from an investment shall be borne by the Escrow Account.




     4.  Accrued Interest on the Escrow Assets.  All interest and earnings of

         -------------------------------------


the Escrow Assets shall be added to and become part of the Escrow Assets, and


shall be held by Escrow Agent under this Escrow Agreement.




     5.  Payments of Amounts Held in Escrow Account.  (a) Subject to Sections

         ------------------------------------------


5(b) and 5(c) hereof, upon termination of the Escrow Agreement pursuant to


Section 6 hereof, Escrow Agent shall distribute all amounts held in the Escrow


Account pursuant to (i) written payment instructions executed by each of


Continental, Pacific, Fibreboard Corporation, Class Counsel (acting on behalf of


the Settlement Class), and, after appointment of the Trustees, the Trustees or


(ii) an order obtained after a hearing held on notice to each of Continental,


Pacific, Fibreboard Corporation and Class Counsel (a "Court Order") of the


United States District Court for the Eastern District of Texas.


                                      -5-


     (b)  At any time and from time to time during the term of this Escrow


Agreement, Escrow Agent shall (i) at the written direction of each of


Continental, Pacific, Fibreboard Corporation, Class Counsel, and, after


appointment of the Trustees, the Trustees distribute such amount or amounts to


such person or persons and at such time or times as each of Continental,


Pacific, Fibreboard Corporation, Class Counsel, and, after appointment of the


Trustees, the Trustees shall direct in an Interim Payment Direction or (ii) in


accordance with a Court Order, distribute such amount or amounts to such person


or persons and at such time or times as is specified in the Court Order.  Any


payment instructions to the Escrow Agent shall include the mailing address and


taxpayer identification number of the person or persons receiving the


distribution hereunder.




          (c)  Notwithstanding any contrary provision of this Escrow Agreement,


within the 30-day period following the end of each calendar quarter, Escrow


Agent shall pay to Continental 64.71% and to Pacific 35.29% of 5% of the income


earned by the Escrow Account during such calendar quarter.




     6.  Termination.  Escrow Agent shall maintain the Escrow Account and hold

         -----------


the Escrow Assets in escrow pursuant to this Escrow Agreement until receipt of


written notice of termination from each of Continental, Pacific, Fibreboard


Corporation, Class Counsel, and, after appointment of the Trustees, the


Trustees.


                                      -6-


     7.  Escrow Agent Qualifications.  Escrow Agent shall at all times be (i) a

         ---------------------------


bank, savings and loan association or trust company in good standing, organized


and doing business under the laws of the United States or a state of the United


States or a United States branch of a foreign bank, (ii) have combined capital


and surplus of not less than Five Hundred Million Dollars ($500,000,000) and be


well capitalized or adequately capitalized (as such terms are defined in


applicable federal regulations) and (iii) be authorized under the laws governing


its organization to exercise corporate trust powers and be authorized under such


laws to enter into and perform this Escrow Agreement.  If Escrow Agent shall at


any time cease to have the foregoing qualifications, Escrow Agent shall give


notice of resignation to Continental and Pacific as provided in Section 10


hereof and Continental and Pacific agree to thereupon promptly appoint a


qualified successor escrow agent in accordance with Section 11.




     8.  Limitations on Liability of Escrow Agent.

         ----------------------------------------


          (a)  Escrow Agent may act upon any written notice, certificate,


instrument, request, waiver, consent, paper or other document that Escrow Agent


in good faith reasonably believes to be genuine and to have been made, sent,


signed, prescribed, or presented by the proper person or persons acting on


behalf of the parties named in paragraph 5(a) and 5(b).  Escrow Agent shall not


be liable for any action taken or omitted by it in connection with the


performance of its duties and obligations hereunder, except for its own gross


negligence or willful misconduct.  Escrow Agent shall be under no obligation to


institute or defend any action, suit or legal proceeding in connection


                                      -7-

with this escrow or this Escrow Agreement unless it is indemnified to its


satisfaction by the party or parties who desire that it undertake such action.




          (b)  Escrow Agent shall be under no obligation or liability for


failure to inform Continental, Pacific, Fibreboard Corporation or Class Counsel


regarding any transaction or facts within Escrow Agent's knowledge, even though


the same may concern the matters described herein, provided they do not prevent


or interfere with Escrow Agent's compliance with this Escrow Agreement, nor


shall Escrow Agent be liable for the sufficiency, correctness or genuineness as


to form, manner of execution or validity of any instrument deposited, nor as to


identity, authority, or rights of any person executing the same, except as above


provided.




          (c)  Should Escrow Agent during or after the term of the escrow


receive or become aware of any conflicting demands or claims with respect to the


Escrow Account, Escrow Assets or the rights of any of the parties hereto,


Fibreboard Corporation or Class Counsel, Escrow Agent shall have the right to


discontinue any or all further acts on its part until such conflict is resolved


to its satisfaction, and Escrow Agent shall have the further right to commence


or defend any action or proceeding for the determination of such conflict.  In


the event Escrow Agent should file suit in interpleader and deposit the Escrow


Assets in dispute in a court of competent jurisdiction, it shall be fully


released and discharged from all further obligations under this Escrow


                                      -8-


Agreement with respect to such Escrow Assets (but such release and discharge


shall not relieve Escrow Agent from any liability incurred prior to such event).




          (d)  Escrow Agent may consult with legal counsel satisfactory to it in


connection with any dispute, the construction of any provision of this Escrow


Agreement or the duties and obligations of Escrow Agent under this Escrow


Agreement.




     9.  Accounts and Release of Escrow Agent.  (a)  The retention and

         ------------------------------------


distribution of the Escrow Assets in accordance with the terms and provisions of


this Escrow Agreement shall fully and completely release Escrow Agent from any


obligations or liabilities assumed under this Escrow Agreement with respect to


the Escrow Assets.  Nothing in this Escrow Agreement shall be interpreted as


depriving the Escrow Agent, Continental, Pacific, Fibreboard Corporation or


Class Counsel of the right to have a judicial settlement of the Escrow Agent's


accounts, and upon any proceeding for a judicial settlement of the Escrow


Agent's accounts or for instructions the only necessary parties thereto will be


the Escrow Agent, Continental, Pacific, Fibreboard Corporation and Class


Counsel.




          (b)  The Escrow Agent shall keep accurate and detailed records of all


investments, receipts, disbursements, and all other transactions required to be


done, including such specific records as shall be agreed upon in writing between


Continental, Pacific and the Escrow Agent.  Within ten (10) days following the


close of each calendar


                                      -9-

month, the Escrow Agent shall deliver to Continental, Pacific, Fibreboard


Corporation and Class Counsel a written account of its administration of the


escrow during such month and cumulatively for the period from the date hereof


through the end of such month, setting forth all investments, receipts,


disbursements and other transactions effected by it, including a description of


all investments purchased and sold with the cost or net proceeds of such


purchases or sales (accrued interest paid or received being shown separately),


showing all cash, securities and other property held in the Escrow Account at


the end of such month and the book and fair market value of all Escrow Assets.




          (c)  All accounts, books and records maintained pursuant to this


Section shall be opened to inspection and audit at all reasonable times by


Continental, Pacific, Fibreboard Corporation and Class Counsel and their


respective representatives.




          (d)  The fair market value of the Escrow Assets shall be determined by


the Escrow Agent whenever required pursuant to the Escrow Agreement, but in any


event not less than monthly.  The Escrow Agent may base such determination upon


such sources of information as it may deem reliable including, but not limited


to, information reported in (i) newspapers of general circulation, (ii),


standard financial periodicals or publications, (iii) statistical and valuation


services, (iv) the records of securities exchanges or brokerage firms deemed by


the Escrow Agent to be reliable, or any combination thereof.  The Escrow Agent


shall promptly inform Continental, Pacific,


                                      -10-


Fibreboard Corporation and Class Counsel of any such valuation and provide them


with complete copies thereof.




     10.  Resignation and Removal of Escrow Agent.  Escrow Agent may be removed

          ---------------------------------------


by the joint action of Continental and Pacific, with or without cause, at any


time upon 15 days' prior written notice to Escrow Agent, which notice may be


waived by Escrow Agent.  Escrow Agent may resign at any time upon 60 days' prior


written notice to Continental, Pacific, Fibreboard Corporation and Class


Counsel.




     Notwithstanding any resignation or removal of Escrow Agent pursuant to


Section 7 hereof or this Section 10, such resignation or removal shall not be


effective and Escrow Agent shall continue to serve in its capacity as Escrow


Agent until (i)  a successor escrow agent is appointed in accordance with the


provisions of Section 11 hereof and has accepted such appointment and (ii) the


Escrow Assets together with such records and documents as may be reasonably


required to enable the successor escrow agent to properly administer the Escrow


Fund have been transferred to and received by such successor escrow agent.


Continental and Pacific shall promptly take the necessary action to appoint a


successor escrow agent in accordance with the provisions of Section 11 hereof.




     11.  Appointment of Successor Escrow Agent.  If at any time Escrow Agent

          -------------------------------------


shall resign, be removed or otherwise become incapable of acting as Escrow Agent


                                      -11-


pursuant to this Escrow Agreement, or if at any time a vacancy shall occur in


the office of Escrow Agent for any other cause, a successor Escrow Agent that


meets the qualifications set forth in Section 7 shall be appointed jointly by


Continental and Pacific by a written instrument delivered to the successor


Escrow Agent with a copy delivered to the Escrow Agent.  If no successor Escrow


Agent is appointed (i) within 30 days after the time Escrow Agent becomes


incapable of acting or a vacancy occurred in the office of Escrow Agent or (ii)


within 60 days of Escrow Agent's giving notice of resignation, any party hereto


may petition a court of competent jurisdiction for an appointment of a successor


Escrow Agent.  Upon the appointment and acceptance of any successor Escrow Agent


hereunder, Escrow Agent shall transfer the Escrow Assets to its successor.  Upon


receipt by the successor Escrow Agent of the Escrow Assets, Escrow Agent shall


be discharged from any continuing duties or obligations under this Escrow


Agreement, but such discharge shall not relieve Escrow Agent from any liability


incurred prior to such event, and the successor Escrow Agent shall be vested


with all rights, powers, duties and obligations of Escrow Agent under this


Agreement.




          12.  IRS Filings and Examinations.  (a) For federal income tax

               -----------------------------


purposes, the parties expect that Continental will be allocated 64.71% of the


income, gains and deductions of the Escrow Fund and that Pacific will be


allocated 35.29% of the income, gains and deductions of the Escrow Fund and that


Continental and Pacific will each be required to include those items of taxable


income, gains and deductions of the Escrow Fund which are attributable to them


in computing their separate taxable income and this


                                      -12-

Escrow Agreement shall be construed accordingly.  Notwithstanding the foregoing,


Escrow Agent shall timely file such tax and other returns and statements for the


Escrow Account (collectively "Returns"), and shall provide for and pay such


taxes, as are required to comply with applicable provisions of the Internal


Revenue Code of 1986, as amended, and of any state or local law and the


regulations promulgated thereunder.  The Escrow Agent shall provide all


completed Returns to Continental and Pacific at least 10 days in advance of the


due date for such Returns and shall obtain the consent of Continental and


Pacific to all Returns before they are filed.  The Escrow Agent is authorized to


employ such agents and independent contractors as it deems necessary in its best


judgment in order to perform the federal and state tax reporting required by


this paragraph.  Continental and Pacific will advise the Escrow Agent of the


party who will sign any required federal and state tax returns on behalf of the


Escrow Account.




          (b)  The Escrow Agent agrees that Continental and Pacific shall have


the sole and exclusive responsibility for handling any income tax examinations


relating to the Escrow Fund.  All costs and expenses of any income tax


examination relating to potential tax liability of the Escrow Fund, including


the expense of defending any adjustments or proposed adjustments, shall be


charged to the Escrow Fund.



          (c)  Escrow Agent agrees that it will inform Continental and Pacific


promptly of all questions raised by agents conducting an income tax examination


of the Escrow Account and shall cooperate with accountants, tax advisers and


counsel retained


                                      -13-

by Continental and Pacific in working with the income tax agents and in


responding to any questions and proposed tax adjustments.




          13.  Notices.  Any notice or other communication hereunder must be

               -------


given in writing and either (a) delivered in person, (b) transmitted by telex,


telefax or other telecopy mechanism, provided that any notice so given is also


mailed as provided in clause (c), or (c) mailed, postage prepaid, receipt


requested, as follows:




     If to Continental, addressed to:




          Continental Casualty Co.

          Specialty Claims Office, 12th Floor

          50 Fremont Street

          San Francisco, CA  94105

          Attention:  Claim Manager

          Telecopier:  (415) 512-4899




               and




          WACHTELL, LIPTON, ROSEN & KATZ

          51 West 52nd Street

          New York, New York  10019

          Attention:  Herbert M. Wachtell, Esq.

          Telecopier:  (212) 403-2000




               and




          CARROLL, BURDICK & McDONOUGH

          44 Montgomery Street, Suite 400

          San Francisco, CA  94104

          Attention:  Rodney L. Eshelman, Esq.

          Telecopier:  (415) 989-0932


                                      -14-


        If to Pacific, addressed to:




          Pacific Indemnity Company

          Chubb & Son Inc.

          15 Mountain View Road

          P.O. Box 1615

          Warren, NJ  07061-1615

          Attention:  Malcolm B. Burton

          Telecopier:  (908) 580-3030




                    and




          WHITE & CASE

          1155 Avenue of the Americas

          New York, NY  10036

          Attention:  Paul J. Bschorr, Esq.

          Telecopier:  (212) 354-8113




        If to Fibreboard, addressed to:




          FIBREBOARD CORPORATION

          2121 North California Blvd.

          Walnut Creek, CA  94596

          Attention:  Michael R. Douglas

                     Senior Vice President and

                      General Counsel

          Telecopier:  (510) 274-0714




                    and




          BROBECK, PHLEGER & HARRISON

          Spear Street Tower

          One Market Plaza

          San Francisco, CA  94105

          Attention:  Stephen M. Snyder, Esq.

          Telecopier:  (415) 442-1020





        If to the Class Counsel, addressed to:




          CAPLIN & DRYSDALE, CHARTERED

          399 Park Avenue

          New York, New York  10022

          Attention:  Elihu Inselbuch
          Telecopier:  (212) 644-6755



                                      -15-





        If to Escrow Agent, addressed to:




          The First National Bank of Chicago

          One First National Plaza, Suite 0126

          Chicago, IL 60670-0126

          Attention:  Joseph Cahill

          Telecopier:  (312) 407-1708




or to such other address or to such other person as either party shall have last


designated by such notice to the other party.  Each such notice or other


communication shall be effective (i) if given by telecommunication, when


transmitted to the applicable number so specified in (or pursuant to) this


Section 13 and an appropriate answer back is received, (ii) if given by mail,


three business days after such communication is deposited in the mails with


first class postage prepaid, addressed as aforesaid or (iii) if given by any


other means, when actually delivered at such address.




          14.  Amendments; Waivers.  This Escrow Agreement may be amended only

               -------------------


by (i) an agreement in writing executed by Escrow Agent, Continental, Pacific,


Fibreboard Corporation and Class Counsel, or (ii) pursuant to a Court Order.  No


waiver of any provisions nor consent to any exception to the terms of this


Escrow Agreement shall be effective unless in writing and signed by the party to


be bound, and then only to the specific purpose, extent and in stance as so


provided.




          15.  Counterparts.  This Escrow Agreement and any other agreement (or

               ------------


document) delivered pursuant hereto may be executed in one or more counterparts


and


                                      -16-


by different parties in separate counterparts.  All of such counterparts shall


constitute one and the same agreement and shall become effective when one or


more counterparts of this Escrow Agreement have been signed by each party, and


delivered to the other parties.




          16.  Assignment.  Neither this Escrow Agreement nor any rights or

               ----------


obligations under it are assignable.




          17.  Governing Law.  This Escrow Agreement and the legal relations

               -------------


among the parties shall be governed by and construed in accordance with the laws


of the State of Illinois applicable to contracts made and performed in such


state without regard to conflicts of law doctrines, except to the extent that


certain matters are preempted by federal law or are governed by the law of the


jurisdiction of organization of the respective parties.




          18.  Integration.  This Escrow Agreement constitutes the entire

               -----------


agreement and understanding of Continental, Pacific, Fibreboard Corporation and


Class Counsel on the one hand and Escrow Agent on the other with respect to the


subject matter of this Escrow Agreement and supersedes all prior agreements and


understandings with respect thereto.


                                      -17-


          19.  Severability.  If any provision of this Escrow Agreement is held

               ------------


invalid by any court, governmental agency or regulatory body, the other


provisions shall remain in full force and effect.




          20.  Parties in Interest.  This Escrow Agreement shall be binding upon

               -------------------


and inure to the benefit of each party, Fibreboard Corporation and Class


Counsel, and nothing in this Escrow Agreement, express or implied, is intended


to confer upon any other person any rights or remedies of any nature whatsoever


by, under or by reason of this Escrow Agreement.  Nothing in this Escrow


Agreement is intended to relieve or discharge the obligation of any third person


to, or to confer any right of subrogation or action over against, any party to


this Escrow Agreement or Fibreboard Corporation or Class Counsel or Class


Counsel.




          21.  Headings.  The descriptive headings of the Sections of this

               --------


Escrow Agreement are for convenience only and do not constitute a part of this


Escrow Agreement.


                                      -18-


          IN WITNESS WHEREOF, each of the parties hereto has caused this


Agreement to be executed on the day and year first above written.




                                        CONTINENTAL CASUALTY COMPANY




                                        By        Laurens F. Terry
                                           ---------------------------------

                                        Title  Vice President
                                               -----------------------------




                                        PACIFIC INDEMNITY CORPORATION




                                        By          John J. Degnan
                                           ---------------------------------

                                        Title  Senior Vice President
                                               -----------------------------




                                        THE FIRST NATIONAL BANK OF CHICAGO




                                        By
                                           ---------------------------------

                                        Title
                                               -----------------------------




AGREED TO:




FIBREBOARD CORPORATION




By       Michael R. Douglas
   ---------------------------------

Title  Senior Vice President and
        General Counsel

       -----------------------------



CLASS COUNSEL



By           Joseph Rice
   ---------------------------------

          Joseph Rice, Esq.



By          Joseph Cox
   ---------------------------------

          Joseph Cox, Esq.



By           Harry Wartnick
   ---------------------------------

          Harry Wartnick, Esq.



By          Steven Kazan
   ---------------------------------

          Steven Kazan, Esq.


                                      -19-





<PAGE>
Form 2                                                            EXHIBIT 28.02

 ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
 CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
 ...........................................
                 (Name)


      SCHEDULE P - ANALYSIS OF LOSSES AND LOSS EXPENSES

                                              Notes to Schedule P
 (1) The Parts of Schedule P:
    Part 1 - detailed information on losses and loss expenses.
    Part 2 - history of incurred losses and allocated expenses.
    Part 3 - history of loss and allocated expense payments.
    Part 4 - history of bulk and incurred-but-not reported reserves.
    Schedule P Interrogatories

 (2) Lines of business A through M and R are groupings of the lines of business
     used on Page 14, the state page.

 (3) Reinsurance A, B, C, and D (lines N to Q) are:
     Reinsurance A = nonproportional property (1988 and subsequent)
     Reinsurance B = nonproportional liability (1988 and subsequent)
     Reinsurance C = financial lines (1988 and subsequent)
     Reinsurance D = old Schedule O line 30 (1987 and prior)

 (4) The Instructions to Schedule P contain directions necessary for filling
     out Schedule P.


                                  SCHEDULE P - PART 1 - SUMMARY

<TABLE>
<CAPTION>
                                                                                                 (000 omitted)
 --------------------------------------------------------------------------------------------------------------------
|             |              Premiums Earned             |                                     Loss and Loss Expense |
|      1      |------------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3       |      4      |         Loss Payments       |         Allocated Loss      |
|   in Which  |             |              |             |                             |        Expense Payments     |
|Premiums Were|             |              |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |              |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded     |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |              |             | and Assumed  |    Ceded     | and Assumed
  |      Ceded   |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>            <C>           <C>            <C>            <C>            <C>            |
|             |             |              |             |              |              |              |              |
| 1. Prior ...|   X X X X   |     X X X X  |    X X X X  |      304,164 |       48,439 |       99,060 |        5,911 |
| 2. 1984.....|   1,972,550 |      251,064 |   1,721,486 |    1,718,025 |      322,406 |      262,790 |       45,095 |
| 3. 1985.....|   2,756,886 |      425,772 |   2,331,114 |    2,259,526 |      587,368 |      306,759 |       39,434 |
| 4. 1986.....|   4,300,449 |      550,592 |   3,749,857 |    2,096,005 |      311,551 |      314,112 |       29,692 |
| 5. 1987.....|   4,915,810 |      665,280 |   4,250,529 |    2,341,964 |      334,228 |      273,173 |       12,982 |
| 6. 1988.....|   5,399,645 |      613,422 |   4,786,223 |    2,761,739 |      343,647 |      291,235 |       16,501 |
| 7. 1989.....|   5,768,987 |      549,762 |   5,219,225 |    3,345,300 |      344,621 |      295,604 |       19,201 |
| 8. 1990.....|   6,595,234 |      454,185 |   6,141,049 |    3,244,754 |      182,895 |      273,915 |        8,275 |
| 9. 1991.....|   6,891,720 |      425,638 |   6,466,082 |    2,701,737 |      148,931 |      184,187 |        6,734 |
|10. 1992.....|   6,535,769 |      434,065 |   6,101,704 |    2,138,580 |      176,908 |       84,153 |        4,834 |
|11. 1993.....|   6,404,755 |      454,555 |   5,950,200 |      966,538 |       73,897 |       23,537 |        1,531 |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |     X X X X  |    X X X X  |   23,878,333 |    2,874,891 |    2,408,526 |      190,190 |
 --------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
      Report cumulative amounts paid or received for specific years.
      Report loss payments net of salvage and subrogation received.

<PAGE>

<PAGE>
                                  SCHEDULE P - PART 1 - SUMMARY - (CONTINUED)
<CAPTION>
 ---------------------------------------------------------------------------
|             |Payments                                     |               |
|      1      |---------------------------------------------|        12     |
|    Years    |      9       |      10      |      11       |               |
|   in Which  |              |              |               |  Number of    |
|Premiums Were|   Salvage    |  Unallocated |    Total      |    Claims     |
|  Earned and |     and      |      Loss    |    Net Paid   |  Reported -   |
| Losses Were | Subrogation  |    Expense   |  (5 - 6 + 7   |  Direct and   |
|   Incurred  |   Received   |    Payments  |  - 8 + 10)    |   Assumed     |
|-------------|--------------|--------------|---------------|---------------|
<S>           <C>            <C>            <C>             <C>             |
|             |              |              |               |               |
| 1. Prior ...|        8,685 |        4,544 |       353,419 |   X X X X     |
| 2. 1984.....|       60,367 |       75,702 |     1,689,016 |   X X X X     |
| 3. 1985.....|       67,693 |       91,787 |     2,031,271 |   X X X X     |
| 4. 1986.....|       72,640 |      115,504 |     2,184,378 |   X X X X     |
| 5. 1987.....|       63,611 |      129,481 |     2,397,408 |   X X X X     |
| 6. 1988.....|      164,867 |      152,894 |     2,845,720 |   X X X X     |
| 7. 1989.....|      146,989 |      184,707 |     3,461,789 |   X X X X     |
| 8. 1990.....|       87,595 |      190,299 |     3,517,798 |   X X X X     |
| 9. 1991.....|      119,841 |      193,098 |     2,923,357 |   X X X X     |
|10. 1992.....|       68,429 |      179,934 |     2,220,924 |   X X X X     |
|11. 1993.....|      119,228 |      153,236 |     1,067,884 |   X X X X     |
|-------------|--------------|--------------|---------------|---------------|
|12. Totals ..|      979,945 |    1,471,186 |    24,692,964 |   X X X X     |
 ---------------------------------------------------------------------------
<CAPTION>
 --------------------------------------------------------------------------------------------------------------------
|             |                       Losses Unpaid                     |              Allocated Loss Expenses Unpaid|
|    Years    |---------------------------------------------------------|--------------------------------------------|
|   in Which  |           Case Basis       |          Bulk + IBNR       |          Case Basis         |          Bulk|
|Premiums Were|----------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14       |     15       |      16     |      17      |      18      |     19       |
| Losses Were |   Direct    |              |   Direct     |             |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded     | and Assumed  |    Ceded    | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|--------------|--------------|-------------|--------------|--------------|--------------|
<S>           <C>           <C>            <C>            <C>           <C>            <C>            <C>            |
|             |             |              |              |             |              |              |              |
| 1. Prior ...|     878,775 |      213,722 |    2,722,911 |     199,116 |            0 |            0 |       43,214 |
| 2. 1984.....|     186,423 |       27,043 |      106,347 |      22,261 |            0 |            0 |       17,331 |
| 3. 1985.....|     206,441 |       35,257 |      182,710 |      26,435 |            0 |            0 |       26,127 |
| 4. 1986.....|     269,220 |       28,839 |      236,977 |      23,741 |            0 |            0 |       44,507 |
| 5. 1987.....|     332,114 |       37,723 |      279,893 |      35,749 |            0 |            0 |       61,626 |
| 6. 1988.....|     461,651 |       33,439 |      369,280 |      69,356 |            0 |            0 |       76,584 |
| 7. 1989.....|     627,807 |       51,015 |      426,054 |      62,814 |            0 |            0 |      111,645 |
| 8. 1990.....|     943,114 |       51,907 |      680,064 |     120,339 |            0 |            0 |      192,202 |
| 9. 1991.....|   1,040,354 |       57,790 |    1,288,800 |     158,056 |            0 |            0 |      284,729 |
|10. 1992.....|   1,076,401 |       35,068 |    1,903,538 |     213,145 |            0 |            0 |      357,554 |
|11. 1993.....|     900,547 |       65,653 |    2,985,885 |     229,084 |            0 |            0 |      416,424 |
|-------------|-------------|--------------|--------------|-------------|--------------|--------------|--------------|
|12. Totals ..|   6,922,847 |      637,456 |   11,182,458 |   1,160,096 |            0 |            0 |    1,631,943 |
 --------------------------------------------------------------------------------------------------------------------

<PAGE>

<PAGE>
                                  SCHEDULE P - PART 1 - SUMMARY - (CONTINUED)
<CAPTION>
 ------------------------------------------------------------------------------------------
|             |              |               |               |               |             |
|    Years    |--------------|      21       |      22       |      23       |     24      |
|   in Which  | + IBNR       |               |               |               |  Number of  |
|Premiums Were|--------------|    Salvage    |  Unallocated  |     Total     |   Claims    |
|  Earned and |      20      |     and       |     Loss      |  Net Losses   |Outstanding -|
| Losses Were |              |  Subrogation  |    Expenses   | and Expenses  |   Direct    |
|   Incurred  |    Ceded     |  Anticipated  |     Unpaid    |     Unpaid    | and Assumed |
|-------------|--------------|---------------|---------------|---------------|-------------|
<S>           <C>            <C>             <C>             <C>             <C>           |
|             |              |               |               |               |             |
| 1. Prior ...|        6,723 |        34,973 |         7,915 |     3,233,254 |   X X X X   |
| 2. 1984.....|        2,894 |         7,110 |         2,168 |       260,071 |   X X X X   |
| 3. 1985.....|        4,840 |        14,622 |         2,430 |       351,176 |   X X X X   |
| 4. 1986.....|        4,251 |        15,780 |         3,776 |       497,649 |   X X X X   |
| 5. 1987.....|        5,183 |        15,043 |         6,338 |       601,316 |   X X X X   |
| 6. 1988.....|        8,369 |        23,696 |         7,022 |       803,373 |   X X X X   |
| 7. 1989.....|        9,939 |        34,351 |         8,382 |     1,050,120 |   X X X X   |
| 8. 1990.....|       14,049 |        53,711 |        12,593 |     1,641,678 |   X X X X   |
| 9. 1991.....|       18,229 |        67,353 |        19,027 |     2,398,835 |   X X X X   |
|10. 1992.....|       16,142 |        81,757 |        27,129 |     3,100,267 |   X X X X   |
|11. 1993.....|       24,896 |       103,346 |        41,542 |     4,024,765 |   X X X X   |
|-------------|--------------|---------------|---------------|---------------|-------------|
|12. Totals ..|      115,515 |       451,742 |       138,322 |    17,962,504 |   X X X X   |
 ------------------------------------------------------------------------------------------
<CAPTION>
 ---------------------------------------------------------------------------------------------------------------------
|    Years    |             Total Losses and             |      Loss and Loss Expense Percentage      |       Discount|
|   in Which  |          Loss Expenses Incurred          |         (Incurred/Premiums Earned)         |       Value of|
|Premiums Were|------------------------------------------|--------------------------------------------|---------------|
|  Earned and |     25      |     26       |     27      |      28      |      29      |      30      |      31       |
| Losses Were |   Direct    |              |             |    Direct    |              |              |               |
|   Incurred  | and Assumed |    Ceded     |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss      |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|---------------|
<S>           <C>           <C>            <C>           <C>            <C>            <C>            <C>             |
|             |             |              |             |              |              |              |               |
| 1. Prior ...|    X X X X  |     X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |             0 |
| 2. 1984.....|   2,368,786 |      419,699 |   1,949,087 |        120.1 |        167.2 |        113.2 |             0 |
| 3. 1985.....|   3,075,780 |      693,334 |   2,382,446 |        111.6 |        162.8 |        102.2 |             0 |
| 4. 1986.....|   3,080,101 |      398,074 |   2,682,027 |         71.6 |         72.3 |         71.5 |             0 |
| 5. 1987.....|   3,424,589 |      425,865 |   2,998,724 |         69.7 |         64.0 |         70.5 |             0 |
| 6. 1988.....|   4,120,405 |      471,312 |   3,649,093 |         76.3 |         76.8 |         76.2 |             0 |
| 7. 1989.....|   4,999,499 |      487,590 |   4,511,909 |         86.7 |         88.7 |         86.4 |             0 |
| 8. 1990.....|   5,536,941 |      377,465 |   5,159,476 |         84.0 |         83.1 |         84.0 |             0 |
| 9. 1991.....|   5,711,932 |      389,740 |   5,322,192 |         82.9 |         91.6 |         82.3 |             0 |
|10. 1992.....|   5,767,289 |      446,097 |   5,321,192 |         88.2 |        102.8 |         87.2 |             0 |
|11. 1993.....|   5,487,709 |      395,061 |   5,092,648 |         85.7 |         86.9 |         85.6 |             0 |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|---------------|
|12. Totals ..|   X X X X   |    X X X X   |   X X X X   |    X X X X   |    X X X X   |    X X X X   |             0 |
 ---------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)

<PAGE>

<PAGE>
                                  SCHEDULE P - PART 1 - SUMMARY - (CONTINUED)
<CAPTION>
 ---------------------------------------------------------------------------
|    Years    |for Time      |              |   Net Balance Sheet Reserves  |
|   in Which  | Money        |      33      |         After Discount        |
|Premiums Were|--------------|Inter-Company |-------------------------------|
|  Earned and |      32      |    Pooling   |       34       |      35      |
| Losses Were |     Loss     |Participation |      Losses    |Loss Expenses |
|   Incurred  |   Expense    |   Percentage |      Unpaid    |     Unpaid   |
|-------------|--------------|--------------|----------------|--------------|
<S>           <C>            <C>            <C>              <C>            |
|             |              |              |                |              |
| 1. Prior ...|            0 |    X X X X   |      3,188,848 |       44,406 |
| 2. 1984.....|            0 |          0.0 |        243,466 |       16,605 |
| 3. 1985.....|            0 |          0.0 |        327,459 |       23,717 |
| 4. 1986.....|            0 |          0.0 |        453,616 |       44,032 |
| 5. 1987.....|            0 |          0.0 |        538,534 |       62,781 |
| 6. 1988.....|            0 |          0.0 |        728,137 |       75,237 |
| 7. 1989.....|            0 |          0.0 |        940,031 |      110,088 |
| 8. 1990.....|            0 |          0.0 |      1,450,932 |      190,746 |
| 9. 1991.....|            0 |          0.0 |      2,113,309 |      285,527 |
|10. 1992.....|            0 |          0.0 |      2,731,726 |      368,541 |
|11. 1993.....|            0 |          0.0 |      3,591,695 |      433,070 |
|-------------|--------------|--------------|----------------|--------------|
|12. Totals ..|            0 |    X X X X   |     16,307,753 |    1,654,750 |
 ---------------------------------------------------------------------------
</TABLE>

Form 2

ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                  (Name)

                                  SCHEDULE P - PART 2 - SUMMARY

<TABLE>
<CAPTION>
 ---------------------------------------------------------------------------------------------------------------------------
|         1         |                                    Incurred Losses and Allocated Expenses Reported At Year End (000   |
|   Years in Which  |-------------------------------------------------------------------------------------------------------|
|    Losses Were    |       2        |       3     |       4      |      5      |      6      |       7      |       8      |
|     Incurred      |     1984       |     1985    |     1986     |    1987     |    1988     |     1989     |     1990     |
|-------------------|----------------|-------------|--------------|-------------|-------------|--------------|--------------|
<S>                 <C>              <C>           <C>            <C>           <C>           <C>            <C>            |
|                   |                |             |              |             |             |              |              |
|                   |                |             |              |             |             |              |              |
|  1.   Prior ......|    2,338,933 * |   2,454,076 |    2,566,981 |   2,919,734 |   3,085,482 |    3,324,720 |    3,492,509 |
|  2.   1984........|    1,508,144   |   1,490,738 |    1,508,155 |   1,659,625 |   1,715,717 |    1,803,022 |    1,848,457 |
|  3.   1985........|     X X X X    |   2,036,469 |    2,105,231 |   2,094,082 |   2,119,566 |    2,191,704 |    2,212,837 |
|  4.   1986........|     X X X X    |   X X X X   |    3,034,038 |   2,915,814 |   2,824,448 |    2,672,855 |    2,595,606 |
|  5.   1987........|     X X X X    |   X X X X   |    X X X X   |   3,056,861 |   3,004,221 |    3,045,014 |    2,942,054 |
|  6.   1988........|     X X X X    |   X X X X   |    X X X X   |   X X X X   |   3,674,384 |    3,616,713 |    3,575,399 |
|  7.   1989........|     X X X X    |   X X X X   |    X X X X   |   X X X X   |   X X X X   |    4,225,774 |    4,245,052 |
|  8.   1990........|     X X X X    |   X X X X   |    X X X X   |   X X X X   |   X X X X   |    X X X X   |    5,082,895 |
|  9.   1991........|     X X X X    |   X X X X   |    X X X X   |   X X X X   |   X X X X   |    X X X X   |    X X X X   |
| 10.   1992........|     X X X X    |   X X X X   |    X X X X   |   X X X X   |   X X X X   |    X X X X   |    X X X X   |
| 11.   1993........|     X X X X    |   X X X X   |    X X X X   |   X X X X   |   X X X X   |    X X X X   |    X X X X   |
|---------------------------------------------------------------------------------------------------------------------------|
| 12.    Totals ............................................................................................................|
 ---------------------------------------------------------------------------------------------------------------------------
  *Reported reserves only. Subsequent development relates only to subsequent
   payments and reserves.
 **Current year less first or second prior year, showing (redundant) or adverse.

<PAGE>

<PAGE>
                                  SCHEDULE P - PART 2 - SUMMARY - (CONTINUED)
<CAPTION>
 ------------------------------------------------------------------------------------------
|         1         |omitted)                                  |       Development**       |
|   Years in Which  |------------------------------------------|---------------------------|
|    Losses Were    |       9      |      10     |     11      |     12      |     13      |
|     Incurred      |     1991     |     1992    |    1993     |  One Year   |  Two Year   |
|-------------------|--------------|-------------|-------------|-------------|-------------|
<S>                 <C>            <C>           <C>           <C>           <C>           |
|                   |              |             |             |             |             |
|  1.   Prior ......|    3,605,121 |   5,347,424 |   6,376,184 |   1,028,759 |   2,771,063 |
|  2.   1984........|    1,847,357 |   1,856,201 |   1,871,217 |      15,016 |      23,860 |
|  3.   1985........|    2,266,914 |   2,289,475 |   2,288,229 |      (1,246)|      21,316 |
|  4.   1986........|    2,603,601 |   2,561,578 |   2,562,747 |       1,169 |     (40,854)|
|  5.   1987........|    2,897,060 |   2,870,274 |   2,862,904 |      (7,370)|     (34,156)|
|  6.   1988........|    3,506,208 |   3,504,812 |   3,489,178 |     (15,634)|     (17,031)|
|  7.   1989........|    4,272,963 |   4,322,588 |   4,318,820 |      (3,769)|      45,856 |
|  8.   1990........|    4,954,751 |   4,932,462 |   4,956,585 |      24,123 |       1,834 |
|  9.   1991........|    5,461,255 |   5,369,712 |   5,110,068 |    (259,645)|    (351,188)|
| 10.   1992........|    X X X X   |   5,264,857 |   5,114,128 |    (150,729)|   X X X X   |
| 11.   1993........|    X X X X   |   X X X X   |   4,897,871 |   X X X X   |   X X X X   |
|--------------------------------------------------------------|-------------|-------------|
| 12.    Totals ...............................................|     630,675 |   2,420,701 |
 ------------------------------------------------------------------------------------------
</TABLE>

                                  SCHEDULE P - PART 3 - SUMMARY

<TABLE>
<CAPTION>
 ----------------------------------------------------------------------------------------------------------------------------
|         1         |                                       Cumulative Paid Losses and Allocated Expenses At Year End (000   |
|   Years in Which  |--------------------------------------------------------------------------------------------------------|
|    Losses Were    |       2        |       3      |       4      |      5      |      6      |       7      |       8      |
|     Incurred      |     1984       |     1985     |     1986     |    1987     |    1988     |     1989     |     1990     |
|                   |                |              |              |             |             |              |              |
|-------------------|--------------- |--------------|--------------|-------------|-------------|--------------|--------------|
<S>                 <C>              <C>            <C>            <C>           <C>           <C>            <C>            |
|                   |                |              |              |             |             |              |              |
|  1.   Prior ......|            0   |      516,822 |      949,048 |   1,334,725 |   1,635,347 |    1,957,064 |    2,204,591 |
|  2.   1984........|      (28,063)  |      701,748 |      848,913 |     997,651 |   1,177,489 |    1,293,517 |    1,403,568 |
|  3.   1985........|    X X X X     |      (39,769)|      868,516 |   1,092,877 |   1,240,564 |    1,414,678 |    1,585,980 |
|  4.   1986........|    X X X X     |    X X X X   |      467,087 |     947,280 |   1,263,953 |    1,420,288 |    1,651,606 |
|  5.   1987........|    X X X X     |    X X X X   |    X X X X   |     547,999 |   1,201,193 |    1,563,459 |    1,748,920 |
|  6.   1988........|    X X X X     |    X X X X   |    X X X X   |   X X X X   |     651,625 |    1,428,893 |    1,886,171 |
|  7.   1989........|    X X X X     |    X X X X   |    X X X X   |   X X X X   |   X X X X   |      789,063 |    1,827,085 |
|  8.   1990........|    X X X X     |    X X X X   |    X X X X   |   X X X X   |   X X X X   |    X X X X   |      918,597 |
|  9.   1991........|    X X X X     |    X X X X   |    X X X X   |   X X X X   |   X X X X   |    X X X X   |    X X X X   |
| 10.   1992........|    X X X X     |    X X X X   |    X X X X   |   X X X X   |   X X X X   |    X X X X   |    X X X X   |
| 11.   1993........|    X X X X     |    X X X X   |    X X X X   |   X X X X   |   X X X X   |    X X X X   |    X X X X   |
 ----------------------------------------------------------------------------------------------------------------------------
 Note: Net of salvage and subrogation received.

<PAGE>

<PAGE>
                                  SCHEDULE P - PART 3 - SUMMARY - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------------------------
|                   |                                           |     12      |     13      |
|         1         |omitted)                                   |  Number of  |  Number of  |
|   Years in Which  |-------------------------------------------|   Claims    |   Claims    |
|    Losses Were    |       9      |      10      |     11      | Closed With |   Closed    |
|     Incurred      |     1991     |     1992     |    1993     |    Loss     |Without Loss |
|                   |              |              |             |   Payment   |   Payment   |
|-------------------|--------------|--------------|-------------|-------------|-------------|
<S>                 <C>            <C>            <C>           <C>           <C>           |
|                   |              |              |             |             |             |
|  1.   Prior ......|    2,505,698 |    2,801,970 |   3,150,845 |   X X X X   |   X X X X   |
|  2.   1984........|    1,493,715 |    1,560,866 |   1,613,314 |   X X X X   |   X X X X   |
|  3.   1985........|    1,752,074 |    1,887,316 |   1,939,483 |   X X X X   |   X X X X   |
|  4.   1986........|    1,861,599 |    1,963,470 |   2,068,874 |   X X X X   |   X X X X   |
|  5.   1987........|    1,950,264 |    2,137,487 |   2,267,927 |   X X X X   |   X X X X   |
|  6.   1988........|    2,188,695 |    2,490,999 |   2,692,826 |   X X X X   |   X X X X   |
|  7.   1989........|    2,507,948 |    2,925,775 |   3,277,082 |   X X X X   |   X X X X   |
|  8.   1990........|    2,061,339 |    2,802,747 |   3,327,500 |   X X X X   |   X X X X   |
|  9.   1991........|      997,430 |    2,012,959 |   2,730,259 |   X X X X   |   X X X X   |
| 10.   1992........|    X X X X   |    1,004,297 |   2,040,990 |   X X X X   |   X X X X   |
| 11.   1993........|    X X X X   |    X X X X   |     914,648 |   X X X X   |   X X X X   |
 -------------------------------------------------------------------------------------------
</TABLE>

                                  SCHEDULE P - PART 4 - SUMMARY

<TABLE>
<CAPTION>
 ---------------------------------------------------------------------------------------------------------------
 |         1          |                     Bulk and Incurred But Not Reported Reserves on Losses and Allocated |
 |   Years in Which   | ----------------------------------------------------------------------------------------|
 |      Losses        |       2      |        3      |       4      |       5      |      6      |       7      |
 |   Were Incurred    |     1984     |      1985     |     1986     |     1987     |    1988     |     1989     |
 |--------------------|--------------|---------------|--------------|--------------|-------------|--------------|
 <S>                  <C>            <C>             <C>            <C>            <C>           <C>            |
 |                    |              |               |              |              |             |              |
 |  1.     Prior .....|      873,964 |       649,519 |      491,275 |      580,826 |     561,553 |      473,323 |
 |  2.     1984.......|    1,164,329 |       427,252 |      278,463 |      297,143 |     209,779 |      221,474 |
 |  3.     1985.......|   X X X X    |     1,610,921 |      781,359 |      557,294 |     437,921 |      419,052 |
 |  4.     1986.......|   X X X X    |     X X X X   |    2,048,934 |    1,417,507 |   1,057,062 |      771,057 |
 |  5.     1987.......|   X X X X    |     X X X X   |    X X X X   |    1,964,787 |   1,207,755 |      910,368 |
 |  6.     1988.......|   X X X X    |     X X X X   |    X X X X   |    X X X X   |   2,335,680 |    1,457,537 |
 |  7.     1989.......|   X X X X    |     X X X X   |    X X X X   |    X X X X   |   X X X X   |    2,596,516 |
 |  8.     1990.......|   X X X X    |     X X X X   |    X X X X   |    X X X X   |   X X X X   |    X X X X   |
 |  9.     1991.......|   X X X X    |     X X X X   |    X X X X   |    X X X X   |   X X X X   |    X X X X   |
 | 10.     1992.......|   X X X X    |     X X X X   |    X X X X   |    X X X X   |   X X X X   |    X X X X   |
 | 11.     1993.......|   X X X X    |     X X X X   |    X X X X   |    X X X X   |   X X X X   |    X X X X   |
 ---------------------------------------------------------------------------------------------------------------

<PAGE>

<PAGE>
                                  SCHEDULE P - PART 4 - SUMMARY - (CONTINUED)
<CAPTION>
- -------------------------------------------------------------------------------
|         1          |Expenses at Year End (000 omitted)                       |
|   Years in Which   |---------------------------------------------------------|
|      Losses        |       8      |       9      |     10      |     11      |
|   Were Incurred    |     1990     |     1991     |    1992     |    1993     |
|--------------------|--------------|--------------|-------------|-------------|
<S>                  <C>            <C>            <C>           <C>           |
|                    |              |              |             |             |
|  1.     Prior .....|      479,150 |      395,468 |   1,898,880 |   2,560,286 |
|  2.     1984.......|      191,724 |      130,513 |      93,114 |      98,523 |
|  3.     1985.......|      309,281 |      244,302 |     202,851 |     177,562 |
|  4.     1986.......|      520,491 |      391,556 |     305,341 |     253,492 |
|  5.     1987.......|      671,384 |      500,199 |     368,650 |     300,587 |
|  6.     1988.......|      957,875 |      646,699 |     469,139 |     368,139 |
|  7.     1989.......|    1,503,631 |      882,306 |     602,913 |     464,946 |
|  8.     1990.......|    3,251,645 |    1,746,567 |   1,046,699 |     737,878 |
|  9.     1991.......|    X X X X   |    3,433,404 |   2,202,453 |   1,397,244 |
| 10.     1992.......|    X X X X   |    X X X X   |   3,344,444 |   2,031,805 |
| 11.     1993.......|    X X X X   |    X X X X   |   X X X X   |   3,148,329 |
- -------------------------------------------------------------------------------
</TABLE>


Form 2

ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                           (Name)

                           SCHEDULE P - PART 1A - HOMEOWNERS/FARMOWNERS

<TABLE>
<CAPTION>
                                                                                        (000 omitted)
 ---------------------------------------------------------------------------------------------------------------------
|      1      |              Premiums Earned             |                                      Loss and Loss Expense |
|             |------------------------------------------|------------------------------------------------------------|
|    Years    |      2      |       3      |      4      |         Loss Payments       |          Allocated Loss      |
|   in Which  |             |              |             |                             |        Expense Payments      |
|Premiums Were|             |              |             |-----------------------------|------------------------------|
|  Earned and |   Direct    |              |     Net     |      5       |      6       |      7       |      8        |
| Losses Were |     and     |     Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |               |
|   Incurred  |   Assumed   |              |             | and Assumed  |    Ceded     | and Assumed  |    Ceded      |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|---------------|
<S>           <C>           <C>            <C>           <C>            <C>            <C>            <C>             |
|             |             |              |             |              |              |              |               |
| 1. Prior ...|   X X X X   |     X X X X  |    X X X X  |          209 |            0 |           35 |             0 |
| 2. 1984.....|      69,369 |        1,307 |      68,063 |       45,753 |          694 |        2,130 |            13 |
| 3. 1985.....|      79,932 |        5,347 |      74,585 |       59,538 |            0 |        3,198 |             0 |
| 4. 1986.....|      90,407 |          970 |      89,437 |       53,997 |            1 |        2,879 |             0 |
| 5. 1987.....|     110,990 |        1,029 |     109,960 |       65,414 |           16 |        4,769 |             0 |
| 6. 1988.....|     147,610 |          759 |     146,851 |       85,099 |           (5)|        4,072 |             0 |
| 7. 1989.....|     169,394 |        1,244 |     168,150 |      123,772 |          262 |        5,975 |             5 |
| 8. 1990.....|     188,947 |          517 |     188,430 |      144,028 |          237 |        6,117 |            10 |
| 9. 1991.....|     203,426 |        2,272 |     201,154 |      138,661 |          442 |        4,560 |            28 |
|10. 1992.....|     216,699 |          681 |     216,018 |      175,088 |       10,923 |        4,343 |            15 |
|11. 1993.....|     223,351 |          299 |     223,053 |       99,073 |           24 |        2,247 |             3 |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|---------------|
|12. Totals ..|   X X X X   |     X X X X  |    X X X X  |      990,632 |       12,594 |       40,325 |            74 |
 ---------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years. Report
       loss payments net of salvage and subrogation received.
<PAGE>

<PAGE>
                           SCHEDULE P - PART 1A - HOMEOWNERS/FARMOWNERS - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------
|      1      |Payments                                    |              |
|             |--------------------------------------------|              |
|    Years    |      9       |      10      |       11     |      12      |
|   in Which  |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |     Total    |    Claims    |
|  Earned and |     and      |     Loss     |    Net Paid  |  Reported -  |
| Losses Were | Subrogation  |   Expense    |   (5 - 6 + 7 |  Direct and  |
|   Incurred  |   Received   |   Payments   |   - 8 + 10)  |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
|             |              |              |              |              |
| 1. Prior ...|            3 |            6 |          250 |    X X X X   |
| 2. 1984.....|        1,218 |          508 |       47,683 |       35,760 |
| 3. 1985.....|          923 |        1,628 |       64,363 |       44,723 |
| 4. 1986.....|          848 |        4,377 |       61,252 |       38,493 |
| 5. 1987.....|          798 |        5,822 |       75,989 |       45,207 |
| 6. 1988.....|        1,512 |        6,221 |       95,398 |       49,533 |
| 7. 1989.....|        1,803 |        7,991 |      137,470 |       67,666 |
| 8. 1990.....|        2,369 |        9,294 |      159,192 |       72,498 |
| 9. 1991.....|        1,527 |       11,941 |      154,692 |       80,160 |
|10. 1992.....|          963 |       13,823 |      182,316 |       80,675 |
|11. 1993.....|          562 |       14,021 |      115,313 |       62,634 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|       12,526 |       75,632 |    1,093,921 |    X X X X   |
 -------------------------------------------------------------------------
<CAPTION>
 --------------------------------------------------------------------------------------------------------------------
|             |                        Losses Unpaid                    |              Allocated Loss Expenses Unpaid|
|    Years    |---------------------------------------------------------|--------------------------------------------|
|   in Which  |           Case Basis       |          Bulk + IBNR       |          Case Basis         |          Bulk|
|Premiums Were|----------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |      14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |              |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |     Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>            <C>           <C>            <C>            <C>            <C>            |
|             |             |              |             |              |              |              |              |
|             |             |              |             |              |              |              |              |
| 1. Prior ...|         591 |            0 |           0 |            0 |            0 |            0 |            0 |
| 2. 1984.....|         855 |            0 |          98 |            0 |            0 |            0 |            0 |
| 3. 1985.....|         691 |            0 |         277 |            0 |            0 |            0 |           16 |
| 4. 1986.....|         660 |            0 |         300 |            0 |            0 |            0 |            0 |
| 5. 1987.....|       1,390 |            0 |         334 |            0 |            0 |            0 |          177 |
| 6. 1988.....|       2,921 |            0 |       1,432 |            0 |            0 |            0 |           52 |
| 7. 1989.....|       3,799 |            0 |       1,473 |           32 |            0 |            0 |          260 |
| 8. 1990.....|       5,804 |            0 |       1,794 |            6 |            0 |            0 |          587 |
| 9. 1991.....|       8,975 |            0 |       6,537 |        1,210 |            0 |            0 |        2,878 |
|10. 1992.....|      10,784 |          647 |      16,475 |           93 |            0 |            0 |        3,967 |
|11. 1993.....|      21,713 |            0 |      45,686 |           82 |            0 |            0 |        4,442 |
|-------------|-------------|--------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|      58,182 |          647 |      74,406 |        1,423 |            0 |            0 |       12,379 |
 --------------------------------------------------------------------------------------------------------------------
<PAGE>

<PAGE>
                           SCHEDULE P - PART 1A - HOMEOWNERS/FARMOWNERS - (CONTINUED)
<CAPTION>
 ----------------------------------------------------------------------------------------
|             |              |               |              |              |             |
|    Years    |--------------|       21      |      22      |      23      |     24      |
|   in Which  |+ IBNR        |               |              |              |  Number of  |
|Premiums Were|--------------|    Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |      and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              |  Subrogation  |   Expenses   | and Expenses | Direct and  |
|   Incurred  |    Ceded     |  Anticipated  |    Unpaid    |    Unpaid    |   Assumed   |
|-------------|--------------|---------------|--------------|--------------|-------------|
<S>           <C>            <C>             <C>            <C>            <C>           |
|             |              |               |              |              |             |
|             |              |               |              |              |             |
| 1. Prior ...|            0 |             1 |            0 |          591 |           5 |
| 2. 1984.....|            0 |            24 |            4 |          957 |           7 |
| 3. 1985.....|            0 |            11 |            6 |          990 |           9 |
| 4. 1986.....|            0 |            12 |            9 |          969 |          22 |
| 5. 1987.....|            0 |            75 |           21 |        1,922 |          27 |
| 6. 1988.....|            0 |           319 |           52 |        4,457 |          52 |
| 7. 1989.....|            0 |           686 |           72 |        5,572 |         114 |
| 8. 1990.....|            0 |         1,457 |          118 |        8,297 |         145 |
| 9. 1991.....|            0 |         1,448 |          317 |       17,497 |         342 |
|10. 1992.....|            3 |         2,939 |          600 |       31,082 |         615 |
|11. 1993.....|            0 |         2,739 |        1,351 |       73,110 |       3,984 |
|-------------|--------------|---------------|--------------|--------------|-------------|
|12. Totals ..|            3 |         9,712 |        2,550 |      145,444 |       5,322 |
 ----------------------------------------------------------------------------------------
<CAPTION>
 ---------------------------------------------------------------------------------------------------------------------
|             |              Total Losses and           |       Loss and Loss Expense Percentage     |        Discount|
|    Years    |           Loss Expenses Incurred        |          (Incurred/Premiums Earned)        |        Value of|
|   in Which  |-----------------------------------------|--------------------------------------------|----------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |        31      |
|  Earned and |             |             |             |              |              |              |                |
| Losses Were |   Direct    |             |             |    Direct    |              |              |                |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |       Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|----------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>              |
|             |             |             |             |              |              |              |                |
|             |             |             |             |              |              |              |                |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |              0 |
| 2. 1984.....|      49,348 |         707 |      48,641 |         71.1 |         54.1 |         71.5 |              0 |
| 3. 1985.....|      65,354 |           0 |      65,354 |         81.8 |          0.0 |         87.6 |              0 |
| 4. 1986.....|      62,222 |           1 |      62,221 |         68.8 |          0.1 |         69.6 |              0 |
| 5. 1987.....|      77,927 |          16 |      77,911 |         70.2 |          1.6 |         70.9 |              0 |
| 6. 1988.....|      99,849 |          (5)|      99,854 |         67.6 |         (0.7)|         68.0 |              0 |
| 7. 1989.....|     143,342 |         299 |     143,043 |         84.6 |         24.0 |         85.1 |              0 |
| 8. 1990.....|     167,742 |         253 |     167,489 |         88.8 |         48.9 |         88.9 |              0 |
| 9. 1991.....|     173,869 |       1,680 |     172,189 |         85.5 |         73.9 |         85.6 |              0 |
|10. 1992.....|     225,080 |      11,681 |     213,399 |        103.9 |      1,715.3 |         98.8 |              0 |
|11. 1993.....|     188,533 |         109 |     188,424 |         84.4 |         36.5 |         84.5 |              0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|----------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |              0 |
 ---------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)

<PAGE>

<PAGE>
                           SCHEDULE P - PART 1A - HOMEOWNERS/FARMOWNERS - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------
|             |for Time      |              |   Net Balance Sheet Reserves|
|    Years    |Money         |      33      |         After Discount      |
|   in Which  |--------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |     Loss     |
| Losses Were |     Loss     |Participation |    Losses    |   Expenses   |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
| 1. Prior ...|            0 |    X X X X   |          591 |            0 |
| 2. 1984.....|            0 |          0.0 |          953 |            4 |
| 3. 1985.....|            0 |          0.0 |          968 |           22 |
| 4. 1986.....|            0 |          0.0 |          960 |            9 |
| 5. 1987.....|            0 |          0.0 |        1,724 |          198 |
| 6. 1988.....|            0 |          0.0 |        4,353 |          104 |
| 7. 1989.....|            0 |          0.0 |        5,240 |          332 |
| 8. 1990.....|            0 |          0.0 |        7,592 |          705 |
| 9. 1991.....|            0 |          0.0 |       14,302 |        3,195 |
|10. 1992.....|            0 |          0.0 |       26,518 |        4,564 |
|11. 1993.....|            0 |          0.0 |       67,317 |        5,793 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|            0 |    X X X X   |      130,518 |       14,926 |
 -------------------------------------------------------------------------
</TABLE>

Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                  (Name)

               SCHEDULE P - PART 1B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL

<TABLE>
<CAPTION>
                                                                                        (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                      Loss and Loss Expense|
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |          Allocated Loss     |
|   in Which  |             |             |             |                             |         Expense Payments    |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |       7       |      8      |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |     Direct    |             |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     |  and Assumed  |    Ceded    |
|-------------|-------------|-------------|-------------|--------------|--------------|---------------|-------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>             <C>           |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |        1,942 |          212 |           226 |          12 |
| 2. 1984.....|     129,306 |       3,006 |     126,300 |      121,343 |        3,617 |         8,950 |          85 |
| 3. 1985.....|     146,068 |      10,748 |     135,320 |      136,303 |        2,775 |        10,131 |          37 |
| 4. 1986.....|     170,619 |       6,847 |     163,772 |      154,882 |        8,231 |        11,837 |         190 |
| 5. 1987.....|     202,239 |      12,200 |     190,039 |      184,373 |       11,519 |        13,441 |         293 |
| 6. 1988.....|     260,594 |      18,142 |     242,452 |      211,440 |       15,141 |        13,663 |         537 |
| 7. 1989.....|     308,866 |      19,341 |     289,524 |      247,105 |       15,965 |        15,212 |         412 |
| 8. 1990.....|     356,704 |      11,055 |     345,650 |      254,679 |        8,579 |        15,601 |         278 |
| 9. 1991.....|     378,037 |       6,068 |     371,969 |      226,370 |        4,402 |        10,128 |         101 |
|10. 1992.....|     410,684 |       6,450 |     404,233 |      179,556 |        4,587 |         4,741 |          49 |
|11. 1993.....|     418,598 |       5,705 |     412,893 |       76,939 |        1,009 |         1,348 |           0 |
|-------------|-------------|-------------|-------------|--------------|--------------|---------------|-------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    1,794,933 |       76,035 |       105,277 |       1,993 |
 -------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.
<PAGE>

<PAGE>

               SCHEDULE P - PART 1B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------
|      1      |Payments                                    |              |
|             |--------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|   in Which  |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
| 1. Prior ...|        1,307 |           68 |        2,012 |    X X X X   |
| 2. 1984.....|        3,414 |        5,325 |      131,915 |       61,428 |
| 3. 1985.....|        5,797 |        7,751 |      151,374 |       62,470 |
| 4. 1986.....|        4,360 |       10,940 |      169,238 |       66,322 |
| 5. 1987.....|        5,668 |       11,680 |      197,682 |       76,365 |
| 6. 1988.....|        6,735 |       15,594 |      225,020 |       83,598 |
| 7. 1989.....|        6,648 |       19,123 |      265,063 |       92,421 |
| 8. 1990.....|        6,004 |       17,816 |      279,240 |       96,465 |
| 9. 1991.....|        4,654 |       17,768 |      249,763 |       94,290 |
|10. 1992.....|        2,866 |       17,824 |      197,485 |       91,072 |
|11. 1993.....|        1,004 |       17,139 |       94,417 |       73,422 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|       48,457 |      141,029 |    1,963,211 |    X X X X   |
 -------------------------------------------------------------------------
<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |              Allocated Loss Expenses Unpaid|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|   in Which  |          Case Basis       |          Bulk + IBNR       |          Case Basis        |           Bulk|
|Premiums Were|---------------------------|----------------------------|----------------------------|---------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18     |       19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |             |     Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded    |  and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|-------------|---------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>           <C>             |
|             |             |             |             |              |              |             |               |
|             |             |             |             |              |              |             |               |
| 1. Prior ...|       3,871 |         631 |       5,781 |            0 |            0 |           0 |           303 |
| 2. 1984.....|       2,844 |           0 |       2,356 |            0 |            0 |           0 |           192 |
| 3. 1985.....|       4,470 |           0 |       3,042 |            0 |            0 |           0 |           338 |
| 4. 1986.....|       8,773 |           0 |       2,395 |            0 |            0 |           0 |         1,250 |
| 5. 1987.....|       9,713 |          50 |       4,236 |            0 |            0 |           0 |         2,017 |
| 6. 1988.....|      14,591 |          60 |       6,676 |            0 |            0 |           0 |         2,429 |
| 7. 1989.....|      30,378 |         582 |      14,355 |            0 |            0 |           0 |         5,828 |
| 8. 1990.....|      45,186 |         358 |      29,383 |            0 |            0 |           0 |         9,684 |
| 9. 1991.....|      66,947 |         727 |      50,786 |            0 |            0 |           0 |        16,860 |
|10. 1992.....|      99,171 |       1,576 |     103,747 |            0 |            0 |           0 |        22,134 |
|11. 1993.....|      87,848 |       1,776 |     200,144 |        1,852 |            0 |           0 |        17,216 |
|-------------|-------------|-------------|-------------|--------------|--------------|-------------|---------------|
|12. Totals ..|     373,794 |       5,761 |     422,901 |        1,852 |            0 |           0 |        78,251 |
 -------------------------------------------------------------------------------------------------------------------

<PAGE>

<PAGE>
               SCHEDULE P - PART 1B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL - (CONTINUED)
<CAPTION>
 ----------------------------------------------------------------------------------------
|             |              |               |              |              |             |
|    Years    |--------------|       21      |      22      |       23     |     24      |
|   in Which  |+ IBNR        |               |              |              |  Number of  |
|Premiums Were|--------------|    Salvage    | Unallocated  |     Total    |   Claims    |
|  Earned and |      20      |      and      |     Loss     |   Net Losses |Outstanding -|
| Losses Were |              |  Subrogation  |   Expenses   |  and Expenses| Direct and  |
|   Incurred  |    Ceded     |  Anticipated  |    Unpaid    |     Unpaid   |   Assumed   |
|-------------|--------------|---------------|--------------|--------------|-------------|
<S>           <C>            <C>             <C>            <C>            <C>           |
|             |              |               |              |              |             |
|             |              |               |              |              |             |
| 1. Prior ...|            0 |           179 |           95 |        9,419 |         105 |
| 2. 1984.....|            0 |            95 |           48 |        5,440 |          38 |
| 3. 1985.....|            0 |            55 |           53 |        7,903 |          44 |
| 4. 1986.....|            0 |            88 |           90 |       12,508 |          86 |
| 5. 1987.....|            0 |           192 |          109 |       16,025 |         133 |
| 6. 1988.....|            0 |           512 |          147 |       23,783 |         248 |
| 7. 1989.....|            0 |           949 |          387 |       50,366 |         639 |
| 8. 1990.....|            0 |         2,598 |          765 |       84,660 |       1,383 |
| 9. 1991.....|            0 |         3,808 |        1,279 |      135,145 |       2,826 |
|10. 1992.....|            0 |         5,058 |        2,075 |      225,551 |       6,650 |
|11. 1993.....|            1 |         5,448 |        4,130 |      305,709 |      17,653 |
|-------------|--------------|---------------|--------------|--------------|-------------|
|12. Totals ..|            1 |        18,981 |        9,178 |      876,510 |      29,805 |
 ----------------------------------------------------------------------------------------
<CAPTION>
 ---------------------------------------------------------------------------------------------------------------------
|             |             Total Losses and            |       Loss and Loss Expense Percentage     |        Discount|
|    Years    |           Loss Expenses Incurred        |          (Incurred/Premiums Earned)        |        Value of|
|   in Which  |-----------------------------------------|--------------------------------------------|----------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |        31      |
|  Earned and |             |             |             |              |              |              |                |
| Losses Were |   Direct    |             |             |    Direct    |              |              |                |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |       Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|----------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>              |
|             |             |             |             |              |              |              |                |
|             |             |             |             |              |              |              |                |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |              0 |
| 2. 1984.....|     141,058 |       3,702 |     137,356 |        109.1 |        123.2 |        108.8 |              0 |
| 3. 1985.....|     162,088 |       2,812 |     159,276 |        111.0 |         26.2 |        117.7 |              0 |
| 4. 1986.....|     190,167 |       8,421 |     181,746 |        111.5 |        123.0 |        111.0 |              0 |
| 5. 1987.....|     225,569 |      11,862 |     213,707 |        111.5 |         97.2 |        112.5 |              0 |
| 6. 1988.....|     264,540 |      15,738 |     248,802 |        101.5 |         86.7 |        102.6 |              0 |
| 7. 1989.....|     332,388 |      16,959 |     315,429 |        107.6 |         87.7 |        108.9 |              0 |
| 8. 1990.....|     373,114 |       9,215 |     363,899 |        104.6 |         83.4 |        105.3 |              0 |
| 9. 1991.....|     390,138 |       5,230 |     384,908 |        103.2 |         86.2 |        103.5 |              0 |
|10. 1992.....|     429,248 |       6,212 |     423,036 |        104.5 |         96.3 |        104.7 |              0 |
|11. 1993.....|     404,764 |       4,638 |     400,126 |         96.7 |         81.3 |         96.9 |              0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|----------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |              0 |
 ---------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)

<PAGE>

<PAGE>
               SCHEDULE P - PART 1B - PRIVATE PASSENGER AUTO LIABILITY/MEDICAL - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------
|             |for Time      |              |   Net Balance Sheet Reserves|
|    Years    |Money         |      33      |         After Discount      |
|   in Which  |--------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |     Loss     |
| Losses Were |     Loss     |Participation |    Losses    |   Expenses   |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
| 1. Prior ...|            0 |    X X X X   |        9,021 |          398 |
| 2. 1984.....|            0 |          0.0 |        5,200 |          240 |
| 3. 1985.....|            0 |          0.0 |        7,512 |          391 |
| 4. 1986.....|            0 |          0.0 |       11,168 |        1,340 |
| 5. 1987.....|            0 |          0.0 |       13,899 |        2,126 |
| 6. 1988.....|            0 |          0.0 |       21,207 |        2,576 |
| 7. 1989.....|            0 |          0.0 |       44,151 |        6,215 |
| 8. 1990.....|            0 |          0.0 |       74,211 |       10,449 |
| 9. 1991.....|            0 |          0.0 |      117,006 |       18,139 |
|10. 1992.....|            0 |          0.0 |      201,342 |       24,209 |
|11. 1993.....|            0 |          0.0 |      284,364 |       21,345 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|            0 |    X X X X   |      789,082 |       87,428 |
 -------------------------------------------------------------------------
</TABLE>


<PAGE>

<PAGE>

Form 2

ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                (Name)


                SCHEDULE P - PART 1C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL

<TABLE>
<CAPTION>
                                                                                    (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                    Loss and Loss Expense P|
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|   in Which  |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |        1,480 |          545 |          168 |            2 |
| 2. 1984.....|     127,994 |      14,501 |     113,493 |      140,029 |       13,133 |       14,267 |          458 |
| 3. 1985.....|     221,827 |      39,207 |     182,619 |      174,080 |       27,186 |       19,879 |        1,350 |
| 4. 1986.....|     403,419 |      95,375 |     308,043 |      235,218 |       64,104 |       26,648 |          352 |
| 5. 1987.....|     508,426 |     139,851 |     368,576 |      302,656 |       94,173 |       32,236 |          584 |
| 6. 1988.....|     522,888 |     127,960 |     394,928 |      315,449 |       85,339 |       32,197 |          560 |
| 7. 1989.....|     523,927 |      96,218 |     427,708 |      320,264 |       49,869 |       29,787 |          445 |
| 8. 1990.....|     536,387 |      63,618 |     472,769 |      304,094 |       30,559 |       25,104 |          322 |
| 9. 1991.....|     586,500 |      59,306 |     527,195 |      227,339 |       20,584 |       16,409 |          378 |
|10. 1992.....|     546,403 |      49,741 |     496,661 |      132,493 |       11,527 |        6,338 |          181 |
|11. 1993.....|     533,280 |      38,265 |     495,015 |       57,472 |        1,879 |        1,581 |           10 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    2,210,574 |      398,898 |      204,613 |        4,640 |
 -------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.

<PAGE>

<PAGE>
                SCHEDULE P - PART 1C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------
|      1      ayments                                      |              |
|             ---------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|   in Which  |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
|             |              |              |              |              |
| 1. Prior ...|          846 |           15 |        1,114 |    X X X X   |
| 2. 1984.....|        2,764 |        6,304 |      147,009 |       61,813 |
| 3. 1985.....|        2,256 |        7,460 |      172,882 |       75,705 |
| 4. 1986.....|        1,684 |        8,895 |      206,306 |       94,664 |
| 5. 1987.....|        1,961 |       11,346 |      251,481 |      106,320 |
| 6. 1988.....|        2,978 |       11,986 |      273,733 |      106,884 |
| 7. 1989.....|        2,491 |       12,871 |      312,609 |      104,752 |
| 8. 1990.....|        2,936 |       12,735 |      311,053 |       96,764 |
| 9. 1991.....|        2,793 |       13,024 |      235,810 |       87,109 |
|10. 1992.....|        1,502 |       12,908 |      140,031 |       71,105 |
|11. 1993.....|          882 |       14,798 |       71,963 |       58,630 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|       23,094 |      112,342 |    2,123,991 |    X X X X   |
 -------------------------------------------------------------------------


<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |               Allocated Loss Expenses Unpai|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|   in Which  |          Case Basis       |          Bulk + IBNR       |          Case Basis         |          Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|      12,817 |           0 |       7,583 |          205 |            0 |            0 |          938 |
| 2. 1984.....|      11,625 |          17 |       3,743 |            2 |            0 |            0 |          795 |
| 3. 1985.....|      13,121 |         313 |       5,483 |            9 |            0 |            0 |        2,193 |
| 4. 1986.....|      28,039 |         920 |      14,732 |            8 |            0 |            0 |        4,206 |
| 5. 1987.....|      37,098 |       2,011 |       6,918 |          107 |            0 |            0 |        6,288 |
| 6. 1988.....|      57,680 |       3,837 |      12,005 |          612 |            0 |            0 |        7,252 |
| 7. 1989.....|      63,788 |       7,303 |      16,415 |          198 |            0 |            0 |       14,395 |
| 8. 1990.....|      80,321 |       5,963 |      49,780 |        2,166 |            0 |            0 |       24,532 |
| 9. 1991.....|     101,928 |      13,708 |     133,834 |        2,785 |            0 |            0 |       28,621 |
|10. 1992.....|     118,303 |       7,054 |     205,816 |       13,403 |            0 |            0 |       39,350 |
|11. 1993.....|      82,696 |       5,289 |     278,947 |       19,630 |            0 |            0 |       39,224 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|     607,417 |      46,416 |     735,256 |       39,125 |            0 |            0 |      167,794 |
 -------------------------------------------------------------------------------------------------------------------

<PAGE>

<PAGE>
                SCHEDULE P - PART 1C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL - (CONTINUED)
<CAPTION>
 ---------------------------------------------------------------------------------------
|             d              |              |              |              |             |
|    Years    ---------------|      21      |      22      |      23      |     24      |
|   in Which   + IBNR        |              |              |              |  Number of  |
|Premiums Were---------------|   Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |     and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              | Subrogation  |   Expenses   | and Expenses | Direct and  |
|   Incurred  |    Ceded     | Anticipated  |    Unpaid    |    Unpaid    |   Assumed   |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S>           <C>            <C>            <C>            <C>            <C>           |
|             |              |              |              |              |             |
|             |              |              |              |              |             |
| 1. Prior ...|            0 |           12 |          108 |       21,241 |          67 |
| 2. 1984.....|            0 |           19 |           22 |       16,166 |          39 |
| 3. 1985.....|            0 |           40 |           42 |       20,517 |          81 |
| 4. 1986.....|            0 |           16 |          114 |       46,163 |         188 |
| 5. 1987.....|            0 |           17 |          692 |       48,877 |         283 |
| 6. 1988.....|            0 |          213 |          821 |       73,309 |         474 |
| 7. 1989.....|            2 |          366 |          982 |       88,078 |         852 |
| 8. 1990.....|            6 |          715 |          873 |      147,371 |       1,497 |
| 9. 1991.....|            2 |        1,354 |        1,253 |      249,140 |       2,577 |
|10. 1992.....|          442 |        1,959 |        1,229 |      343,799 |       4,542 |
|11. 1993.....|          632 |        1,933 |        2,405 |      377,721 |      12,532 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..|        1,084 |        6,645 |        8,541 |    1,432,383 |      23,132 |
 ---------------------------------------------------------------------------------------


<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |             Total Losses and            |       Loss and Loss Expense Percentage     |      Discount|
|    Years    |           Loss Expenses Incurred        |          (Incurred/Premiums Earned)        |       Value o|
|   in Which  |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |      31      |
|  Earned and |             |             |             |              |              |              |              |
| Losses Were |   Direct    |             |             |    Direct    |              |              |              |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
| 2. 1984.....|     176,785 |      13,610 |     163,175 |        138.1 |         93.9 |        143.8 |            0 |
| 3. 1985.....|     222,258 |      28,858 |     193,400 |        100.2 |         73.6 |        105.9 |            0 |
| 4. 1986.....|     317,852 |      65,384 |     252,468 |         78.8 |         68.6 |         82.0 |            0 |
| 5. 1987.....|     397,234 |      96,875 |     300,359 |         78.1 |         69.3 |         81.5 |            0 |
| 6. 1988.....|     437,390 |      90,348 |     347,042 |         83.6 |         70.6 |         87.9 |            0 |
| 7. 1989.....|     458,502 |      57,817 |     400,685 |         87.5 |         60.1 |         93.7 |            0 |
| 8. 1990.....|     497,439 |      39,016 |     458,423 |         92.7 |         61.3 |         97.0 |            0 |
| 9. 1991.....|     522,408 |      37,457 |     484,951 |         89.1 |         63.2 |         92.0 |            0 |
|10. 1992.....|     516,437 |      32,607 |     483,830 |         94.5 |         65.6 |         97.4 |            0 |
|11. 1993.....|     477,123 |      27,440 |     449,683 |         89.5 |         71.7 |         90.8 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
 ------------- -----------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)

<PAGE>

<PAGE>
                SCHEDULE P - PART 1C - COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------
|              for Time      |              |   Net Balance Sheet Reserves|
|    Years    f Money        |      33      |         After Discount      |
|   in Which  ---------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |     Loss     |
| Losses Were |     Loss     |Participation |    Losses    |   Expenses   |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
| 1. Prior ...|            0 |    X X X X   |       20,195 |        1,046 |
| 2. 1984.....|            0 |          0.0 |       15,349 |          817 |
| 3. 1985.....|            0 |          0.0 |       18,282 |        2,235 |
| 4. 1986.....|            0 |          0.0 |       41,843 |        4,320 |
| 5. 1987.....|            0 |          0.0 |       41,897 |        6,980 |
| 6. 1988.....|            0 |          0.0 |       65,236 |        8,073 |
| 7. 1989.....|            0 |          0.0 |       72,703 |       15,375 |
| 8. 1990.....|            0 |          0.0 |      121,972 |       25,399 |
| 9. 1991.....|            0 |          0.0 |      219,268 |       29,872 |
|10. 1992.....|            0 |          0.0 |      303,662 |       40,137 |
|11. 1993.....|            0 |          0.0 |      336,724 |       40,997 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|            0 |    X X X X   |    1,257,132 |      175,251 |
 -------------------------------------------------------------------------
</TABLE>


<PAGE>

<PAGE>
Form 2

ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                 (Name)
      
                    SCHEDULE P - PART 1D - WORKERS' COMPENSATION

<TABLE>
<CAPTION>
                                                                                    (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                    Loss and Loss Expense P|
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|   in Which  |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |       33,952 |        6,477 |        2,121 |           59 |
| 2. 1984.....|     473,454 |      39,695 |     433,759 |      378,596 |       35,564 |       19,082 |          220 |
| 3. 1985.....|     583,337 |      68,397 |     514,940 |      488,588 |       47,864 |       26,243 |          255 |
| 4. 1986.....|     965,342 |      95,101 |     870,241 |      664,932 |       85,094 |       33,922 |          131 |
| 5. 1987.....|   1,162,512 |     134,836 |   1,027,676 |      863,310 |      129,824 |       40,789 |          100 |
| 6. 1988.....|   1,494,062 |     111,679 |   1,382,383 |    1,082,547 |       95,051 |       47,577 |          148 |
| 7. 1989.....|   1,619,759 |      57,453 |   1,562,305 |    1,255,153 |       21,747 |       50,842 |           92 |
| 8. 1990.....|   2,256,388 |      10,031 |   2,246,356 |    1,372,201 |        3,314 |       53,647 |          261 |
| 9. 1991.....|   2,446,769 |      22,557 |   2,424,211 |      994,629 |        5,282 |       41,754 |          205 |
|10. 1992.....|   2,158,130 |      17,929 |   2,140,202 |      588,501 |        5,804 |       21,306 |          136 |
|11. 1993.....|   1,856,803 |      20,230 |   1,836,573 |      169,561 |        2,574 |        5,764 |           44 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    7,891,970 |      438,594 |      343,048 |        1,651 |
 -------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.

<PAGE>

<PAGE>
                  SCHEDULE P - PART 1D - WORKERS' COMPENSATION - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------
|      1      ayments                                      |              |
|             ---------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|   in Which  |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
|             |              |              |              |              |
| 1. Prior ...|        4,734 |          790 |       30,327 |    X X X X   |
| 2. 1984.....|       10,528 |       34,300 |      396,194 |      205,359 |
| 3. 1985.....|       12,118 |       38,712 |      505,423 |      239,026 |
| 4. 1986.....|       13,853 |       48,914 |      662,543 |      287,916 |
| 5. 1987.....|       17,791 |       50,744 |      824,920 |      308,936 |
| 6. 1988.....|       18,539 |       60,774 |    1,095,699 |      338,690 |
| 7. 1989.....|       18,159 |       76,138 |    1,360,294 |      327,505 |
| 8. 1990.....|       14,729 |       80,813 |    1,503,085 |      341,219 |
| 9. 1991.....|        6,778 |       77,300 |    1,108,196 |      323,327 |
|10. 1992.....|        3,472 |       65,925 |      669,792 |      274,976 |
|11. 1993.....|          260 |       38,583 |      211,291 |      232,795 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|      120,960 |      572,993 |    8,367,764 |    X X X X   |
 -------------------------------------------------------------------------


<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |               Allocated Loss Expenses Unpai|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|   in Which  |          Case Basis       |          Bulk + IBNR       |          Case Basis         |          Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|     257,889 |      59,004 |      96,298 |        7,569 |            0 |            0 |        6,209 |
| 2. 1984.....|      40,203 |       7,538 |      15,641 |        1,515 |            0 |            0 |        1,305 |
| 3. 1985.....|      61,784 |       9,973 |      11,300 |        2,995 |            0 |            0 |        3,005 |
| 4. 1986.....|      88,231 |      12,382 |      14,675 |        4,702 |            0 |            0 |        6,536 |
| 5. 1987.....|     125,801 |      25,131 |      29,804 |        8,132 |            0 |            0 |       11,460 |
| 6. 1988.....|     183,936 |      17,165 |      52,024 |       11,734 |            0 |            0 |       13,538 |
| 7. 1989.....|     242,279 |       9,980 |      81,920 |        5,322 |            0 |            0 |       11,553 |
| 8. 1990.....|     343,648 |       7,777 |     158,609 |        6,987 |            0 |            0 |       21,295 |
| 9. 1991.....|     394,420 |       2,407 |     548,551 |       10,547 |            0 |            0 |       34,385 |
|10. 1992.....|     383,948 |       6,322 |     772,624 |       15,347 |            0 |            0 |       43,091 |
|11. 1993.....|     278,777 |       6,080 |     987,801 |       11,732 |            0 |            0 |       46,571 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   2,400,916 |     163,759 |   2,769,247 |       86,582 |            0 |            0 |      198,948 |
 -------------------------------------------------------------------------------------------------------------------

<PAGE>

<PAGE>
                  SCHEDULE P - PART 1D - WORKERS' COMPENSATION - (CONTINUED)
<CAPTION>
 ---------------------------------------------------------------------------------------
|             d              |              |              |              |             |
|    Years    ---------------|      21      |      22      |      23      |     24      |
|   in Which   + IBNR        |              |              |              |  Number of  |
|Premiums Were---------------|   Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |     and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              | Subrogation  |   Expenses   | and Expenses | Direct and  |
|   Incurred  |    Ceded     | Anticipated  |    Unpaid    |    Unpaid    |   Assumed   |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S>           <C>            <C>            <C>            <C>            <C>           |
|             |              |              |              |              |             |
|             |              |              |              |              |             |
| 1. Prior ...|          101 |       17,563 |        2,080 |      295,801 |       3,484 |
| 2. 1984.....|           37 |        3,071 |          456 |       48,515 |         532 |
| 3. 1985.....|          118 |        2,919 |          783 |       63,786 |         721 |
| 4. 1986.....|          544 |        4,373 |        1,196 |       93,010 |       1,227 |
| 5. 1987.....|        1,270 |        8,590 |        2,731 |      135,263 |       1,785 |
| 6. 1988.....|        1,477 |       13,953 |        2,587 |      221,709 |       2,911 |
| 7. 1989.....|          602 |       20,368 |        1,885 |      321,733 |       4,463 |
| 8. 1990.....|            2 |       32,978 |        2,699 |      511,484 |       8,396 |
| 9. 1991.....|          120 |       36,552 |        4,807 |      969,089 |      13,713 |
|10. 1992.....|          517 |       39,858 |        6,229 |    1,183,707 |      19,848 |
|11. 1993.....|          702 |       31,202 |        6,638 |    1,301,273 |      52,250 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..|        5,490 |      211,427 |       32,091 |    5,145,370 |     109,330 |
 ---------------------------------------------------------------------------------------

<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |             Total Losses and            |       Loss and Loss Expense Percentage     |      Discount|
|    Years    |           Loss Expenses Incurred        |          (Incurred/Premiums Earned)        |       Value o|
|   in Which  |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |      31      |
|  Earned and |             |             |             |              |              |              |              |
| Losses Were |   Direct    |             |             |    Direct    |              |              |              |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
| 2. 1984.....|     489,583 |      44,874 |     444,709 |        103.4 |        113.0 |        102.5 |            0 |
| 3. 1985.....|     630,415 |      61,205 |     569,210 |        108.1 |         89.5 |        110.5 |            0 |
| 4. 1986.....|     858,406 |     102,853 |     755,553 |         88.9 |        108.2 |         86.8 |            0 |
| 5. 1987.....|   1,124,639 |     164,457 |     960,182 |         96.7 |        122.0 |         93.4 |            0 |
| 6. 1988.....|   1,442,983 |     125,575 |   1,317,408 |         96.6 |        112.4 |         95.3 |            0 |
| 7. 1989.....|   1,719,770 |      37,743 |   1,682,027 |        106.2 |         65.7 |        107.7 |            0 |
| 8. 1990.....|   2,032,912 |      18,341 |   2,014,571 |         90.1 |        182.8 |         89.7 |            0 |
| 9. 1991.....|   2,095,846 |      18,561 |   2,077,285 |         85.7 |         82.3 |         85.7 |            0 |
|10. 1992.....|   1,881,624 |      28,126 |   1,853,498 |         87.2 |        156.9 |         86.6 |            0 |
|11. 1993.....|   1,533,695 |      21,132 |   1,512,563 |         82.6 |        104.5 |         82.4 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
 -------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)

<PAGE>

<PAGE>
                  SCHEDULE P - PART 1D - WORKERS' COMPENSATION - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------
|              for Time      |              |   Net Balance Sheet Reserves|
|    Years    f Money        |      33      |         After Discount      |
|   in Which  ---------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |     Loss     |
| Losses Were |     Loss     |Participation |    Losses    |   Expenses   |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
|             |              |              |              |              |
| 1. Prior ...|            0 |    X X X X   |      287,613 |        8,188 |
| 2. 1984.....|            0 |          0.0 |       46,791 |        1,724 |
| 3. 1985.....|            0 |          0.0 |       60,116 |        3,670 |
| 4. 1986.....|            0 |          0.0 |       85,822 |        7,188 |
| 5. 1987.....|            0 |          0.0 |      122,342 |       12,921 |
| 6. 1988.....|            0 |          0.0 |      207,061 |       14,648 |
| 7. 1989.....|            0 |          0.0 |      308,897 |       12,836 |
| 8. 1990.....|            0 |          0.0 |      487,492 |       23,992 |
| 9. 1991.....|            0 |          0.0 |      930,017 |       39,072 |
|10. 1992.....|            0 |          0.0 |    1,134,904 |       48,803 |
|11. 1993.....|            0 |          0.0 |    1,248,766 |       52,507 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|            0 |    X X X X   |    4,919,821 |      225,549 |
 -------------------------------------------------------------------------
</TABLE>


<PAGE>

<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                (Name)

                       SCHEDULE P - PART 1E - COMMERCIAL MULTIPLE PERIL

<TABLE>
<CAPTION>
                                                                                    (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                    Loss and Loss Expense P|
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|   in Which  |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |        2,404 |          (17)|        2,918 |           20 |
| 2. 1984.....|     201,916 |      22,558 |     179,359 |      148,520 |       10,703 |       26,885 |          272 |
| 3. 1985.....|     314,626 |      21,298 |     293,328 |      175,242 |        3,256 |       29,733 |          423 |
| 4. 1986.....|     457,243 |      18,707 |     438,536 |      152,394 |        2,495 |       34,703 |          112 |
| 5. 1987.....|     542,854 |      16,282 |     526,572 |      178,993 |        2,783 |       36,449 |          130 |
| 6. 1988.....|     596,503 |      15,753 |     580,749 |      203,137 |        2,338 |       41,358 |           84 |
| 7. 1989.....|     658,911 |      22,097 |     636,814 |      336,080 |       36,355 |       46,637 |        2,264 |
| 8. 1990.....|     721,512 |      23,907 |     697,605 |      275,050 |        4,825 |       42,268 |          247 |
| 9. 1991.....|     743,264 |      19,148 |     724,116 |      278,850 |        5,585 |       28,043 |          134 |
|10. 1992.....|     722,128 |      23,724 |     698,403 |      311,714 |       32,086 |       13,025 |          333 |
|11. 1993.....|     748,413 |      20,392 |     728,021 |      153,331 |       13,564 |        4,873 |          102 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    2,215,715 |      113,973 |      306,892 |        4,122 |
 -------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.
<CAPTION>
 -------------------------------------------------------------------------
|      1      ayments                                      |              |
|             ---------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|   in Which  |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
| 1. Prior ...|          111 |           98 |        5,418 |    X X X X   |
| 2. 1984.....|        5,112 |        3,685 |      168,115 |       54,182 |
| 3. 1985.....|        4,312 |        4,906 |      206,203 |       56,619 |
| 4. 1986.....|        6,695 |        6,667 |      191,158 |       52,291 |
| 5. 1987.....|        5,201 |       12,904 |      225,434 |       53,483 |
| 6. 1988.....|        5,306 |       16,205 |      258,278 |       63,468 |
| 7. 1989.....|        6,813 |       20,620 |      364,717 |       83,793 |
| 8. 1990.....|        6,318 |       20,147 |      332,393 |       91,441 |
| 9. 1991.....|        5,307 |       19,892 |      321,065 |       91,742 |
|10. 1992.....|        4,585 |       18,293 |      310,613 |       82,720 |
|11. 1993.....|        1,306 |       21,607 |      166,145 |       68,138 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|       51,067 |      145,025 |    2,549,537 |    X X X X   |
 -------------------------------------------------------------------------
<PAGE>

<PAGE>

                     SCHEDULE P - PART 1E - COMMERCIAL MULTIPLE PERIL - (CONTINUED)

<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |               Allocated Loss Expenses Unpai|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|   in Which  |          Case Basis       |          Bulk + IBNR       |          Case Basis         |          Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|      14,740 |         456 |       4,113 |          727 |            0 |            0 |        1,087 |
| 2. 1984.....|       9,681 |           0 |       2,185 |            0 |            0 |            0 |          419 |
| 3. 1985.....|       6,346 |           0 |       3,063 |            0 |            0 |            0 |          119 |
| 4. 1986.....|      11,185 |           0 |       3,911 |          384 |            0 |            0 |          616 |
| 5. 1987.....|      21,907 |           0 |       4,875 |          203 |            0 |            0 |        1,144 |
| 6. 1988.....|      30,062 |           0 |      14,202 |            0 |            0 |            0 |        3,704 |
| 7. 1989.....|      56,821 |           5 |      12,471 |            0 |            0 |            0 |        5,908 |
| 8. 1990.....|      76,102 |           0 |      33,052 |        1,130 |            0 |            0 |       18,721 |
| 9. 1991.....|      90,316 |          11 |      60,486 |        1,356 |            0 |            0 |       42,519 |
|10. 1992.....|      87,703 |       1,026 |     137,123 |       18,310 |            0 |            0 |       60,323 |
|11. 1993.....|      90,287 |       1,414 |     288,012 |        7,961 |            0 |            0 |       74,056 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|     495,150 |       2,912 |     563,493 |       30,071 |            0 |            0 |      208,616 |
 -------------------------------------------------------------------------------------------------------------------

<CAPTION>
 ---------------------------------------------------------------------------------------
|             d              |              |              |              |             |
|    Years    ---------------|      21      |      22      |      23      |     24      |
|   in Which   + IBNR        |              |              |              |  Number of  |
|Premiums Were---------------|   Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |     and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              | Subrogation  |   Expenses   | and Expenses | Direct and  |
|   Incurred  |    Ceded     | Anticipated  |    Unpaid    |    Unpaid    |   Assumed   |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S>           <C>            <C>            <C>            <C>            <C>           |
|             |              |              |              |              |             |
|             |              |              |              |              |             |
| 1. Prior ...|          133 |          356 |          236 |       18,859 |       1,702 |
| 2. 1984.....|            0 |          236 |          278 |       12,563 |         110 |
| 3. 1985.....|            0 |          199 |          125 |        9,653 |         113 |
| 4. 1986.....|           10 |          411 |          170 |       15,488 |         286 |
| 5. 1987.....|            8 |          596 |          293 |       28,008 |         423 |
| 6. 1988.....|            0 |        1,131 |          267 |       48,235 |         638 |
| 7. 1989.....|            0 |        2,520 |          489 |       75,684 |       1,309 |
| 8. 1990.....|           23 |        3,619 |          772 |      127,494 |       2,271 |
| 9. 1991.....|           40 |        4,917 |        1,035 |      192,949 |       3,477 |
|10. 1992.....|          577 |        8,034 |        1,674 |      266,910 |       4,749 |
|11. 1993.....|          290 |       11,592 |        1,962 |      444,652 |      12,271 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..|        1,081 |       33,611 |        7,301 |    1,240,496 |      27,349 |
 ---------------------------------------------------------------------------------------

<PAGE>

<PAGE>
                     SCHEDULE P - PART 1E - COMMERCIAL MULTIPLE PERIL - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |             Total Losses and            |       Loss and Loss Expense Percentage     |      Discount|
|    Years    |           Loss Expenses Incurred        |          (Incurred/Premiums Earned)        |       Value o|
|   in Which  |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |      31      |
|  Earned and |             |             |             |              |              |              |              |
| Losses Were |   Direct    |             |             |    Direct    |              |              |              |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
| 2. 1984.....|     191,653 |      10,975 |     180,678 |         94.9 |         48.7 |        100.7 |            0 |
| 3. 1985.....|     219,534 |       3,679 |     215,855 |         69.8 |         17.3 |         73.6 |            0 |
| 4. 1986.....|     209,646 |       3,001 |     206,645 |         45.9 |         16.0 |         47.1 |            0 |
| 5. 1987.....|     256,565 |       3,124 |     253,441 |         47.3 |         19.2 |         48.1 |            0 |
| 6. 1988.....|     308,935 |       2,422 |     306,513 |         51.8 |         15.4 |         52.8 |            0 |
| 7. 1989.....|     479,026 |      38,624 |     440,402 |         72.7 |        174.8 |         69.2 |            0 |
| 8. 1990.....|     466,112 |       6,225 |     459,887 |         64.6 |         26.0 |         65.9 |            0 |
| 9. 1991.....|     521,141 |       7,126 |     514,015 |         70.1 |         37.2 |         71.0 |            0 |
|10. 1992.....|     629,855 |      52,332 |     577,523 |         87.2 |        220.6 |         82.7 |            0 |
|11. 1993.....|     634,128 |      23,331 |     610,797 |         84.7 |        114.4 |         83.9 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
 -------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)

<CAPTION>
 -------------------------------------------------------------------------
|              for Time      |              |   Net Balance Sheet Reserves|
|    Years    f Money        |      33      |         After Discount      |
|   in Which  ---------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |     Loss     |
| Losses Were |     Loss     |Participation |    Losses    |   Expenses   |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
|             |              |              |              |              |
| 1. Prior ...|            0 |    X X X X   |       17,669 |        1,190 |
| 2. 1984.....|            0 |          0.0 |       11,866 |          697 |
| 3. 1985.....|            0 |          0.0 |        9,409 |          244 |
| 4. 1986.....|            0 |          0.0 |       14,712 |          776 |
| 5. 1987.....|            0 |          0.0 |       26,579 |        1,429 |
| 6. 1988.....|            0 |          0.0 |       44,264 |        3,971 |
| 7. 1989.....|            0 |          0.0 |       69,287 |        6,397 |
| 8. 1990.....|            0 |          0.0 |      108,024 |       19,470 |
| 9. 1991.....|            0 |          0.0 |      149,435 |       43,514 |
|10. 1992.....|            0 |          0.0 |      205,490 |       61,420 |
|11. 1993.....|            0 |          0.0 |      368,924 |       75,728 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|            0 |    X X X X   |    1,025,660 |      214,836 |
 -------------------------------------------------------------------------

<PAGE>

<PAGE>
Form 2

ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                  (Name)

          SCHEDULE P - PART 1F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE

</TABLE>


<TABLE>
<CAPTION>
                                                                                    (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                    Loss and Loss Expense P|
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|   in Which  |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |       17,785 |        5,221 |        1,584 |          197 |
| 2. 1984.....|      99,848 |      13,442 |      86,406 |       84,607 |        7,947 |       40,063 |          546 |
| 3. 1985.....|     142,103 |      19,829 |     122,274 |       67,197 |        2,812 |       30,618 |          (14)|
| 4. 1986.....|     195,700 |      18,078 |     177,622 |       68,577 |        2,390 |       26,884 |          309 |
| 5. 1987.....|     151,511 |      10,257 |     141,254 |       24,433 |        3,038 |       11,721 |          373 |
| 6. 1988.....|      47,559 |      10,725 |      36,834 |        4,769 |        2,047 |        5,094 |          765 |
| 7. 1989.....|      24,074 |      10,451 |      13,624 |        4,748 |        5,095 |        4,086 |        1,174 |
| 8. 1990.....|      38,788 |      10,291 |      28,497 |        6,784 |        1,007 |        2,366 |          479 |
| 9. 1991.....|      37,194 |      11,325 |      25,869 |        1,936 |        1,476 |        1,202 |          210 |
|10. 1992.....|      34,442 |      13,049 |      21,393 |          734 |           53 |          219 |           49 |
|11. 1993.....|      40,982 |      21,238 |      19,744 |           32 |            1 |           12 |            3 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |      281,603 |       31,088 |      123,848 |        4,091 |
 -------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.
<CAPTION>
 -------------------------------------------------------------------------
|      1      ayments                                      |              |
|             ---------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|   in Which  |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
| 1. Prior ...|          (56)|          185 |       14,136 |    X X X X   |
| 2. 1984.....|       11,145 |        3,386 |      119,562 |        7,291 |
| 3. 1985.....|        4,046 |        2,920 |       97,937 |        6,811 |
| 4. 1986.....|        1,650 |        2,848 |       95,610 |        5,707 |
| 5. 1987.....|          517 |        1,477 |       34,221 |        3,308 |
| 6. 1988.....|          168 |        1,835 |        8,885 |        1,608 |
| 7. 1989.....|           23 |          697 |        3,262 |        1,640 |
| 8. 1990.....|           32 |          545 |        8,210 |        1,867 |
| 9. 1991.....|           10 |          445 |        1,897 |        1,230 |
|10. 1992.....|            0 |          488 |        1,339 |          797 |
|11. 1993.....|            0 |        1,377 |        1,416 |          280 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|       17,534 |       16,203 |      386,475 |    X X X X   |
 -------------------------------------------------------------------------
<PAGE>

<PAGE>
             SCHEDULE P - PART 1F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE - (CONTINUED)

<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |               Allocated Loss Expenses Unpai|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|   in Which  |          Case Basis       |          Bulk + IBNR       |          Case Basis         |          Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|      52,968 |       8,738 |      49,471 |       24,286 |            0 |            0 |        8,200 |
| 2. 1984.....|      25,213 |       1,802 |      11,474 |        3,029 |            0 |            0 |        5,406 |
| 3. 1985.....|      16,319 |           0 |      12,843 |        1,771 |            0 |            0 |        5,959 |
| 4. 1986.....|      17,472 |           0 |      20,806 |        3,730 |            0 |            0 |        5,787 |
| 5. 1987.....|      14,943 |       1,940 |      13,687 |        1,046 |            0 |            0 |        5,840 |
| 6. 1988.....|       9,078 |       1,228 |      31,612 |          808 |            0 |            0 |        2,948 |
| 7. 1989.....|       7,956 |       1,623 |      14,180 |          348 |            0 |            0 |        3,539 |
| 8. 1990.....|       9,837 |       2,067 |      28,619 |        3,879 |            0 |            0 |        4,832 |
| 9. 1991.....|      12,493 |       1,736 |      18,168 |        5,771 |            0 |            0 |        5,357 |
|10. 1992.....|       6,079 |         469 |      31,856 |       12,547 |            0 |            0 |        6,862 |
|11. 1993.....|       1,036 |         202 |      31,975 |       11,406 |            0 |            0 |        6,674 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|     173,392 |      19,806 |     264,691 |       68,621 |            0 |            0 |       61,404 |
 -------------------------------------------------------------------------------------------------------------------
<CAPTION>
 ---------------------------------------------------------------------------------------
|             d              |              |              |              |             |
|    Years    ---------------|      21      |      22      |      23      |     24      |
|   in Which   + IBNR        |              |              |              |  Number of  |
|Premiums Were---------------|   Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |     and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              | Subrogation  |   Expenses   | and Expenses | Direct and  |
|   Incurred  |    Ceded     | Anticipated  |    Unpaid    |    Unpaid    |   Assumed   |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S>           <C>            <C>            <C>            <C>            <C>           |
|             |              |              |              |              |             |
|             |              |              |              |              |             |
| 1. Prior ...|        1,447 |        1,928 |          651 |       76,819 |         187 |
| 2. 1984.....|          109 |        1,021 |          336 |       37,489 |         248 |
| 3. 1985.....|          336 |        2,395 |          358 |       33,372 |         158 |
| 4. 1986.....|          475 |        1,481 |          476 |       40,336 |         185 |
| 5. 1987.....|          313 |          768 |          320 |       31,492 |         141 |
| 6. 1988.....|          661 |          811 |          159 |       41,099 |         117 |
| 7. 1989.....|        1,313 |        1,510 |          123 |       22,514 |         149 |
| 8. 1990.....|        1,784 |        1,009 |          199 |       35,757 |         228 |
| 9. 1991.....|        2,546 |          886 |          254 |       26,220 |         317 |
|10. 1992.....|        2,178 |          677 |          336 |       29,939 |         213 |
|11. 1993.....|        2,783 |          525 |          275 |       25,568 |         101 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..|       13,945 |       13,012 |        3,487 |      400,603 |       2,044 |
 ---------------------------------------------------------------------------------------

<PAGE>

<PAGE>
             SCHEDULE P - PART 1F - SECTION 1 - MEDICAL MALPRACTICE - OCCURRENCE - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |             Total Losses and            |       Loss and Loss Expense Percentage     |      Discount|
|    Years    |           Loss Expenses Incurred        |          (Incurred/Premiums Earned)        |       Value o|
|   in Which  |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |      31      |
|  Earned and |             |             |             |              |              |              |              |
| Losses Were |   Direct    |             |             |    Direct    |              |              |              |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
| 2. 1984.....|     170,485 |      13,433 |     157,052 |        170.7 |         99.9 |        181.8 |            0 |
| 3. 1985.....|     136,214 |       4,905 |     131,309 |         95.9 |         24.7 |        107.4 |            0 |
| 4. 1986.....|     142,850 |       6,904 |     135,946 |         73.0 |         38.2 |         76.5 |            0 |
| 5. 1987.....|      72,421 |       6,710 |      65,711 |         47.8 |         65.4 |         46.5 |            0 |
| 6. 1988.....|      55,495 |       5,509 |      49,986 |        116.7 |         51.4 |        135.7 |            0 |
| 7. 1989.....|      35,329 |       9,553 |      25,776 |        146.8 |         91.4 |        189.2 |            0 |
| 8. 1990.....|      53,182 |       9,216 |      43,966 |        137.1 |         89.6 |        154.3 |            0 |
| 9. 1991.....|      39,855 |      11,739 |      28,116 |        107.2 |        103.7 |        108.7 |            0 |
|10. 1992.....|      46,574 |      15,296 |      31,278 |        135.2 |        117.2 |        146.2 |            0 |
|11. 1993.....|      41,381 |      14,395 |      26,986 |        101.0 |         67.8 |        136.7 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
 -------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)
<CAPTION>
 -------------------------------------------------------------------------
|              for Time      |              |   Net Balance Sheet Reserves|
|    Years    f Money        |      33      |         After Discount      |
|   in Which  ---------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |     Loss     |
| Losses Were |     Loss     |Participation |    Losses    |   Expenses   |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
| 1. Prior ...|            0 |    X X X X   |       69,415 |        7,404 |
| 2. 1984.....|            0 |          0.0 |       31,856 |        5,633 |
| 3. 1985.....|            0 |          0.0 |       27,391 |        5,981 |
| 4. 1986.....|            0 |          0.0 |       34,548 |        5,788 |
| 5. 1987.....|            0 |          0.0 |       25,645 |        5,847 |
| 6. 1988.....|            0 |          0.0 |       38,653 |        2,446 |
| 7. 1989.....|            0 |          0.0 |       20,165 |        2,349 |
| 8. 1990.....|            0 |          0.0 |       32,510 |        3,247 |
| 9. 1991.....|            0 |          0.0 |       23,155 |        3,065 |
|10. 1992.....|            0 |          0.0 |       24,919 |        5,020 |
|11. 1993.....|            0 |          0.0 |       21,402 |        4,166 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|            0 |    X X X X   |      349,657 |       50,946 |
 -------------------------------------------------------------------------
</TABLE>


<PAGE>

<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                 (Name)

         SCHEDULE P - PART 1F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE

<TABLE>
<CAPTION>
                                                                                    (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                    Loss and Loss Expense P|
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|   in Which  |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |            0 |            0 |            0 |            0 |
| 2. 1984.....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 3. 1985.....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 4. 1986.....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 5. 1987.....|      77,440 |       9,388 |      68,052 |       32,077 |          435 |        8,233 |           34 |
| 6. 1988.....|     193,675 |      17,218 |     176,457 |       35,759 |        5,356 |       16,379 |          504 |
| 7. 1989.....|     238,793 |      20,745 |     218,048 |       55,482 |        5,212 |       22,194 |          583 |
| 8. 1990.....|     243,443 |      19,349 |     224,094 |       51,627 |        3,507 |       22,239 |          337 |
| 9. 1991.....|     213,034 |      17,383 |     195,652 |       44,859 |          672 |       16,135 |           92 |
|10. 1992.....|     206,764 |      17,799 |     188,965 |       26,852 |          146 |        8,788 |           47 |
|11. 1993.....|     221,483 |      16,867 |     204,616 |        5,937 |        1,305 |        1,126 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |      252,593 |       16,632 |       95,094 |        1,598 |
 -------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.
<CAPTION>
 -------------------------------------------------------------------------
|      1      ayments                                      |              |
|             ---------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|   in Which  |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
| 1. Prior ...|            0 |            0 |            0 |    X X X X   |
| 2. 1984.....|            0 |            0 |            0 |            0 |
| 3. 1985.....|            0 |            0 |            0 |            0 |
| 4. 1986.....|            0 |            0 |            0 |            0 |
| 5. 1987.....|          135 |        2,309 |       42,150 |        1,222 |
| 6. 1988.....|          368 |        2,810 |       49,088 |        3,057 |
| 7. 1989.....|          761 |        4,453 |       76,334 |        4,229 |
| 8. 1990.....|          312 |        4,811 |       74,832 |        4,621 |
| 9. 1991.....|          171 |        4,275 |       64,506 |        4,981 |
|10. 1992.....|          196 |        3,844 |       39,291 |        6,020 |
|11. 1993.....|           27 |        2,889 |        8,647 |        5,558 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|        1,969 |       25,390 |      354,848 |    X X X X   |
 -------------------------------------------------------------------------
<PAGE>

<PAGE>
     SCHEDULE P - PART 1F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |               Allocated Loss Expenses Unpai|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|   in Which  |          Case Basis       |          Bulk + IBNR       |          Case Basis         |          Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 2. 1984.....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 3. 1985.....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 4. 1986.....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 5. 1987.....|       5,053 |       2,336 |       5,941 |          386 |            0 |            0 |        1,480 |
| 6. 1988.....|      22,286 |         923 |      10,711 |        2,672 |            0 |            0 |        5,679 |
| 7. 1989.....|      38,306 |         234 |      19,137 |        4,321 |            0 |            0 |        9,047 |
| 8. 1990.....|      39,912 |         261 |      27,456 |        9,000 |            0 |            0 |       18,532 |
| 9. 1991.....|      50,550 |       1,108 |      47,466 |       10,463 |            0 |            0 |       24,492 |
|10. 1992.....|      60,028 |       1,007 |      61,557 |       12,191 |            0 |            0 |       33,160 |
|11. 1993.....|      34,981 |          44 |     143,479 |       11,034 |            0 |            0 |       43,330 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|     251,116 |       5,913 |     315,747 |       50,067 |            0 |            0 |      135,720 |
 -------------------------------------------------------------------------------------------------------------------
<CAPTION>
 ---------------------------------------------------------------------------------------
|             d              |              |              |              |             |
|    Years    ---------------|      21      |      22      |      23      |     24      |
|   in Which   + IBNR        |              |              |              |  Number of  |
|Premiums Were---------------|   Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |     and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              | Subrogation  |   Expenses   | and Expenses | Direct and  |
|   Incurred  |    Ceded     | Anticipated  |    Unpaid    |    Unpaid    |   Assumed   |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S>           <C>            <C>            <C>            <C>            <C>           |
|             |              |              |              |              |             |
|             |              |              |              |              |             |
| 1. Prior ...|            0 |            0 |            0 |            0 |           0 |
| 2. 1984.....|            0 |            0 |            0 |            0 |           0 |
| 3. 1985.....|            0 |            0 |            0 |            0 |           0 |
| 4. 1986.....|            0 |            0 |            0 |            0 |           0 |
| 5. 1987.....|          109 |          180 |          122 |        9,765 |          15 |
| 6. 1988.....|          752 |          221 |          294 |       34,623 |          67 |
| 7. 1989.....|          811 |        1,191 |          594 |       61,718 |         151 |
| 8. 1990.....|        2,191 |          840 |          832 |       75,279 |         320 |
| 9. 1991.....|        2,560 |        2,664 |        1,528 |      109,905 |         658 |
|10. 1992.....|        2,108 |        2,841 |        2,106 |      141,545 |       1,313 |
|11. 1993.....|        2,916 |        3,932 |        3,099 |      210,896 |       2,882 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..|       11,447 |       11,870 |        8,575 |      643,731 |       5,406 |
 ---------------------------------------------------------------------------------------

<PAGE>

<PAGE>

     SCHEDULE P - PART 1F - SECTION 2 - MEDICAL MALPRACTICE - CLAIMS-MADE - (CONTINUED)


<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |             Total Losses and            |       Loss and Loss Expense Percentage     |      Discount|
|    Years    |           Loss Expenses Incurred        |          (Incurred/Premiums Earned)        |       Value o|
|   in Which  |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |      31      |
|  Earned and |             |             |             |              |              |              |              |
| Losses Were |   Direct    |             |             |    Direct    |              |              |              |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
| 2. 1984.....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
| 3. 1985.....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
| 4. 1986.....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
| 5. 1987.....|      55,215 |       3,300 |      51,915 |         71.3 |         35.2 |         76.3 |            0 |
| 6. 1988.....|      93,918 |      10,207 |      83,711 |         48.5 |         59.3 |         47.4 |            0 |
| 7. 1989.....|     149,213 |      11,161 |     138,052 |         62.5 |         53.8 |         63.3 |            0 |
| 8. 1990.....|     165,409 |      15,296 |     150,113 |         67.9 |         79.1 |         67.0 |            0 |
| 9. 1991.....|     189,305 |      14,895 |     174,410 |         88.9 |         85.7 |         89.1 |            0 |
|10. 1992.....|     196,335 |      15,499 |     180,836 |         95.0 |         87.1 |         95.7 |            0 |
|11. 1993.....|     234,841 |      15,299 |     219,542 |        106.0 |         90.7 |        107.3 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
 -------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)

<CAPTION>
 -------------------------------------------------------------------------
|              for Time      |              |   Net Balance Sheet Reserves|
|    Years    f Money        |      33      |         After Discount      |
|   in Which  ---------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |     Loss     |
| Losses Were |     Loss     |Participation |    Losses    |   Expenses   |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            | 
|             |              |              |              |              |
|             |              |              |              |              |
| 1. Prior ...|            0 |    X X X X   |            0 |            0 |
| 2. 1984.....|            0 |          0.0 |            0 |            0 |
| 3. 1985.....|            0 |          0.0 |            0 |            0 |
| 4. 1986.....|            0 |          0.0 |            0 |            0 |
| 5. 1987.....|            0 |          0.0 |        8,272 |        1,493 |
| 6. 1988.....|            0 |          0.0 |       29,402 |        5,221 |
| 7. 1989.....|            0 |          0.0 |       52,888 |        8,830 |
| 8. 1990.....|            0 |          0.0 |       58,106 |       17,173 |
| 9. 1991.....|            0 |          0.0 |       86,445 |       23,460 |
|10. 1992.....|            0 |          0.0 |      108,387 |       33,158 |
|11. 1993.....|            0 |          0.0 |      167,383 |       43,513 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|            0 |    X X X X   |      510,883 |      132,848 |
 -------------------------------------------------------------------------
</TABLE>


<PAGE>

<PAGE>
Form 2

ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                  (Name)


 SCHEDULE P - PART 1G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT (ALL PERILS),
                                   BOILER AND MACHINERY)

<TABLE>
<CAPTION>
                                                                                    (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                    Loss and Loss Expense P|
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|   in Which  |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |          643 |           38 |           56 |           33 |
| 2. 1984.....|      32,014 |      20,126 |      11,888 |       13,379 |        6,644 |        1,194 |          801 |
| 3. 1985.....|      29,949 |      20,650 |       9,299 |       13,055 |        9,351 |        1,468 |          809 |
| 4. 1986.....|      46,208 |      29,411 |      16,797 |       20,797 |        9,784 |        1,536 |          917 |
| 5. 1987.....|      59,993 |      33,400 |      26,592 |       17,561 |        9,758 |        1,649 |        1,082 |
| 6. 1988.....|      46,236 |      25,138 |      21,097 |       11,555 |        2,925 |        3,191 |        2,456 |
| 7. 1989.....|      37,990 |      19,020 |      18,970 |       27,917 |       17,353 |        2,456 |        1,653 |
| 8. 1990.....|      25,046 |      15,403 |       9,643 |       25,067 |       14,267 |        2,568 |        1,903 |
| 9. 1991.....|      28,231 |      12,396 |      15,835 |       26,311 |       16,578 |        2,013 |        1,468 |
|10. 1992.....|      29,224 |      13,155 |      16,069 |       19,535 |       12,098 |        1,301 |          986 |
|11. 1993.....|      38,887 |      18,715 |      20,173 |       11,826 |        8,381 |          483 |          351 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |      187,647 |      107,177 |       17,915 |       12,458 |
 -------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.

<PAGE>

<PAGE>
        SCHEDULE P - PART 1G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT (ALL PERILS),
                                 BOILER AND MACHINERY) - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------
|      1      ayments                                      |              |
|             ---------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|   in Which  |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
|             |              |              |              |              |
| 1. Prior ...|            0 |            0 |          628 |    X X X X   |
| 2. 1984.....|           38 |          194 |        7,323 |            0 |
| 3. 1985.....|           71 |           91 |        4,455 |            0 |
| 4. 1986.....|           59 |          136 |       11,768 |            0 |
| 5. 1987.....|           36 |          222 |        8,592 |            0 |
| 6. 1988.....|           52 |          157 |        9,521 |            0 |
| 7. 1989.....|           80 |          165 |       11,532 |            0 |
| 8. 1990.....|          129 |          170 |       11,635 |            0 |
| 9. 1991.....|           91 |          192 |       10,470 |            0 |
|10. 1992.....|          100 |          229 |        7,982 |            0 |
|11. 1993.....|           16 |          292 |        3,869 |            0 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|          671 |        1,848 |       87,776 |    X X X X   |
 -------------------------------------------------------------------------

<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |               Allocated Loss Expenses Unpai|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|   in Which  |          Case Basis       |          Bulk + IBNR       |          Case Basis         |          Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|       1,697 |       1,266 |          66 |           66 |            0 |            0 |            0 |
| 2. 1984.....|          34 |          15 |         333 |          333 |            0 |            0 |            0 |
| 3. 1985.....|         241 |         132 |         701 |          701 |            0 |            0 |            0 |
| 4. 1986.....|         164 |          78 |       2,075 |        2,075 |            0 |            0 |            1 |
| 5. 1987.....|         491 |         293 |       3,686 |        3,686 |            0 |            0 |            6 |
| 6. 1988.....|       1,916 |         272 |      13,785 |       13,501 |            0 |            0 |            9 |
| 7. 1989.....|       1,962 |         927 |       4,104 |        3,787 |            0 |            0 |           57 |
| 8. 1990.....|       4,355 |       2,706 |       7,063 |        6,541 |            0 |            0 |            9 |
| 9. 1991.....|       1,882 |         811 |      11,298 |       10,845 |            0 |            0 |          178 |
|10. 1992.....|       4,099 |       1,424 |       4,966 |        3,649 |            0 |            0 |          844 |
|11. 1993.....|       8,221 |       6,500 |      15,240 |        7,428 |            0 |            0 |        2,278 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|      25,062 |      14,424 |      63,317 |       52,612 |            0 |            0 |        3,382 |
 -------------------------------------------------------------------------------------------------------------------

<PAGE>

<PAGE>
        SCHEDULE P - PART 1G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT (ALL PERILS),
                                 BOILER AND MACHINERY) - (CONTINUED)

<CAPTION>
 ---------------------------------------------------------------------------------------
|             d              |              |              |              |             |
|    Years    ---------------|      21      |      22      |      23      |     24      |
|   in Which   + IBNR        |              |              |              |  Number of  |
|Premiums Were---------------|   Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |     and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              | Subrogation  |   Expenses   | and Expenses | Direct and  |
|   Incurred  |    Ceded     | Anticipated  |    Unpaid    |    Unpaid    |   Assumed   |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S>           <C>            <C>            <C>            <C>            <C>           |
|             |              |              |              |              |             |
|             |              |              |              |              |             |
| 1. Prior ...|            0 |            1 |            0 |          431 |          55 |
| 2. 1984.....|            0 |            0 |            0 |           18 |          12 |
| 3. 1985.....|            0 |            0 |            0 |          109 |          19 |
| 4. 1986.....|            0 |            0 |            0 |           87 |          19 |
| 5. 1987.....|            0 |            0 |            0 |          204 |          21 |
| 6. 1988.....|            0 |            1 |            0 |        1,937 |          59 |
| 7. 1989.....|            0 |            3 |            0 |        1,409 |          87 |
| 8. 1990.....|            0 |           10 |            8 |        2,188 |         109 |
| 9. 1991.....|            0 |           27 |            0 |        1,702 |          86 |
|10. 1992.....|          186 |           33 |            5 |        4,655 |         137 |
|11. 1993.....|        1,373 |          134 |           34 |       10,472 |         175 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..|        1,559 |          209 |           47 |       23,214 |         779 |
 ---------------------------------------------------------------------------------------


<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |             Total Losses and            |       Loss and Loss Expense Percentage     |      Discount|
|    Years    |           Loss Expenses Incurred        |          (Incurred/Premiums Earned)        |       Value o|
|   in Which  |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |      31      |
|  Earned and |             |             |             |              |              |              |              |
| Losses Were |   Direct    |             |             |    Direct    |              |              |              |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
| 2. 1984.....|      15,134 |       7,793 |       7,341 |         47.3 |         38.7 |         61.8 |            0 |
| 3. 1985.....|      15,556 |      10,993 |       4,563 |         51.9 |         53.2 |         49.1 |            0 |
| 4. 1986.....|      24,709 |      12,854 |      11,855 |         53.5 |         43.7 |         70.6 |            0 |
| 5. 1987.....|      23,615 |      14,819 |       8,796 |         39.4 |         44.4 |         33.1 |            0 |
| 6. 1988.....|      30,613 |      19,154 |      11,459 |         66.2 |         76.2 |         54.3 |            0 |
| 7. 1989.....|      36,661 |      23,720 |      12,941 |         96.5 |        124.7 |         68.2 |            0 |
| 8. 1990.....|      39,240 |      25,417 |      13,823 |        156.7 |        165.0 |        143.3 |            0 |
| 9. 1991.....|      41,874 |      29,702 |      12,172 |        148.3 |        239.6 |         76.9 |            0 |
|10. 1992.....|      30,979 |      18,343 |      12,636 |        106.0 |        139.4 |         78.6 |            0 |
|11. 1993.....|      38,374 |      24,033 |      14,341 |         98.7 |        128.4 |         71.1 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
 -------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)

<PAGE>

<PAGE>
        SCHEDULE P - PART 1G - SPECIAL LIABILITY (OCEAN MARINE, AIRCRAFT (ALL PERILS),
                                 BOILER AND MACHINERY) - (CONTINUED)


<CAPTION>
 -------------------------------------------------------------------------
|              for Time      |              |   Net Balance Sheet Reserves|
|    Years    f Money        |      33      |         After Discount      |
|   in Which  ---------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |     Loss     |
| Losses Were |     Loss     |Participation |    Losses    |   Expenses   |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
|             |              |              |              |              |
| 1. Prior ...|            0 |    X X X X   |          431 |            0 |
| 2. 1984.....|            0 |          0.0 |           18 |            0 |
| 3. 1985.....|            0 |          0.0 |          109 |            0 |
| 4. 1986.....|            0 |          0.0 |           86 |            1 |
| 5. 1987.....|            0 |          0.0 |          198 |            6 |
| 6. 1988.....|            0 |          0.0 |        1,928 |            9 |
| 7. 1989.....|            0 |          0.0 |        1,352 |           57 |
| 8. 1990.....|            0 |          0.0 |        2,171 |           17 |
| 9. 1991.....|            0 |          0.0 |        1,524 |          178 |
|10. 1992.....|            0 |          0.0 |        3,992 |          663 |
|11. 1993.....|            0 |          0.0 |        9,533 |          939 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|            0 |    X X X X   |       21,344 |        1,870 |
 -------------------------------------------------------------------------
</TABLE>


<PAGE>

<PAGE>
Form 2
ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                  (Name)

              SCHEDULE P - PART 1H - SECTION 1 - OTHER LIABILITY - OCCURRENCE

<TABLE>
<CAPTION>
                                                                                    (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                    Loss and Loss Expense P|
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|   in Which  |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |      219,105 |       31,119 |       95,240 |        4,263 |
| 2. 1984.....|     282,070 |      71,380 |     210,690 |      360,049 |      160,409 |      105,364 |       27,038 |
| 3. 1985.....|     442,435 |     107,492 |     334,943 |      679,666 |      420,301 |      130,455 |       27,775 |
| 4. 1986.....|     846,355 |     133,251 |     713,104 |      329,139 |       87,139 |      117,511 |       23,652 |
| 5. 1987.....|     493,711 |      28,380 |     465,331 |      139,425 |        5,524 |       46,164 |        1,015 |
| 6. 1988.....|     464,192 |      36,984 |     427,208 |      141,725 |        9,167 |       50,403 |        1,264 |
| 7. 1989.....|     407,460 |      48,217 |     359,243 |      135,709 |        9,955 |       47,869 |          835 |
| 8. 1990.....|     464,249 |      44,621 |     419,628 |      121,641 |        9,802 |       41,144 |          377 |
| 9. 1991.....|     408,354 |      46,989 |     361,365 |       88,359 |       15,019 |       21,188 |          762 |
|10. 1992.....|     386,504 |      60,883 |     325,621 |       33,139 |        3,835 |        5,069 |          615 |
|11. 1993.....|     487,556 |      72,961 |     414,595 |       17,071 |        3,458 |        1,053 |          105 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    2,265,027 |      755,728 |      661,457 |       87,702 |
 -------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.
<CAPTION>
 -------------------------------------------------------------------------
|      1      ayments                                      |              |
|             ---------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|   in Which  |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
| 1. Prior ...|        1,149 |        2,977 |      281,940 |    X X X X   |
| 2. 1984.....|        3,245 |       11,111 |      289,077 |       35,564 |
| 3. 1985.....|       12,316 |       13,256 |      375,300 |       35,371 |
| 4. 1986.....|        9,519 |       10,627 |      346,487 |       43,366 |
| 5. 1987.....|        2,189 |        7,736 |      186,785 |       40,960 |
| 6. 1988.....|        1,613 |       10,214 |      191,910 |       41,808 |
| 7. 1989.....|        1,581 |        9,940 |      182,729 |       43,253 |
| 8. 1990.....|        1,251 |        8,823 |      161,427 |       49,777 |
| 9. 1991.....|        1,407 |        8,840 |      102,605 |       43,898 |
|10. 1992.....|          249 |        7,432 |       41,189 |       31,742 |
|11. 1993.....|          101 |       12,116 |       26,677 |       25,336 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|       34,620 |      103,071 |    2,186,125 |    X X X X   |
 -------------------------------------------------------------------------
<PAGE>

<PAGE>
          SCHEDULE P - PART 1H - SECTION 1 - OTHER LIABILITY - OCCURRENCE - (CONTINUED)

<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |               Allocated Loss Expenses Unpai|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|   in Which  |          Case Basis       |          Bulk + IBNR       |          Case Basis         |          Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|     367,305 |     124,760 |   2,519,816 |      161,332 |            0 |            0 |       24,417 |
| 2. 1984.....|      47,412 |      13,233 |      40,860 |       15,875 |            0 |            0 |        8,234 |
| 3. 1985.....|      58,665 |      22,326 |      58,577 |       17,135 |            0 |            0 |       12,299 |
| 4. 1986.....|      68,241 |      14,815 |      60,381 |       10,142 |            0 |            0 |       20,233 |
| 5. 1987.....|      28,237 |         271 |      53,306 |        4,992 |            0 |            0 |       15,298 |
| 6. 1988.....|      41,219 |       1,796 |      87,802 |       13,713 |            0 |            0 |       13,893 |
| 7. 1989.....|      70,896 |       5,234 |      86,636 |       13,607 |            0 |            0 |       15,573 |
| 8. 1990.....|      85,856 |       4,797 |     120,583 |       22,163 |            0 |            0 |       35,333 |
| 9. 1991.....|      76,908 |       9,868 |     170,167 |       37,319 |            0 |            0 |       52,339 |
|10. 1992.....|      54,837 |       4,628 |     243,768 |       49,056 |            0 |            0 |       61,978 |
|11. 1993.....|      38,003 |       1,687 |     309,108 |       64,591 |            0 |            0 |       59,987 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|     937,579 |     203,417 |   3,751,004 |      409,925 |            0 |            0 |      319,584 |
 -------------------------------------------------------------------------------------------------------------------

<CAPTION>
 ---------------------------------------------------------------------------------------
|             d              |              |              |              |             |
|    Years    ---------------|      21      |      22      |      23      |     24      |
|   in Which   + IBNR        |              |              |              |  Number of  |
|Premiums Were---------------|   Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |     and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              | Subrogation  |   Expenses   | and Expenses | Direct and  |
|   Incurred  |    Ceded     | Anticipated  |    Unpaid    |    Unpaid    |   Assumed   |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S>           <C>            <C>            <C>            <C>            <C>           |
|             |              |              |              |              |             |
|             |              |              |              |              |             |
| 1. Prior ...|        3,993 |       13,971 |        3,797 |    2,625,250 |      14,716 |
| 2. 1984.....|        2,329 |        1,903 |          697 |       65,766 |         543 |
| 3. 1985.....|        3,927 |        7,522 |          716 |       86,868 |         801 |
| 4. 1986.....|        3,055 |        7,036 |        1,106 |      121,948 |         871 |
| 5. 1987.....|           76 |        3,680 |          759 |       92,260 |         606 |
| 6. 1988.....|          352 |        4,317 |        1,129 |      128,181 |         669 |
| 7. 1989.....|          785 |        4,453 |        1,586 |      155,065 |       1,227 |
| 8. 1990.....|          991 |        6,652 |        2,507 |      216,328 |       2,160 |
| 9. 1991.....|        1,358 |        9,943 |        3,246 |      254,115 |       3,174 |
|10. 1992.....|        3,662 |        8,514 |        4,142 |      307,379 |       3,438 |
|11. 1993.....|        4,018 |        8,099 |        5,229 |      342,031 |       5,976 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..|       24,546 |       76,090 |       24,914 |    4,395,193 |      34,181 |
 ---------------------------------------------------------------------------------------

<PAGE>

<PAGE>
         SCHEDULE P - PART 1H - SECTION 1 - OTHER LIABILITY - OCCURRENCE - (CONTINUED)


<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |             Total Losses and            |       Loss and Loss Expense Percentage     |      Discount|
|    Years    |           Loss Expenses Incurred        |          (Incurred/Premiums Earned)        |       Value o|
|   in Which  |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |      31      |
|  Earned and |             |             |             |              |              |              |              |
| Losses Were |   Direct    |             |             |    Direct    |              |              |              |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
| 2. 1984.....|     573,727 |     218,884 |     354,843 |        203.4 |        306.6 |        168.4 |            0 |
| 3. 1985.....|     953,634 |     491,464 |     462,170 |        215.5 |        457.2 |        138.0 |            0 |
| 4. 1986.....|     607,238 |     138,803 |     468,435 |         71.7 |        104.2 |         65.7 |            0 |
| 5. 1987.....|     290,925 |      11,878 |     279,047 |         58.9 |         41.9 |         60.0 |            0 |
| 6. 1988.....|     346,385 |      26,292 |     320,093 |         74.6 |         71.1 |         74.9 |            0 |
| 7. 1989.....|     368,209 |      30,416 |     337,793 |         90.4 |         63.1 |         94.0 |            0 |
| 8. 1990.....|     415,887 |      38,130 |     377,757 |         89.6 |         85.5 |         90.0 |            0 |
| 9. 1991.....|     421,047 |      64,326 |     356,721 |        103.1 |        136.9 |         98.7 |            0 |
|10. 1992.....|     410,365 |      61,796 |     348,569 |        106.2 |        101.5 |        107.0 |            0 |
|11. 1993.....|     442,567 |      73,859 |     368,708 |         90.8 |        101.2 |         88.9 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
 -------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)

<CAPTION>
 -------------------------------------------------------------------------
|              for Time      |              |   Net Balance Sheet Reserves|
|    Years    f Money        |      33      |         After Discount      |
|   in Which  ---------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |     Loss     |
| Losses Were |     Loss     |Participation |    Losses    |   Expenses   |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>              <C>            |
|             |              |              |              |              |
| 1. Prior ...|            0 |    X X X X   |    2,601,029 |       24,221 |
| 2. 1984.....|            0 |          0.0 |       59,164 |        6,602 |
| 3. 1985.....|            0 |          0.0 |       77,780 |        9,088 |
| 4. 1986.....|            0 |          0.0 |      103,664 |       18,284 |
| 5. 1987.....|            0 |          0.0 |       76,279 |       15,981 |
| 6. 1988.....|            0 |          0.0 |      113,511 |       14,670 |
| 7. 1989.....|            0 |          0.0 |      138,691 |       16,374 |
| 8. 1990.....|            0 |          0.0 |      179,479 |       36,849 |
| 9. 1991.....|            0 |          0.0 |      199,888 |       54,227 |
|10. 1992.....|            0 |          0.0 |      244,921 |       62,458 |
|11. 1993.....|            0 |          0.0 |      280,832 |       61,198 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|            0 |    X X X X   |    4,075,241 |      319,952 |
 -------------------------------------------------------------------------
</TABLE>


<PAGE>

<PAGE>
Form 2

ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                   (Name)

             SCHEDULE P - PART 1H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE

<TABLE>
<CAPTION>
                                                                                    (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                    Loss and Loss Expense P|
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|   in Which  |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |            0 |            0 |            0 |            0 |
| 2. 1984.....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 3. 1985.....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 4. 1986.....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 5. 1987.....|     485,410 |     119,663 |     365,747 |      110,973 |       28,086 |       46,103 |        4,751 |
| 6. 1988.....|     500,957 |     115,402 |     385,555 |      126,018 |       31,355 |       44,714 |        4,510 |
| 7. 1989.....|     534,973 |     113,421 |     421,552 |      184,873 |       80,060 |       43,941 |        7,254 |
| 8. 1990.....|     455,514 |     109,190 |     346,325 |      113,646 |       31,694 |       43,717 |        2,364 |
| 9. 1991.....|     481,319 |      90,083 |     391,236 |       79,865 |        5,604 |       27,310 |          223 |
|10. 1992.....|     430,719 |      87,990 |     342,729 |       22,507 |           89 |       10,085 |          221 |
|11. 1993.....|     361,502 |     103,639 |     257,863 |        3,701 |            2 |        1,048 |           57 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |      641,584 |      176,891 |      216,919 |       19,379 |
 -------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.
<CAPTION>
 -------------------------------------------------------------------------
|      1      ayments                                      |              |
|             ---------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|   in Which  |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
| 1. Prior ...|            0 |            0 |            0 |    X X X X   |
| 2. 1984.....|            0 |            0 |            0 |            0 |
| 3. 1985.....|            0 |            0 |            0 |            0 |
| 4. 1986.....|            0 |            0 |            0 |            0 |
| 5. 1987.....|        1,626 |        4,997 |      129,236 |        5,025 |
| 6. 1988.....|        1,766 |        3,627 |      138,495 |        5,113 |
| 7. 1989.....|          349 |        3,994 |      145,493 |        5,034 |
| 8. 1990.....|          429 |        3,915 |      127,221 |        5,791 |
| 9. 1991.....|          207 |        3,930 |      105,278 |        6,246 |
|10. 1992.....|          323 |        3,487 |       35,769 |        6,460 |
|11. 1993.....|           14 |        2,216 |        6,905 |        6,070 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|        4,716 |       26,165 |      688,397 |    X X X X   |
 -------------------------------------------------------------------------
<PAGE>

<PAGE>
              SCHEDULE P - PART 1H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE

<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |               Allocated Loss Expenses Unpai|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|   in Which  |          Case Basis       |          Bulk + IBNR       |          Case Basis         |          Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 2. 1984.....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 3. 1985.....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 4. 1986.....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 5. 1987.....|      20,740 |       3,492 |      28,916 |       13,714 |            0 |            0 |       10,053 |
| 6. 1988.....|      30,489 |       5,968 |      36,444 |       20,905 |            0 |            0 |       17,825 |
| 7. 1989.....|      64,871 |      18,790 |      46,019 |       23,223 |            0 |            0 |       31,085 |
| 8. 1990.....|      87,831 |      25,301 |     103,541 |       54,619 |            0 |            0 |       44,992 |
| 9. 1991.....|     101,016 |      23,424 |     112,096 |       59,957 |            0 |            0 |       60,232 |
|10. 1992.....|      73,526 |       2,614 |     157,952 |       63,242 |            0 |            0 |       67,986 |
|11. 1993.....|      43,351 |         295 |     231,326 |       61,326 |            0 |            0 |       94,178 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|     421,823 |      79,883 |     716,294 |      296,986 |            0 |            0 |      326,351 |
 -------------------------------------------------------------------------------------------------------------------

<CAPTION>
 ---------------------------------------------------------------------------------------
|             d              |              |              |              |             |
|    Years    ---------------|      21      |      22      |      23      |     24      |
|   in Which   + IBNR        |              |              |              |  Number of  |
|Premiums Were---------------|   Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |     and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              | Subrogation  |   Expenses   | and Expenses | Direct and  |
|   Incurred  |    Ceded     | Anticipated  |    Unpaid    |    Unpaid    |   Assumed   |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S>           <C>           <C>           <C>           <C>            <C>              |
|             |              |              |              |              |             |
|             |              |              |              |              |             |
| 1. Prior ...|            0 |            0 |            0 |            0 |           0 |
| 2. 1984.....|            0 |            0 |            0 |            0 |           0 |
| 3. 1985.....|            0 |            0 |            0 |            0 |           0 |
| 4. 1986.....|            0 |            0 |            0 |            0 |           0 |
| 5. 1987.....|        3,051 |            4 |          585 |       40,037 |         174 |
| 6. 1988.....|        4,181 |            9 |          539 |       54,243 |         305 |
| 7. 1989.....|        5,135 |           22 |          987 |       95,814 |         446 |
| 8. 1990.....|        7,291 |           77 |        1,626 |      150,779 |         808 |
| 9. 1991.....|        9,775 |          179 |        1,918 |      182,106 |       1,412 |
|10. 1992.....|        3,648 |          361 |        2,514 |      232,474 |       2,330 |
|11. 1993.....|       10,176 |        1,986 |        2,267 |      299,325 |       4,121 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..|       43,257 |        2,638 |       10,436 |    1,054,778 |       9,596 |
 ---------------------------------------------------------------------------------------


<PAGE>

<PAGE>

              SCHEDULE P - PART 1H - SECTION 2 - OTHER LIABILITY - CLAIMS-MADE


<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |             Total Losses and            |       Loss and Loss Expense Percentage     |      Discount|
|    Years    |           Loss Expenses Incurred        |          (Incurred/Premiums Earned)        |       Value o|
|   in Which  |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |      31      |
|  Earned and |             |             |             |              |              |              |              |
| Losses Were |   Direct    |             |             |    Direct    |              |              |              |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
| 2. 1984.....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
| 3. 1985.....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
| 4. 1986.....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
| 5. 1987.....|     222,367 |      53,094 |     169,273 |         45.8 |         44.4 |         46.3 |            0 |
| 6. 1988.....|     259,656 |      66,919 |     192,737 |         51.8 |         58.0 |         50.0 |            0 |
| 7. 1989.....|     375,770 |     134,462 |     241,308 |         70.2 |        118.6 |         57.2 |            0 |
| 8. 1990.....|     399,268 |     121,269 |     277,999 |         87.7 |        111.1 |         80.3 |            0 |
| 9. 1991.....|     386,367 |      98,983 |     287,384 |         80.3 |        109.9 |         73.5 |            0 |
|10. 1992.....|     338,057 |      69,814 |     268,243 |         78.5 |         79.3 |         78.3 |            0 |
|11. 1993.....|     378,087 |      71,856 |     306,231 |        104.6 |         69.3 |        118.8 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
 -------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)

<CAPTION>
 -------------------------------------------------------------------------
|              for Time      |              |   Net Balance Sheet Reserves|
|    Years    f Money        |      33      |         After Discount      |
|   in Which  ---------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |     Loss     |
| Losses Were |     Loss     |Participation |    Losses    |   Expenses   |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>               |
|             |              |              |              |              |
|             |              |              |              |              |
| 1. Prior ...|            0 |    X X X X   |            0 |            0 |
| 2. 1984.....|            0 |          0.0 |            0 |            0 |
| 3. 1985.....|            0 |          0.0 |            0 |            0 |
| 4. 1986.....|            0 |          0.0 |            0 |            0 |
| 5. 1987.....|            0 |          0.0 |       32,450 |        7,587 |
| 6. 1988.....|            0 |          0.0 |       40,060 |       14,183 |
| 7. 1989.....|            0 |          0.0 |       68,877 |       26,937 |
| 8. 1990.....|            0 |          0.0 |      111,452 |       39,327 |
| 9. 1991.....|            0 |          0.0 |      129,731 |       52,375 |
|10. 1992.....|            0 |          0.0 |      165,622 |       66,852 |
|11. 1993.....|            0 |          0.0 |      213,056 |       86,269 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|            0 |    X X X X   |      761,248 |      293,530 |
 -------------------------------------------------------------------------
</TABLE>


<PAGE>

<PAGE>

Form 2

ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                  (Name)

   SCHEDULE P - PART 1I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
                              EARTHQUAKE, GLASS, BURGLARY AND THEFT)

<TABLE>
<CAPTION>
                                                                                             (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                     Loss and Loss Expense |
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|    Which    |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |       13,740 |        4,470 |        1,486 |          405 |
| 2. 1992.....|     179,956 |      70,306 |     109,651 |      128,918 |       62,113 |        2,786 |        1,282 |
| 3. 1993.....|     193,799 |      71,866 |     121,933 |       45,042 |       25,190 |        1,328 |          696 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|   X X X X   |    X X X X  |    X X X X  |      187,699 |       91,773 |        5,600 |        2,382 |
 -------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.
<CAPTION>
 -------------------------------------------------------------------------
|      1      Payments                                     |              |
|             ---------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|    Which    |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
| 1. Prior ...|        6,969 |          212 |       10,564 |    X X X X   |
| 2. 1992.....|          405 |        2,433 |       70,741 |    X X X X   |
| 3. 1993.....|          165 |        2,677 |       23,161 |    X X X X   |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|        7,540 |        5,322 |      104,466 |    X X X X   |
 -------------------------------------------------------------------------

<PAGE>

<PAGE>
      SCHEDULE P - PART 1I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
                             EARTHQUAKE, GLASS, BURGLARY AND THEFT) - (CONTINUED)

<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |              Allocated Loss Expenses Unpaid|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|    Which    |         Case Basis        |        Bulk + IBNR         |          Case Basis         |         Bulk |
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|      13,320 |       2,828 |      29,816 |       15,143 |            0 |            0 |        5,753 |
| 2. 1992.....|      17,137 |       3,518 |      20,294 |       10,611 |            0 |            0 |        3,484 |
| 3. 1993.....|      70,774 |      38,453 |      29,506 |        8,865 |            0 |            0 |        4,201 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|     101,231 |      44,799 |      79,616 |       34,619 |            0 |            0 |       13,438 |
 -------------------------------------------------------------------------------------------------------------------
<CAPTION>
 ---------------------------------------------------------------------------------------
|                            |              |              |              |             |
|    Years    ---------------|      21      |      22      |      23      |     24      |
|    Which    + IBNR         |              |              |              |  Number of  |
|Premiums Were---------------|   Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |     and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              | Subrogation  |   Expense    | and Expenses | Direct and  |
|   Incurred  |    Ceded     | Anticipated  |    Unpaid    |    Unpaid    |   Assumed   |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S>           <C>            <C>            <C>            <C>            <C>           |
|             |              |              |              |              |             |
| 1. Prior ...|           15 |        2,689 |          137 |       31,040 |         688 |
| 2. 1992.....|        1,578 |        2,402 |          110 |       25,318 |         344 |
| 3. 1993.....|          738 |        2,597 |          362 |       56,787 |       1,077 |
|-------------|--------------|--------------|--------------|--------------|-------------|
| 4. Totals ..|        2,331 |        7,688 |          609 |      113,145 |       2,109 |
 ---------------------------------------------------------------------------------------



<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |             Total Losses and            |      Loss and Loss Expense Percentage      |      Discount|
|    Years    |          Loss Expenses Incurred         |         (Incurred/Premiums Earned)         |       Value o|
|    Which    |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |      31      |
|  Earned and |             |             |             |              |              |              |              |
| Losses Were |   Direct    |             |             |    Direct    |              |              |              |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |   X X X X    |    X X X X   |    X X X X   |            0 |
| 2. 1992.....|     175,162 |      79,102 |      96,060 |         97.3 |        112.5 |         87.6 |            0 |
| 3. 1993.....|     153,890 |      73,942 |      79,948 |         79.4 |        102.9 |         65.6 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|   X X X X   |    X X X X  |    X X X X  |   X X X X    |    X X X X   |    X X X X   |            0 |
 -------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)


<PAGE>

<PAGE>
      SCHEDULE P - PART 1I - SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
                             EARTHQUAKE, GLASS, BURGLARY AND THEFT) - (CONTINUED)

<CAPTION>
 -------------------------------------------------------------------------
|              for Time      |              |  Net Balance Sheet Reserves |
|    Years    f Money        |      33      |        After Discount       |
|    Which    ---------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |              |
| Losses Were |     Loss     |Participation |    Losses    |Loss Expenses |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
| 1. Prior ...|            0 |    X X X X   |       25,165 |        5,875 |
| 2. 1992.....|            0 |          0.0 |       23,302 |        2,016 |
| 3. 1993.....|            0 |          0.0 |       52,962 |        3,825 |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|            0 |    X X X X   |      101,429 |       11,716 |
 -------------------------------------------------------------------------
</TABLE>

                          SCHEDULE P - PART 1J - AUTO PHYSICAL DAMAGE

<TABLE>
<CAPTION>
                                                                                             (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                     Loss and Loss Expense |
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|    Which    |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |        2,752 |          (20)|        1,888 |           53 |
| 2. 1992.....|     393,174 |      11,491 |     381,683 |      185,113 |        4,539 |        2,846 |           23 |
| 3. 1993.....|     362,501 |       6,771 |     355,730 |      159,678 |        3,164 |        1,912 |            7 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|   X X X X   |    X X X X  |    X X X X  |      347,543 |        7,684 |        6,646 |           83 |
 -------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.
<CAPTION>
 -------------------------------------------------------------------------
|      1      Payments                                     |              |
|             ---------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|    Which    |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
| 1. Prior ...|        3,683 |         (124)|        4,484 |   X X X X    |
| 2. 1992.....|       32,809 |       20,399 |      203,794 |      185,594 |
| 3. 1993.....|       17,545 |       16,229 |      174,649 |      153,975 |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|       54,037 |       36,505 |      382,927 |   X X X X    |
 -------------------------------------------------------------------------
<PAGE>

<PAGE>

                  SCHEDULE P - PART 1J - AUTO PHYSICAL DAMAGE - (CONTINUED)

<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |              Allocated Loss Expenses Unpaid|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|    Which    |         Case Basis        |        Bulk + IBNR         |          Case Basis         |         Bulk |
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|           0 |           0 |           0 |            0 |            0 |            0 |        1,751 |
| 2. 1992.....|       1,259 |          13 |      20,580 |        1,563 |            0 |            0 |        2,084 |
| 3. 1993.....|      11,032 |         247 |      35,807 |        2,283 |            0 |            0 |       11,127 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|      12,291 |         260 |      56,387 |        3,846 |            0 |            0 |       14,962 |
 -------------------------------------------------------------------------------------------------------------------
<CAPTION>
 ---------------------------------------------------------------------------------------
|                            |              |              |              |             |
|    Years    ---------------|      21      |      22      |      23      |     24      |
|    Which    + IBNR         |              |              |              |  Number of  |
|Premiums Were---------------|   Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |     and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              | Subrogation  |   Expense    | and Expenses | Direct and  |
|   Incurred  |    Ceded     | Anticipated  |    Unpaid    |    Unpaid    |   Assumed   |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S>           <C>            <C>            <C>            <C>            <C>           |
|             |              |              |              |              |             |
| 1. Prior ...|            0 |        3,848 |          169 |       13,345 |         310 |
| 2. 1992.....|           27 |        5,330 |          635 |       22,955 |         156 |
| 3. 1993.....|           99 |       31,402 |        1,800 |       57,137 |       5,217 |
|-------------|--------------|--------------|--------------|--------------|-------------|
| 4. Totals ..|          126 |       40,579 |        2,604 |       93,437 |       5,683 |
 ---------------------------------------------------------------------------------------

<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |             Total Losses and            |      Loss and Loss Expense Percentage      |      Discount|
|    Years    |          Loss Expenses Incurred         |         (Incurred/Premiums Earned)         |       Value o|
|    Which    |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |      31      |
|  Earned and |             |             |             |              |              |              |              |
| Losses Were |   Direct    |             |             |    Direct    |              |              |              |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |   X X X X    |    X X X X   |    X X X X   |            0 |
| 2. 1992.....|     232,916 |       6,165 |     226,751 |         59.2 |         53.7 |         59.4 |            0 |
| 3. 1993.....|     237,585 |       5,800 |     231,785 |         65.5 |         85.7 |         65.2 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|   X X X X   |   X X X X   |   X X X X   |   X X X X    |    X X X X   |   X X X X    |            0 |
 --------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)


<PAGE>

<PAGE>

                  SCHEDULE P - PART 1J - AUTO PHYSICAL DAMAGE - (CONTINUED)


<CAPTION>
 --------------------------- ---------------------------------------------
|              for Time      |              |  Net Balance Sheet Reserves |
|    Years    f Money        |      33      |        After Discount       |
|    Which    ---------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |              |
| Losses Were |     Loss     |Participation |    Losses    |Loss Expenses |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
| 1. Prior ...|            0 |    X X X X   |       11,425 |        1,920 |
| 2. 1992.....|            0 |          0.0 |       20,263 |        2,692 |
| 3. 1993.....|            0 |          0.0 |       44,309 |       12,828 |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|            0 |    X X X X   |       75,997 |       17,440 |
 -------------------------------------------------------------------------
</TABLE>


<PAGE>

<PAGE>

Form 2

ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                  (Name)


 SCHEDULE P - PART 1K - FIDELITY, SURETY, FINANCIAL GUARANTY, MORTGAGE GUARANTY

<TABLE>
<CAPTION>
                                                                                             (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                     Loss and Loss Expense |
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|    Which    |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |        9,566 |        9,200 |        2,721 |        4,070 |
| 2. 1992.....|     121,630 |      24,714 |      96,915 |       22,018 |        1,928 |        1,748 |          361 |
| 3. 1993.....|     127,118 |      20,304 |     106,814 |       53,968 |       10,277 |          355 |            8 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|   X X X X   |    X X X X  |    X X X X  |       85,552 |       21,406 |        4,824 |        4,438 |
 -------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.

<CAPTION>
 -------------------------------------------------------------------------
|      1      Payments                                     |              |
|             ---------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|    Which    |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            | 
|             |              |              |              |              |
| 1. Prior ...|       53,772 |          148 |         (835)|    X X X X   |
| 2. 1992.....|       20,901 |          553 |       22,030 |    X X X X   |
| 3. 1993.....|       97,322 |          558 |       44,596 |    X X X X   |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|      171,994 |        1,259 |       65,791 |    X X X X   |
 -------------------------------------------------------------------------

<PAGE>

<PAGE>
 SCHEDULE P - PART 1K - FIDELITY, SURETY, FINANCIAL GUARANTY, MORTGAGE GUARANTY
                                    - (CONTINUED)
<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |              Allocated Loss Expenses Unpaid|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|    Which    |         Case Basis        |        Bulk + IBNR         |          Case Basis         |         Bulk |
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            | 
|             |             |             |             |              |              |              |              |
| 1. Prior ...|      31,700 |       8,341 |      77,062 |       30,803 |            0 |            0 |       16,670 |
| 2. 1992.....|       3,393 |       1,494 |      28,211 |        8,085 |            0 |            0 |        2,778 |
| 3. 1993.....|       1,513 |         225 |      29,928 |        4,165 |            0 |            0 |        4,412 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|      36,607 |      10,060 |     135,201 |       43,053 |            0 |            0 |       23,860 |
 -------------------------------------------------------------------------------------------------------------------

<CAPTION>
 ---------------------------------------------------------------------------------------
|                            |              |              |              |             |
|    Years    ---------------|      21      |      22      |      23      |     24      |
|    Which    + IBNR         |              |              |              |  Number of  |
|Premiums Were---------------|   Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |     and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              | Subrogation  |   Expense    | and Expenses | Direct and  |
|   Incurred  |    Ceded     | Anticipated  |    Unpaid    |    Unpaid    |   Assumed   |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S>           <C>            <C>            <C>            <C>            <C>           | 
|             |              |              |              |              |             |
| 1. Prior ...|        6,733 |        8,116 |          958 |       80,513 |       1,062 |
| 2. 1992.....|        1,046 |        3,055 |           77 |       23,835 |         251 |
| 3. 1993.....|          707 |          890 |          281 |       31,038 |         202 |
|-------------|--------------|--------------|--------------|--------------|-------------|
| 4. Totals ..|        8,486 |       12,062 |        1,316 |      135,386 |       1,515 |
 ---------------------------------------------------------------------------------------


<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |             Total Losses and            |      Loss and Loss Expense Percentage      |      Discount|
|    Years    |          Loss Expenses Incurred         |         (Incurred/Premiums Earned)         |       Value o|
|    Which    |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |      31      |
|  Earned and |             |             |             |              |              |              |              |
| Losses Were |   Direct    |             |             |    Direct    |              |              |              |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            | 
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |   X X X X    |    X X X X   |    X X X X   |            0 |
| 2. 1992.....|      58,778 |      12,914 |      45,864 |         48.3 |         52.3 |         47.3 |            0 |
| 3. 1993.....|      91,015 |      15,382 |      75,633 |         71.6 |         75.8 |         70.8 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|   X X X X   |    X X X X  |    X X X X  |   X X X X    |    X X X X   |    X X X X   |            0 |
 -------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)

<PAGE>

<PAGE>
 SCHEDULE P - PART 1K - FIDELITY, SURETY, FINANCIAL GUARANTY, MORTGAGE GUARANTY
                                    - (CONTINUED)

<CAPTION>
 -------------------------------------------------------------------------
|              for Time      |              |  Net Balance Sheet Reserves |
|    Years    f Money        |      33      |        After Discount       |
|    Which    ---------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |              |
| Losses Were |     Loss     |Participation |    Losses    |Loss Expenses |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
| 1. Prior ...|            0 |    X X X X   |       69,618 |       10,895 |
| 2. 1992.....|            0 |          0.0 |       22,026 |        1,809 |
| 3. 1993.....|            0 |          0.0 |       27,052 |        3,986 |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|            0 |    X X X X   |      118,696 |       16,690 |
 -------------------------------------------------------------------------
</TABLE>


         SCHEDULE P - PART 1L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)

<TABLE>
<CAPTION>
                                                                                             (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                     Loss and Loss Expense |
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|    Which    |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |       72,090 |        1,397 |            4 |            0 |
| 2. 1992.....|     441,805 |      13,828 |     427,977 |      169,634 |        6,446 |           61 |            3 |
| 3. 1993.....|     512,288 |      13,503 |     498,785 |      102,825 |        2,690 |            0 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|   X X X X   |    X X X X  |    X X X X  |      344,549 |       10,533 |           65 |            3 |
 --------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.
<CAPTION>
 -------------------------------------------------------------------------
|      1      Payments                                     |              |
|             ---------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|    Which    |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
| 1. Prior ...|            0 |        2,518 |       73,216 |   X X X X    |
| 2. 1992.....|            0 |       10,824 |      174,069 |   X X X X    |
| 3. 1993.....|            0 |        7,469 |      107,604 |   X X X X    |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|            0 |       20,811 |      354,889 |   X X X X    |
 -------------------------------------------------------------------------
<PAGE>

<PAGE>
       SCHEDULE P - PART 1L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH) - (CONTINUED)

<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |              Allocated Loss Expenses Unpaid|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|    Which    |         Case Basis        |        Bulk + IBNR         |          Case Basis         |         Bulk |
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|     286,727 |       4,333 |       3,013 |          832 |            0 |            0 |          309 |
| 2. 1992.....|     101,821 |         343 |       2,481 |          657 |            0 |            0 |          114 |
| 3. 1993.....|     108,651 |       3,037 |     136,928 |        3,163 |            0 |            0 |           52 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|     497,199 |       7,714 |     142,422 |        4,652 |            0 |            0 |          475 |
 -------------------------------------------------------------------------------------------------------------------

<CAPTION>
 ---------------------------------------------------------------------------------------
|                            |              |              |              |             |
|    Years    ---------------|      21      |      22      |      23      |     24      |
|    Which    + IBNR         |              |              |              |  Number of  |
|Premiums Were---------------|   Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |     and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              | Subrogation  |   Expense    | and Expenses | Direct and  |
|   Incurred  |    Ceded     | Anticipated  |    Unpaid    |    Unpaid    |   Assumed   |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S>           <C>            <C>            <C>            <C>            <C>           |
|             |              |              |              |              |             |
| 1. Prior ...|           11 |            0 |        6,028 |      290,901 |           4 |
| 2. 1992.....|           67 |            0 |        4,715 |      108,064 |           6 |
| 3. 1993.....|            9 |            0 |       10,962 |      250,384 |          24 |
|-------------|--------------|--------------|--------------|--------------|-------------|
| 4. Totals ..|           87 |            0 |       21,705 |      649,349 |          34 |
 ---------------------------------------------------------------------------------------


<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |             Total Losses and            |      Loss and Loss Expense Percentage      |      Discount|
|    Years    |          Loss Expenses Incurred         |         (Incurred/Premiums Earned)         |       Value o|
|    Which    |-----------------------------------------|--------------------------------------------|--------------|
|Premiums Were|     25      |     26      |     27      |      28      |      29      |      30      |      31      |
|  Earned and |             |             |             |              |              |              |              |
| Losses Were |   Direct    |             |             |    Direct    |              |              |              |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1. Prior ...|   X X X X   |    X X X X  |    X X X X  |   X X X X    |    X X X X   |    X X X X   |            0 |
| 2. 1992.....|     289,650 |       7,516 |     282,134 |         65.6 |         54.4 |         65.9 |            0 |
| 3. 1993.....|     366,887 |       8,899 |     357,988 |         71.6 |         65.9 |         71.8 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|   X X X X   |   X X X X   |   X X X X   |   X X X X    |    X X X X   |   X X X X    |            0 |
 -------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)

<PAGE>

<PAGE>

     SCHEDULE P - PART 1L - OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH) - (CONTINUED)

<CAPTION>
 -------------------------------------------------------------------------
|              for Time      |              |  Net Balance Sheet Reserves |
|    Years    f Money        |      33      |        After Discount       |
|    Which    ---------------|              |-----------------------------|
|Premiums Were|      32      |Inter-Company |      34      |      35      |
|  Earned and |              |   Pooling    |              |              |
| Losses Were |     Loss     |Participation |    Losses    |Loss Expenses |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
| 1. Prior ...|            0 |    X X X X   |      284,575 |        6,326 |
| 2. 1992.....|            0 |          0.0 |      103,302 |        4,762 |
| 3. 1993.....|            0 |          0.0 |      239,379 |       11,005 |
|-------------|--------------|--------------|--------------|--------------|
| 4. Totals ..|            0 |    X X X X   |      627,256 |       22,093 |
 -------------------------------------------------------------------------
</TABLE>


<PAGE>

<PAGE>
Form 2

ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                 (Name)
                            SCHEDULE P - PART 1M - INTERNATIONAL

<TABLE>
<CAPTION>
                                                                                             (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|             |             Premiums Earned             |                                     Loss and Loss Expense |
|      1      |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|   in Which  |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1.  Prior ..|   X X X X   |    X X X X  |    X X X X  |            0 |            0 |            0 |            0 |
| 2.  1984....|        (646)|           0 |        (646)|       (1,522)|            0 |            0 |            0 |
| 3.  1985....|           0 |        (131)|         131 |            0 |            0 |            0 |            0 |
| 4.  1986....|           0 |        (131)|         131 |            0 |            0 |            0 |            0 |
| 5.  1987....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 6.  1988....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 7.  1989....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 8.  1990....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 9.  1991....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
|10.  1992....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
|11.  1993....|         183 |           0 |         183 |            0 |            0 |            0 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |    X X X X  |    X X X X  |       (1,522)|            0 |            0 |            0 |
 -------------------------------------------------------------------------------------------------------------------
 Note: For "prior," report amounts paid or received in current year only.
       Report cumulative amounts paid or received for specific years.
       Report loss payments net of salvage and subrogation received.
<CAPTION>
 -------------------------------------------------------------------------
|             Payments                                     |              |
|      1      ---------------------------------------------|      12      |
|    Years    |      9       |      10      |      11      |              |
|   in Which  |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
| 1.  Prior ..|            0 |            0 |            0 |   X X X X    |
| 2.  1984....|            0 |            0 |       (1,522)|   X X X X    |
| 3.  1985....|            0 |            0 |            0 |   X X X X    |
| 4.  1986....|            0 |            0 |            0 |   X X X X    |
| 5.  1987....|            0 |            0 |            0 |   X X X X    |
| 6.  1988....|            0 |            0 |            0 |   X X X X    |
| 7.  1989....|            0 |            0 |            0 |   X X X X    |
| 8.  1990....|            0 |            0 |            0 |   X X X X    |
| 9.  1991....|            0 |            0 |            0 |   X X X X    |
|10.  1992....|            0 |            0 |            0 |   X X X X    |
|11.  1993....|            0 |            0 |            0 |   X X X X    |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|            0 |            0 |       (1,522)|   X X X X    |
 -------------------------------------------------------------------------
<PAGE>

<PAGE>
                          SCHEDULE P - PART 1M - INTERNATIONAL - (CONTINUED)


<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|             |                      Losses Unpaid                     |               Allocated Loss Expenses Unpai|
|    Years    |--------------------------------------------------------|--------------------------------------------|
|   in Which  |          Case Basis       |          Bulk + IBNR       |          Case Basis         |          Bulk|
|Premiums Were|---------------------------|----------------------------|-----------------------------|--------------|
|  Earned and |     13      |     14      |     15      |      16      |      17      |      18      |      19      |
| Losses Were |   Direct    |             |   Direct    |              |    Direct    |              |    Direct    |
|   Incurred  | and Assumed |    Ceded    | and Assumed |    Ceded     | and Assumed  |    Ceded     | and Assumed  |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1.  Prior ..|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 2.  1984....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 3.  1985....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 4.  1986....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 5.  1987....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 6.  1988....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 7.  1989....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 8.  1990....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
| 9.  1991....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
|10.  1992....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
|11.  1993....|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|           0 |           0 |           0 |            0 |            0 |            0 |            0 |
 -------------------------------------------------------------------------------------------------------------------

<CAPTION>
 ---------------------------------------------------------------------------------------
|             d              |              |              |              |             |
|    Years    ---------------|      21      |      22      |      23      |     24      |
|   in Which   + IBNR        |              |              |              |  Number of  |
|Premiums Were---------------|   Salvage    | Unallocated  |    Total     |   Claims    |
|  Earned and |      20      |     and      |     Loss     |  Net Losses  |Outstanding -|
| Losses Were |              | Subrogation  |   Expenses   | and Expenses |   Direct    |
|   Incurred  |    Ceded     | Anticipated  |    Unpaid    |    Unpaid    | and Assumed |
|-------------|--------------|--------------|--------------|--------------|-------------|
<S>           <C>            <C>            <C>            <C>            <C>           |
|             |              |              |              |              |             |
| 1.  Prior ..|            0 |            0 |            0 |            0 |           0 |
| 2.  1984....|            0 |            0 |            0 |            0 |           0 |
| 3.  1985....|            0 |            0 |            0 |            0 |           0 |
| 4.  1986....|            0 |            0 |            0 |            0 |           0 |
| 5.  1987....|            0 |            0 |            0 |            0 |           0 |
| 6.  1988....|            0 |            0 |            0 |            0 |           0 |
| 7.  1989....|            0 |            0 |            0 |            0 |           0 |
| 8.  1990....|            0 |            0 |            0 |            0 |           0 |
| 9.  1991....|            0 |            0 |            0 |            0 |           0 |
|10.  1992....|            0 |            0 |            0 |            0 |           0 |
|11.  1993....|            0 |            0 |            0 |            0 |           0 |
|-------------|--------------|--------------|--------------|--------------|-------------|
|12. Totals ..|            0 |            0 |            0 |            0 |           0 |
 ---------------------------------------------------------------------------------------

<PAGE>

<PAGE>
                          SCHEDULE P - PART 1M - INTERNATIONAL - (CONTINUED)

<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
|    Years    |            Total Losses and             |      Loss and Loss Expense Percentage      |      Discount|
|   in Which  |         Loss Expenses Incurred          |         (Incurred/Premiums Earned)         |       Value o|
|Premiums Were|-----------------------------------------|--------------------------------------------|--------------|
|  Earned and |     25      |     26      |     27      |      28      |      29      |      30      |      31      |
| Losses Were |   Direct    |             |             |    Direct    |              |              |              |
|   Incurred  | and Assumed |    Ceded    |     Net *   | and Assumed  |    Ceded     |     Net      |     Loss     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1.  Prior ..|    X X X X  |    X X X X  |    X X X X  |    X X X X   |    X X X X   |    X X X X   |            0 |
| 2.  1984....|      (1,522)|           0 |      (1,522)|        235.6 |          0.0 |        235.6 |            0 |
| 3.  1985....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
| 4.  1986....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
| 5.  1987....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
| 6.  1988....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
| 7.  1989....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
| 8.  1990....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
| 9.  1991....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
|10.  1992....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
|11.  1993....|           0 |           0 |           0 |          0.0 |          0.0 |          0.0 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|   X X X X   |   X X X X   |   X X X X   |    X X X X   |    X X X X   |    X X X X   |            0 |
 -------------------------------------------------------------------------------------------------------------------
 *Net = (25 - 26) = (11 + 23)
<CAPTION>
 -------------------------------------------------------------------------
|    Years     for Time      |              |  Net Balance Sheet Reserves |
|   in Which  f Money        |      33      |        After Discount       |
|Premiums Were---------------|Inter-Company |-----------------------------|
|  Earned and |      32      |   Pooling    |      34      |      35      |
| Losses Were |     Loss     |Participation |    Losses    |Loss Expenses |
|   Incurred  |   Expense    |  Percentage  |    Unpaid    |    Unpaid    |
|-------------|--------------|--------------|--------------|--------------|
<S>           <C>            <C>            <C>            <C>            |
|             |              |              |              |              |
| 1.  Prior ..|            0 |    X X X X   |            0 |            0 |
| 2.  1984....|            0 |          0.0 |            0 |            0 |
| 3.  1985....|            0 |          0.0 |            0 |            0 |
| 4.  1986....|            0 |          0.0 |            0 |            0 |
| 5.  1987....|            0 |          0.0 |            0 |            0 |
| 6.  1988....|            0 |          0.0 |            0 |            0 |
| 7.  1989....|            0 |          0.0 |            0 |            0 |
| 8.  1990....|            0 |          0.0 |            0 |            0 |
| 9.  1991....|            0 |          0.0 |            0 |            0 |
|10.  1992....|            0 |          0.0 |            0 |            0 |
|11.  1993....|            0 |          0.0 |            0 |            0 |
|-------------|--------------|--------------|--------------|--------------|
|12. Totals ..|            0 |    X X X X   |            0 |            0 |
 -------------------------------------------------------------------------
</TABLE>


<PAGE>

<PAGE>

Form 2

ANNUAL STATEMENT FOR THE YEAR 1993 OF THE
CONTINENTAL CASUALTY COMPANY - CONSOLIDATED
...........................................
                   (Name)

                              SCHEDULE P - PART 1N - REINSURANCE A

<TABLE>
<CAPTION>
                                                                                             (000 omitted)
 -------------------------------------------------------------------------------------------------------------------
|      1      |             Premiums Earned             |                                     Loss and Loss Expense |
|             |-----------------------------------------|-----------------------------------------------------------|
|    Years    |      2      |      3      |      4      |         Loss Payments       |         Allocated Loss      |
|    Which    |             |             |             |                             |        Expense Payments     |
|Premiums Were|             |             |             |-----------------------------|-----------------------------|
|  Earned and |   Direct    |             |     Net     |      5       |      6       |      7       |      8       |
| Losses Were |     and     |    Ceded    |   (2 - 3)   |    Direct    |              |    Direct    |              |
|   Incurred  |   Assumed   |             |             | and Assumed  |    Ceded     | and Assumed  |    Ceded     |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
<S>           <C>           <C>           <C>           <C>            <C>            <C>            <C>            |
|             |             |             |             |              |              |              |              |
| 1. 1988.....|      18,107 |       2,084 |      16,022 |       (8,536)|          113 |          260 |            2 |
| 2. 1989.....|      30,323 |       5,188 |      25,136 |       76,534 |       27,493 |          202 |            1 |
| 3. 1990.....|      52,398 |       8,887 |      43,511 |       38,177 |       12,667 |          130 |            0 |
| 4. 1991.....|      53,594 |       8,599 |      44,995 |       35,811 |        3,072 |          235 |            2 |
| 5. 1992.....|      71,214 |       6,982 |      64,231 |      130,165 |       18,150 |          121 |           58 |
| 6. 1993.....|      88,237 |       7,979 |      80,258 |        5,307 |           19 |           20 |            0 |
|-------------|-------------|-------------|-------------|--------------|--------------|--------------|--------------|
| 7. Totals ..|   X X X X   |    X X X X  |    X X X X  |      277,458 |       61,515 |          968 |           64 |
 -------------------------------------------------------------------------------------------------------------------
 NOTE:  Report cumulative amounts paid or received for specific years.
        Report loss payments net of salvage and subrogation received.

<CAPTION>
 -------------------------------------------------------------------------
|      1      Payments                                     |              |
|             ---------------------------------------------|              |
|    Years    |      9       |      10      |      11      |      12      |
|    Which    |              |              |              |  Number of   |
|Premiums Were|   Salvage    | Unallocated  |    Total     |    Claims    |
|  Earned and |     and      |     Loss     |   Net Paid   |  Reported -  |
| Losses Were | Subrogation  |   Expense    |  (5 - 6 + 7  |  Direct and  |
|   Incurred  |   Received   |   Payments   |  - 8 + 10)   |   Assumed    |
|-------------|--------