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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 45)
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CNA FINANCIAL CORPORATION
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
126117 10 0
- --------------------------------------------------------------------------------
(CUSIP Number)
Barry Hirsch, Senior Vice President and Secretary
Loews Corporation
667 Madison Avenue, New York, New York 10021 (212) 545-2920
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 14, 1994
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(Date of Event which Required Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-l(b)(3) or (4), check the following box .
----
Check the following box if a fee is being paid with the statement .
--
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1
SCHEDULE 13D
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CUSIP No. 126117 10 0
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
LOEWS CORPORATION
IRS Identification No. 13-2646102
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)/ /
N/A (b)/ /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
N/A
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF 51,929,360
SHARES ------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH ------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 51,929,360
WITH ------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
51,929,360
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
84.03%
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14 TYPE OF REPORTING PERSON*
HC
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Page 2
AMENDMENT NO. 45
to
SCHEDULE 13D
relating to the
Common Stock, $2.50 par value per share
of
CNA Financial Corporation
This Amendment No. 45 to this Statement on Schedule 13D is being filed in
restated form pursuant to Rule 13d-2 under the Securities Exchange Act of 1934,
as amended, and Rules 101(a) and 901(d) of Regulation S-T, and incorporates the
Statement on Schedule 13D initially filed on February 20, 1974, and Amendments
numbered 1 through 44 thereto.
Item 1. Security and Issuer
-------------------
Item 1 is hereby amended in its entirety to read as follows:
The class of equity securities to which this statement relates is the Common
Stock, $2.50 par value per share, (the "Common Stock") of CNA Financial
Corporation, a Delaware corporation (the "Issuer" or "CNA"). The principal
executive offices of the Issuer are located at CNA Plaza, Chicago, Illinois
60685.
Item 2. Identity and Background
-----------------------
Item 2 is hereby amended in its entirety to read as follows:
This Statement is being filed by Loews Corporation, a Delaware corporation
("Loews"). The principal executive offices of Loews are located at 667 Madison
Avenue, New York, New York 10021.
Loews, through its subsidiaries, is engaged in the production and sale of
cigarettes; the operation of hotels and offshore drilling rigs; through its
approximately 84% ownership of the Issuer, insurance (property, casualty and
life); and through its approximately 97% ownership of Bulova Corporation, the
distribution and sale of watches and the production and sale of other timing
devices. In addition, a wholly-owned subsidiary of Loews owns approximately
17.9% of the outstanding common stock of CBS Inc.
Laurence A. Tisch, Chairman of the Board and Co-Chief Executive Officer of
Loews, and Preston R. Tisch, President and Co-Chief Executive Officer of Loews
each own 9,449,956 shares of Common Stock of Loews, constituting an aggregate of
18,899,912 shares, or approximately 31.5%, of the total number of shares of
Loews Common Stock outstanding. As a result, they may be deemed to be
"controlling" persons of Loews as that term is defined in the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
The name, business address, present principal occupation and citizenship of
each executive officer and director of Loews are set forth in Appendix A hereto.
During the last five years neither Loews nor, to the best knowledge of Loews,
any of its executive officers or directors has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding subject to a judgment, decree or
Page 3
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or a finding of any
violation with respect to such laws.
Item 3. Source and Amount of Funds or other Consideration
-------------------------------------------------
[Original filing] The funds used in making the purchases set forth herein were
corporate funds, internally generated. Such funds aggregated approximately
$22,842,500.
[Amendment No. 28] The amount required by Loews to purchase the 20,000,000
shares of Stock under the Offer (including commissions and other expenses) is
estimated to be between $105,000,000 and $120,000,000. In addition, $25,000,000
will be required for Loews's purchase of the New Preferred Stock, described in
the response to Item 6 below. Loews has sufficient cash, marketable securities
and other current assets to enable it to provide all such funds and the funds
necessary to purchase any additional shares of Stock it might purchase under the
Offer. Recently market conditions have not been favorable for the sale of large
amounts of securities. Loews has been informed by Salomon Brothers, which is
acting as Dealer Manager for the Offer, and by Abraham & Co., that such brokers
would, subject to the availability of credit to them, extend up to $75,000,000
and $10,000,000 of credit, respectively, to Loews on a demand margin basis and
at interest rates expected to approximate the prime brokers (call loan) rate in
effect from time to time plus one-half percent, if Loews were to request such
credit. Such brokers may also act for Loews in sales of marketable securities
held by Loews, including sales of securities pledged as collateral for such
loans.
[Amendment No. 36] The funds required to purchase the additional 28,800
shares of Series A Preferred Stock purchased in November 1979, referred to in
Item 5 below, were provided from internally generated funds.
[Amendment No. 37] The funds required to purchase the additional 275,000
shares of Series A Preferred Stock referred to in Item 5 below were provided
from internally generated funds.
[Amendment No. 38] The funds required to purchase the additional shares
referred to in Item 5 below were provided from internally generated funds.
[Amendment No. 45] The funds required to purchase the additional 626,200
shares of Common Stock of CNA referred to in Item 5 of Amendment No. 45 to this
Schedule 13D, amounting to approximately $39,228,710, were provided from
internally generated funds.
Item 4. Purpose of Transaction
----------------------
[Original filing] Loews has not made any determination to acquire control of
the Issuer. Pending such determination, Loews's purchases must be considered to
have been made for investment. Loews will periodically review its investment in
the Issuer and may at any time determine to increase or decrease the amount of
its investment in the Issuer and/or formulate a plan to acquire control of the
Issuer. Loews is actively seeking acquisition opportunities and has in the
recent past sought to acquire control or full ownership of several substantial
publicly held corporations.
[Amendment No. 2] On April 18, 1974 Loews communicated to the Director of the
Department of Insurance of the State of Illinois its concern as a shareholder
about questions presented by the petition of Accident and Casualty Insurance
Company of Winterthur, Switzerland ("Winterthur") for approval of the purchase
by Winterthur, should it elect to do so, of additional securities of the Issuer
which, when added to the shares now held by Winterthur, would result in
ownership by it of 10% or more of the voting securities of the Issuer. Loews
Page 4
invited the attention of the Department of Insurance to areas of inquiry raised
by the petition of Winterthur and requested that information and documents
relating thereto be made available for review and consideration by shareholders
of the Issuer in the interest of a full and complete hearing concerning the
petition of Winterthur and the relationship between it and the Issuer. Loews
intends to continue to review its investment in the Issuer and may at any time
determine to increase or decrease the amount of its investment in the Issuer
and/or formulate a plan to acquire control of the Issuer. Loews intends to meet
with management of the Issuer during the week of April 22, 1974 in connection
therewith; and may seek approval of the Director of the Illinois Department of
Insurance and of other States and jurisdictions, where applicable, for
acquisition by it of 10% or more of the voting securities of the Issuer, should
it elect to do so based on the status of the proceedings presently before
insurance regulatory agencies, market conditions, discussions with management
and further review of financial and economic factors relating to the Issuer.
[Amendment No. 3] Loews has forwarded a letter to management of the Issuer,
dated the date hereof and attached hereto as Exhibit A, relating to its concern
about matters testified to at a hearing at the Department of Insurance of the
State of Illinois held on April 23, 1974, in connection with the petition of
Accident and Casualty Insurance Company of Winterthur, Switzerland
("Winterthur") for approval of the purchase by Winterthur of securities of the
Issuer. The letter advises management of the Issuer that Loews has now
formulated its own considerations with respect to increasing its investment to a
majority of the voting stock of the Issuer through a cash tender offer, and
seeks a meeting with the Board of Directors to discuss same.
As indicated in Amendment No. 2 to this Schedule 13D, management of Loews met
with management of the Issuer on Monday, April 22, 1974. Loews was then advised
that the Issuer wished to remain an independent company not controlled by any
other company. At this time there is no understanding or arrangement between
Loews and the Issuer and Loews does not know what determination the Board of
Directors of the Issuer will make with respect to Loews increasing its
investment in the Issuer.
[Amendment No. 4] Loews, on May 1, 1974, issued the statement attached hereto
as Exhibit A relating to its investment in CNA.
[Amendment No. 5] Loews, on May 3, 1974, issued the statement attached hereto
as Exhibit A relating to its investment in CNA.
[Amendment No. 6] On May 13, 1974 Loews filed with the Director of the
Department of Insurance of the State of Illinois for approval to purchase, by
means of a cash tender offer, additional shares of the voting stock of the
Issuer, which when added to the shares held by Loews would result in Loews
owning a majority of the voting stock of the Issuer and having control of the
Issuer. Loews is also seeking similar approvals under the laws of such other
States or jurisdictions in which such approval is considered necessary. There
is no assurance that such offer by Loews will be made. Prior to the making of
such offer, a statement under Rule 14d-1 will be filed with the Securities and
Exchange Commission.
[Amendment No. 7] On May 22, 1974 Loews filed suit in the United States
District Court for the Northern District of Illinois against Elmer L. Nicholson,
Chairman of the Board and President of CNA, Accident and Casualty Insurance
Company of Winterthur, Switzerland, a substantial stockholder of CNA, and Hans
Braunschweiler, Chairman of the Board and principal executive officer of
Winterthur. A copy of the complaint is annexed hereto as Exhibit 2.
[Amendment No 8] As previously reported, Loews is seeking approvals to make
its proposed tender offer in States and jurisdictions considered necessary. In
addition, Loews has made requests for consolidation with or in opposition to
applications by Accident and Casualty Insurance Company of Winterthur,
Switzerland ("Winterthur"). Loews has been pursuing the lawsuit referred to in
Page 5
Amendment No. 7 including an application for a preliminary injunction against
interference by Winterthur with the proposed Loews tender offer through open
market purchases which Loews has contended could block Loews's ability to make
its proposed offer. Loews has not yet received any of the requisite approvals.
Hearings before the Illinois Department of Insurance were held on June 6 and 7,
1974 and are scheduled to continue on June 27 and 28, 1974. CNA has
participated in the hearings before the Illinois Department of Insurance and has
taken other actions which Loews believes are for the purpose of blocking Loews
proposed tender offer. Loews cannot now predict the outcome of the several
proceedings and other matters, such as purchases of CNA shares by Winterthur,
affecting Loews proposed tender offer.
[Amendment No. 9] On July 10, 1974 the Insurance Department of the State of
Connecticut issued the Order annexed hereto as Exhibit 1 in connection with
Loews's proposed tender offer.
On July 11, 1974 the United States District Court for the Northern District of
Illinois, Eastern Division, ruled from the bench on Loews's application for the
preliminary injunction referred to in Amendment No. 8. The transcript of the
proceedings before such court on such date is annexed hereto as Exhibit 2.
[Amendment No. 10] The Issuer, in Amendment No. 4 to its Schedule 14D,
reported that it had filed with the Securities and Exchange Commission an
application "for a declaratory order of the Commission with respect to whether
Loews and/or its subsidiaries, Loew's Theatres, Inc. and Lawton General Corp.,
are unregistered investment companies for purposes of the Investment Company Act
of 1940 and, thus, as to whether Issuer is an affiliated person of an
unregistered investment company, and whether the acquisition of control of
Issuer by Loews, other than pursuant to an order of the Commission under Section
6(c) of the 1940 Act, would violate the provisions of the 1940 Act." A copy of
such application was annexed to such Amendment No. 4.
Loews believes that the filing of such application is part of a continuing
effort by the Issuer to block Loews's proposed tender offer. Loews further
believes that the Issuer lacks standing to raise such questions, that there is
no jurisdiction for the proceedings sought by the Issuer and that there is no
basis in law or fact for the contention that Loews and/or its subsidiaries are
investment companies within the meaning of the 1940 Act. Loews is unable to
predict what effect the filing of such application will have on Loews's ability
to make its proposed tender offer.
[Amendment No. 11] On July 30, 1974 the Director of Insurance of the State of
Illinois issued an Order approving the application of Loews to acquire control
of the Issuer, subject to certain conditions. A copy of the Order and attached
Findings of Fact, Conclusions of Law and Recommendations made by the Hearing
Officer are attached as Exhibit A.
Loews, on July 31, 1974, issued the statement attached hereto as Exhibit B,
relating to the Order of the Director of Insurance of the State of Illinois.
[Amendment No. 12] On August 2, 1974 the Insurance Commissioner of the State
of California issued his consent approving the application of Loews to acquire
control of the Issuer. A copy of the consent of the Insurance Commissioner of
the State of California is attached hereto as Exhibit A.
[Amendment No. 13] On August 12, 1974 a hearing was held in Tallahassee,
Florida, on Loews's application to the Florida Department of Insurance to
acquire control of CNA. At such hearing, counsel for CNA stated in substance
that CNA was neither opposing nor favoring such application and requested a
speedy determination of such application. No formal determination has been made
as of the date hereof with respect to such application. On August 12, 1974
Loews agreed to a request by CNA for a meeting between Loews's management and a
committee of the Board of Directors of CNA. There are no preconditions to such
meeting, which is scheduled for August 14, 1974.
Page 6
Loews cannot predict whether the foregoing will have any effect on Loews's
proposed tender offer or on the remaining regulatory proceedings pending in
connection therewith.
[Amendment No. 14] On August 13, 1974 the Director of Insurance of the State
of Illinois accepted the Agreement of Loews attached hereto as Exhibit A, and
subscribed the same as fulfilling the express conditions of his Order dated July
30, 1974 approving the application of Loews to acquire control of the Issuer.
On August 14, 1974 the Chairman of the Board and the Senior Vice President of
Loews met with a committee of the Board of Directors of the Issuer, pursuant to
the request of the issuer previously reported by Loews in Amendment No. 13. The
meeting between Loews's management and the committee of the Board of Directors
of the Issuer resulted in no understandings or agreements relating to Loews's
proposed tender offer and there are no arrangements for further meetings.
[Amendment No. 15] On August 21, 1974, Loews agreed to a request by CNA for a
meeting on August 29, 1974 between Loews's management and members of a Committee
of the Board of Directors of CNA. There are no pre-conditions to such meeting.
Loews cannot predict whether the foregoing will have any effect on Loews's
proposed tender offer, or on the remaining regulatory proceedings pending in
connection therewith.
[Amendment No. 16] On August 23, 1974 Loews issued the statement attached
hereto as Exhibit A with respect to its proposed tender offer for CNA.
[Amendment No. 17] On August 26, 1974 Loews received an Order of the
Insurance Commissioner of the State of Florida, a copy of which is annexed
hereto as Exhibit A, approving the application of Loews to acquire control of
CNA. On August 26, 1974 Loews issued the statement annexed hereto as Exhibit B
with respect to said Order.
On August 20, 1974 the United States District Court for the Northern District
of Illinois, Eastern Division, issued Findings of Fact, Conclusions of Law and
an Order relating to Loews's application for the preliminary injunction referred
to in Amendments Nos. 8 and 9. A copy of such Findings of Fact, Conclusions of
Law and Order is annexed hereto as Exhibit C. Accident and Casualty Insurance
Company of Winterthur, Switzerland ("Winterthur") and Hans Braunschweiler have
made a motion to the Court for an Order vacating such portions of the Order
dated August 20, 1974 as enjoin Winterthur from acquiring any shares of CNA
stock other than in open-market purchases until further order of the Court, to
be effective upon the filing by Winterthur of an amendment to its Schedule 13D
relating to CNA. Loews has opposed vacation of those portions of the Order. A
decision by the Court with respect to the Winterthur motion is expected to be
rendered on August 28, 1974.
[Amendment No. 18] On August 29, 1974 Loews issued the statement annexed
hereto as Exhibit A with respect to a meeting between management of Loews and
members of a special committee of the Board of Directors of CNA held on August
29, 1974.
[Amendment No. 19] On August 30, 1974 Loews received approval from the New
York Insurance Department for acquisition by it of control of CNA. A copy of
the letter of the New York Insurance Department relating thereto is annexed
hereto as Exhibit A. On September 3, 1974 Loews issued the statement annexed
hereto as Exhibit B with respect to said approval.
[Amendment No. 20] On September 12, 1974 Loews received the letters dated
September 9, 1974, attached hereto as Exhibit A, of the Department of Insurance
of the State of Pennsylvania. On September 12, 1974 Loews forwarded to the
Pennsylvania Department of Insurance the letter, of the same date, attached
hereto as Exhibit B.
Page 7
At the request of CNA, a meeting has been arranged for September 16, 1974
between officers and directors of Loews and of CNA. As previously reported, two
prior meetings between Loews and CNA have not resulted in any understanding, and
there are no "negotiations" in progress. Loews cannot predict whether the
meeting arranged for September 16, 1974 will have any effect on Loews's proposed
tender offer or on the remaining regulatory proceedings pending in connection
therewith.
[Amendment No. 21] On September 13, 1974 Loews advised the directors of CNA
of cancellation by Loews of the meeting to be held on September 16, 1974 between
officers and directors of Loews and CNA, because Loews believes that no useful
purpose would be served by such meeting at this time, in that actions have been
taken by management of CNA for apparent purpose of delaying the proposed Loews
offer to the shareholders of CNA.
[Amendment No. 22] As previously reported by Loews, the Pennsylvania
Insurance Commissioner (the "Commissioner") advised Loews, by letter dated
September 9, 1974, that he had extended to September 16, 1974 the period after
which the record relating to Loews's application for control of the Issuer would
be closed, and during which he extended to the Issuer the right to submit
information or requests.
On September 19, 1974 counsel for Loews was informed orally that the
Commissioner, at the request of the Issuer, had extended the aforesaid period
from September 16 through September 20, 1974, and that the Issuer had arranged a
conference with the Commissioner for September 24, 1974. Loews was informed
that it would be accorded the privilege of attending the conference between the
Issuer and the Commissioner. Loews intends to attend such conference.
Loews cannot predict when its proposed tender offer will be approved in
Pennsylvania and what effect the foregoing will have on its proposed offer.
[Amendment No. 23] On September 20, 1974 Loews received the letter of the
Senior Vice President and General Counsel of the Issuer annexed hereto as
Exhibit A.
At a meeting held, at the request of the Issuer, on September 24, 1974, and
attended by the Pennsylvania Commissioner of Insurance, representatives of the
Commissioner's staff and representatives of Loews, the Issuer stated that it did
not believe that Loews's application to acquire additional shares of the Issuer,
now pending in Pennsylvania, could be granted because the application did not
meet requisites of Pennsylvania law. Counsel for Loews has advised it that the
application meets the requisites of Pennsylvania law. The Issuer also suggested
proposed conditions in the event an approving determination is made. Loews has
advised the Pennsylvania Department of Insurance that the proposed conditions
are neither necessary nor appropriate.
On September 26, 1974, Loews received the letter annexed hereto as Exhibit B
from the Division of Investment Management Regulation of the Securities and
Exchange Commission stating that the Commission has determined not to entertain
the application of the Issuer for a declaratory order on Loews's status under
the Investment Company Act of 1940, which determination does not reflect any
conclusion by the Commission or its staff with respect to the status of Loews
under said Act.
[Amendment No. 24] On October 16, 1974 counsel for Loews received a copy of
the letter annexed hereto as Exhibit A, forwarded to the Pennsylvania Insurance
Department by counsel to the Issuer. On October 16, 1974 counsel for Loews
forwarded to the Pennsylvania Insurance Department the letter annexed hereto as
Exhibit B.
On October 17, 1974 Loews was advised by the Pennsylvania Insurance Department
that a hearing on its application to acquire control of the Issuer would be held
by that Department no later than October 22, 1974, and Loews was furnished with
Page 8
a copy of the letter relating thereto annexed hereto as Exhibit C. On October
18, 1974 Loews issued the statement relating thereto annexed hereto as Exhibit
D.
[Amendment No. 25] On October 30, 1974 Loews issued the statement annexed
hereto as Exhibit A with respect to the status of its proposed tender offer for
control of the Issuer; a meeting held October 29, 1974 between management of
Loews and its counsel and management of the Issuer, a special committee of the
Issuer's directors and the Issuer's counsel and outside auditors; and approval
by the Pennsylvania Insurance Department of the application by Loews to control
the Issuer, as originally proposed. A copy of the Order and Determination of
the Pennsylvania Insurance Commissioner approving the Loews application to
acquire additional shares of the Issuer is annexed hereto as Exhibit B.
[Amendment No. 26] On November 4, 1974, Loews and CNA jointly issued the
release attached hereto as Exhibit A.
[Amendment No. 27] On November 8, 1974 Loews issued the release attached
hereto as Exhibit A.
[Amendment No. 28] The purpose of the Offer is to acquire a majority or more
of the Stock of CNA, which will give Loews control of CNA. Loews does not
presently intend to liquidate CNA, to sell its assets or to merge it with any
other company. Loews does intend to seek the changes in CNA's business and
management discussed below. Loews has been advised by CNA that management of
CNA has under preliminary consideration material changes in CNA's business.
Except as set forth below, Loews has made no determinations with respect
thereto. If Loews acquires control of CNA, Loews intends to review with CNA's
management CNA's business and management and make such changes as may be in the
best interests of CNA's business. If Loews acquires a majority of the Stock,
Loews would have the ability to elect all of the directors of CNA, at least one
third of whom must be independent of Loews by reason of the agreements referred
to below. In any action Loews takes with respect to the Board of Directors or
management of CNA, Loews will be guided by what it believes to be the best
interest of CNA and all of CNA's stockholders. Loews believes certain
acquisitions made by CNA were in retrospect ill-advised and that the business of
CNA should be concentrated in the insurance and finance areas, but Loews has not
made any determinations in this respect.
As set forth in response to Item 6 below, Loews has obtained the kinds of
information necessary to formulate intentions as to the future business of CNA
only since October 29, 1974. As also set forth below, however, Loews presently
believes and intends that CNA should concentrate on its basic insurance and
finances businesses. Accordingly, Loews believes that CNA's wholly-owned
General Finance Company ("General Finance") subsidiary should continue as a
subsidiary of CNA. In view of Loews's belief that CNA should concentrate on its
basic insurance and finance businesses, it is possible that Loews may in the
future determine that CNA's other businesses should be disposed of. As of the
date hereof, Loews has made no determinations in this regard.
While Loews has had several discussions with senior executives of CNA as to
feasibility of specific actions with respect to CNA's business, Loews has not
formulated any specific intentions at this time. CNA has advised Loews that it
has considered transferring ownership of Continental Assurance Company
("Assurance") to Continental Casualty Company (together with its subsidiaries
referred to as "Casualty") to increase Casualty's surplus. Loews understands
that such action would raise certain questions of practicability which have not
yet been fully explored or answered. Based on what it now understands, while
Loews has no present intention to effectuate such transfer, Loews recognizes
that it could in the future be a necessary or desirable action. Loews does not
have sufficient information about the patient care subsidiaries of CNA presently
to form an intention with respect to them. Loews is aware of the management
dispute and litigation affecting Healthco, Inc., a 45% owned subsidiary of CNA
engaged in the dental and medical supply field, and Loews intends to explore
Page 9
whether such dispute and litigation can be settled on a basis satisfactory to
CNA and Healthco.
Loews believes that the major business problem faced by CNA is to improve the
operations and financial condition of Casualty. In order to accomplish this
Loews believes that it may be necessary to increase substantially the capital of
Casualty. At the present time, the only likely sources of such additional
capital are the transfer of assets of CNA, such as Assurance, to Casualty or the
direct provision of money by CNA to Casualty. Loews believes that the only
practicable sources of funds for such a direct capital infusion by CNA are the
sale of assets or provision of funds or credit by Loews.
If Loews determines to provide additional funds or credit to CNA the terms may
be less favorable or more favorable to CNA than the terms of the purchase of the
New Preferred Stock described in response to Item 6. In view of the current
financial condition and operations of CNA it should be expected that the terms
would be less favorable and that the interests of the stockholders other than
Loews might be substantially diluted. See below with respect to the agreement
by Loews that for the next five years the terms on which Loews provides
additional capital to CNA must be approved by a majority of the independent
directors of CNA.
Based on its present knowledge of CNA, Loews believes that a primary and
essential need is to strengthen CNA's management. Loews believes that present
management, as a whole, has not been successful. Based on its discussions with
the senior executives of CNA, Loews believes that many of them are competent and
should remain in the employ of CNA. Loews has not yet had the opportunity to
make specific determinations in this area and recognizes that further study and
consideration is necessary. CNA is presently seeking a senior executive to
manage its insurance operations. Loews believes that this is one of the most
important immediate tasks facing CNA and intends that CNA accomplish it as soon
as possible. Loews does not have any understanding with any of the officers or
directors of CNA with respect to employment or with respect to the tender of
their shares.
Loews has applied to the Foreign Investment Review Agency of Canada for
approval to acquire control of CNA's Canadian subsidiaries through acquisition
of control of CNA. In the event Loews acquires control of CNA and such approval
is not granted, Loews has advised the Foreign Investment Review Agency that it
would agree to divest itself of control of the CNA Canadian subsidiaries at the
earliest practicable dates mutually agreeable to Loews and that Agency. CNA has
advised Loews that at September 30, 1974 its Canadian subsidiaries had an
aggregate net worth of approximately $25,000,000 (excluding the interest of
parties not affiliated with CNA) and that for the nine months then ended such
subsidiaries had an aggregate net profit of approximately $1,000,000 (excluding
the interest of parties not affiliated with CNA). CNA is engaged, through
wholly-owned subsidiaries, in the management of investment companies registered
under the Investment Company Act of 1940 and in providing other investment
advisory services. If Loews acquires control of CNA pursuant to the Offer, the
investment advisory agreements of the CNA subsidiaries would terminate and
unless and until new agreements are approved, which in the case of the
investment companies requires approval of their shareholders, CNA will not have
the income from such investment management and advisory activities. Loews has
been informed by CNA that CNA has communications subsidiaries that are subject
to regulation under the Federal Communications Act, a subsidiary which is a
small business investment company subject to regulation under the Small Business
Investment Act and a subsidiary which operates patient care facilities in
several states and is subject to various state licensing regulations. The
acquisition of control by Loews of these businesses through the acquisition of
control of CNA could require various agency approvals. While Loews intends to
seek any approvals it considers necessary, Loews does not intend to defer the
purchase of shares of Stock pursuant to the Offer pending receipt thereof.
There is no assurance that such approvals will be obtained in the event Loews
acquires control of CNA, and failure to obtain such approvals might result in
Page 10
CNA being required to divest itself of such businesses or in the suspension of
the right to conduct such businesses. Furthermore, the failure to obtain any
such approvals prior to the Offer may adversely affect Loews's ability to obtain
them in the future. CNA has advised Loews that such investment management and
advisory activities, communications subsidiaries, small business investment
subsidiary and patient care facilities were in the aggregate not profitable for
the nine months ended September 30, 1974 and that their aggregate net worth at
that date was not material. Loews does not have sufficient information to
determine whether CNA might be adversely affected, other than as set forth
herein, if Loews acquires additional shares of Stock or control of CNA; however,
there can be no assurance that there may not be other adverse effects incurred
by CNA.
In certain areas of the United States, the CNA subsidiaries engaged in real
estate development and related activities compete to some extent with Loews's
joint venture activities in the same fields. Loews believes that such
competition is not substantial and would not result in any material conflicts of
interest if Loews should acquire control of CNA.
The insurance company subsidiaries of CNA are subject to regulation and
supervision in each jurisdiction in which they do business. Generally, such
regulation is by state insurance commissioners who have broad administrative
powers with respect to licensing of insurers and their agents, the nature and
limitations on investments, approval of policy forms, reserve requirements and
trade practices. Insurance holding company laws of several states grant
additional powers to state insurance commissioners to regulate the acquisition
of domestic insurance companies, to require registration of companies and
periodic disclosure of information and to regulate transactions with affiliates.
Loews has received approval from the insurance departments of Illinois,
California, Florida, New York and Pennsylvania to acquire control of CNA or,
through such acquisition, of CNA's insurance company subsidiaries, and has
received an exemption from the Connecticut Insurance Department. Loews believes
that no other insurance department approvals or exemptions are necessary. In
connection with obtaining certain of such approvals, Loews and Laurence A. Tisch
and Preston R. Tisch agreed that they would not permit CNA or any of its
subsidiaries to enter into certain transactions with Loews or its affiliates,
and that, after Loews acquired 50% or more of the voting stock of CNA, (a) Loews
would cause at least one-third of CNA's directors to be persons who were
independent of Loews and its affiliates, and (b) Loews and certain of its
affiliates would within three years reduce the aggregate beneficial ownership of
Loews and such affiliates of voting securities in Reliance Group, Inc. (an
insurance holding company which is in competition with CNA) to less than 1% of
the outstanding voting securities of Reliance Group, Inc. Loews further agreed
that for a period of five years after Loews acquires more than 50% of the voting
securities of CNA, Loews will not cause or permit CNA to pay any dividend unless
such dividend shall have been approved by a majority of the directors of CNA
including a majority of the directors who are not affiliated with Loews and
that, for such five year period, if CNA requires additional capital and Loews
determines to provide such additional capital, the terms on which such
additional capital shall be provided to CNA by Loews shall be approved by a
majority of the directors of CNA including a majority of the directors who are
not affiliated with Loews. The purchase by Loews of the New Preferred Stock,
described in response to Item 6 below, complies with such condition. Loews also
agreed to remove any officer or director who is found to be unacceptable by the
New York State Department of Insurance and that for a period of two years no
dividend would be declared or paid by Transcontinental Insurance Company, a New
York insurance company subsidiary of CNA, without the prior approval of the
Superintendent of Insurance of New York.
Accident and Casualty Insurance Company of Winterthur, Switzerland
("Winterthur") has, according to reports filed by it pursuant to Section 13(d)
of the Securities Exchange Act of 1934, received regulatory approval or
exemptions from all of the state insurance departments which it deems necessary
to purchase additional shares of Stock "through open market purchases, block
Page 11
purchases, private purchases off the market, or otherwise, as shall be deemed to
be in the best interests of Winterthur and depending upon market conditions and
other factors," Winterthur, which according to such reports owned beneficially
on June 4, 1974 2,529,328 shares of Common Stock and 530,013 shares of Preferred
Stock, has also previously stated in such reports that "it has no present
intention of increasing its holdings above 20% of the outstanding voting stock
of CNA or acquiring control of CNA." On May 22, 1974, Loews filed suit in the
United States District Court for the Northern District of Illinois against
Winterthur, Dr. Hans Braunschweiler, Chairman of the Board and principal
executive officer of Winterthur and a director of CNA, and Elmer L. Nicholson,
Chairman of the Board and President of CNA, alleging, among other things,
violations of the federal securities laws. See Exhibit 2 filed with Amendment
No. 7 hereto. On August 20, 1974, the District Court, on Loews's motion for a
preliminary injunction, enjoined Winterthur from purchasing any additional
shares of Stock or voting any shares of Stock acquired by Winterthur subsequent
to March 11, 1974 until further order of the District Court. See Exhibit 2
filed with Amendment No. 9 hereto and Exhibit C filed with Amendment No. 17
hereto. The District Court's decision is being appealed by Winterthur. Loews
did not seek preliminary relief against Mr. Nicholson, and the District Court
found that the evidence presented on the motion for a preliminary injunction did
not prove Mr. Nicholson acted in concert with Winterthur or Dr. Braunschweiler.
In September 1974, Winterthur announced that it had decided not to purchase any
more shares of Stock. Loews is considering consulting with Winterthur and the
other defendants as to a dismissal of the lawsuit. Loews understands that CNA
and Winterthur have for many years done substantial reciprocal reinsurance
business with each other and have had other business relations. Loews hopes
that to the extent such relationships are beneficial to CNA they will continue,
but Loews cannot predict the effect of Loews obtaining control of CNA on such
relationships.
On July 18, 1974, CNA filed with the Securities and Exchange Commission
("Commission") an application for a declaratory order as to whether Loews and/or
certain of its subsidiaries are investment companies for purposes of the
Investment Company Act of 1940 (the "1940 Act"). Loews was advised by its
counsel that in their opinion neither Loews nor such subsidiaries are investment
companies within the meaning of the 1940 Act, and Loews so advised the
Commission. On September 20, 1974, the Commission, without passing on the
question of Loews's status under the 1940 Act, declined to order the institution
of the proceedings requested by CNA. The staff of the Commission conducted an
investigation of Loews, Winterthur and CNA in connection with the Offer. On
September 6, 1974, Loews was advised by the staff that the investigation was
terminated. Such advice does not constitute assurance that no action against
any of the parties, including Loews, may ultimately result from the
investigation.
The staff of the Commission has raised a question with Loews as to whether,
given the particular circumstances of recent disclosure by CNA, the Offer
provides all information desirable under such circumstances or whether the
format should be changed to one substantially similar to a prospectus that would
be used for an exchange offer registered under the Securities Act of 1933.
Loews believes that the Offer complies with the federal securities laws. Loews
believes that it would be adverse to Loews and CNA if the Offer were to be
delayed for the time necessary for the preparation of a document similar to an
exchange offer prospectus. Loews cannot predict what action, if any, might be
recommended by the staff of the Commission. While Loews has not made any
decision with respect thereto, it should be recognized that any such action
taken or threatened could result in Loews electing to terminate the Offer as
provided in paragraph 11 of the Offer to Purchase annexed hereto as Exhibit 1.
Based on a preliminary review of the businesses of Loews and CNA, Loews
believes that acquisition by it of Stock pursuant to the Offer will not violate
the federal antitrust laws. The Offer has not been submitted for review by the
Antitrust Division of the Department of Justice or the Federal Trade Commission.
There can be no assurance that no challenge to the Offer on antitrust grounds
Page 12
will be made.
For additional information, see Item 6 (to this Amendment No. 28).
[Amendment No. 29] On November 15, 1974 Loews issued the press release
attached hereto as Exhibit A.
[Amendment No. 30] On November 27, 1974 Loews issued the press release
attached hereto as Exhibit A.
[Amendment No. 31] On November 29, 1974 Loews issued the press release
attached hereto as Exhibit A.
[Amendment No. 32] On December 11, 1974 Elmer L. Nicholson resigned as
Chairman of the Board, President and a Director of CNA and as an officer and
director of all of its subsidiaries. On December 11, 1974 Laurence A. Tisch,
Chairman of the Board of Loews, became Chairman of the Board of CNA. The
following additional officers of CNA have resigned as officers and/or directors
of CNA and its subsidiaries: A. Scott Bushey, David J. Christensen, Eugene
Miller, Jacques W. Sammet and Harold E. Sorter.
Loews has agreed to dismiss the lawsuit brought by it on May 22, 1974 in the
United States District Court for the Northern District of Illinois against
Accident and Casualty Insurance Company of Winterthur, Switzerland
("Winterthur"), Dr. Hans Braunschweiler and Elmer L. Nicholson. Winterthur has
agreed to dismiss its appeal from the preliminary injunction entered in such
lawsuit.
[Amendment No. 33] On August 1, 1979, Loews issued the press release attached
hereto as Exhibit A.
[Amendment No. 34] On August 8, 1979, Loews issued the press release attached
hereto as Exhibit A.
[Amendment No. 36] Loews purpose in converting the shares of $.80 Cumulative
Convertible Series C Preferred Stock (the "Series C Preferred Stock") and $11.85
Cumulative Convertible Series D Junior Preferred Stock (the "Series D Preferred
Stock") of CNA described in Item 5 below was to increase Loews ownership of the
outstanding voting securities of CNA from approximately 78.7% to approximately
82.4% and thereby effect the consolidation of the results of operations of CNA
with those of Loews for tax purposes beginning in 1980.
Item 5. Interest in Securities of the Issuer
------------------------------------
[Original filing] (a) Loews owns indirectly a total of 1,604,300 shares of
the Common Stock of the Issuer and a total of 180,100 shares of the Issuer's
Series A Preferred Stock. An aggregate of 588,600 of such shares of Common
stock were purchased during the past sixty days in transactions on the New York,
Midwest and PBW stock exchanges, on various dates between December 26, 1973 and
the date hereof, at prices ranging from $7.75 to $9.00 per share.
All of the shares acquired by Loews were and are owned by Lawton General Corp.
("Lawton"), a wholly owned second-tier subsidiary of Loews. Lawton's offices
are located at 666 Fifth Avenue, New York, New York. Information relating to
Lawton is contained in Appendix B attached hereto.
A total of 8,000 shares of Common Stock are held by the trust under the Loews
Supplemental Employees' Savings Plan and a total of 4,000 shares of Common Stock
are held by the trust under the Loews Employees' Retirement Plan. Loews
disclaims any partnership, syndicate or other group relationship with such
trusts in connection with the purchase of any of the securities referred to
herein. James Bruce, a director of Loews, is the trustee and a beneficiary of a
trust which holds 200 shares of Common Stock of the Issuer. To the best of
Page 13
Loews's knowledge, no officer, director or affiliated person of Loews otherwise
owns any securities of the Issuer.
[Amendment No. 1] Lawton General Corp., a wholly owned second-tier subsidiary
of Loews, purchased in the over-the-counter market an aggregate of 362,000
shares of Common Stock of the Issuer at a negotiated net purchase price of
$2,950,300 on March 4, 1974.
[Amendment No. 2] Lawton General Corp., a wholly owned second-tier subsidiary
of Loews, in addition to purchases previously reported, purchased an aggregate
of 144,000 shares of Common Stock of the Issuer on the New York Stock Exchange,
the PBW Stock Exchange and in the over-the-counter market between February 21
and April 17, 1974, at prices ranging from $8.125 to $10 per share.
[Amendment No. 28] The minor son of Lester Pollack, Senior Vice President of
Loews, owns five shares of Common Stock, and James Bruce, a director of Loews,
is the trustee and a beneficiary of a trust which holds 200 shares of Preferred
Stock. See response to Item 6 below.
[Amendment No. 35] On September 4, 1979, the Purchaser gave notice to The
First National Bank of Chicago, the Depositary, to purchase all shares of Common
Stock and Series A Preferred Stock tendered pursuant to the tender offer. Based
on the most recent count, on September 13, 1979 the Depositary informed the
Purchaser that 8,126,589 shares of Common Stock and 2,238,756 shares of Series A
Preferred Stock were tendered. Of such shares, certificates for 351,326 shares
of Common Stock and 132,367 shares of Series A Preferred Stock had not yet been
received by the Depositary. Assuming the purchase of 8,126,589 shares of Common
Stock and 2,238,756 shares of Series A Preferred Stock, the Purchaser would own,
at the date hereof, 28,016,320 shares of Common Stock (approximately 81.2% of
the 34,482,010 shares of Common Stock outstanding at September 13, 1979) and
4,649,928 shares of Series A Preferred Stock (approximately 57.3% of the
8,111,441 shares of Series A Preferred Stock outstanding at September 13, 1979).
[Amendment No. 36] On November 30, 1979 the First National Bank of Chicago,
the Depositary, advised Loews that the final count of the number of shares
tendered and purchased pursuant to Loews Tender Offer dated August 10, 1979 to
purchase Common Stock and Series A Preferred Stock was 8,094,472 shares of
Common Stock and 2,226,613 shares of Series A Preferred Stock.
On November 21 and November 23 Loews purchased in open market transactions on
the New York Stock Exchange 19,800 shares and 9,000 shares, respectively, of
Series A Preferred Stock at a purchase price of $18 per share.
On January 3, 1980 Loews converted all of the Series C Preferred Stock and
Series D Preferred Stock owned by it into an aggregate of 13,888,889 shares of
Common Stock pursuant to CNA's Certificate of Incorporation.
Loews is the beneficial owner of 41,873,092 shares of Common Stock,
representing approximately 86.5%, of the total number of shares of Common Stock
outstanding on January 3, 1980 and 4,666,585 shares of Series A Preferred Stock,
representing approximately 57.5% of the total number of shares of Series A
Preferred Stock outstanding on January 3, 1980. Assuming the conversion of the
Series A Preferred Stock beneficially owned by Loews, Loews would be the
beneficial owner of an aggregate of 47,706,323 shares of Common Stock,
representing approximately 88% of the total number of shares of Common Stock
outstanding on January 3, 1980 after giving effect to such conversion. The
shares of Common Stock and Series A Preferred Stock presently owned by Loews
constitute approximately 82.4% of the outstanding voting securities of CNA.
Except as set forth above in this Item 5 and as set forth in Item 6 of Loews
Schedule 14D-1 dated August 10, 1979, neither Loews, nor to the best knowledge
of Loews any of its executive officers or directors, beneficially owns any
shares of Common Stock or Series A Preferred Stock.
Page 14
Loews has the sole power to vote and the sole power to dispose of the shares
of Common Stock and Series A Preferred Stock beneficially owned by it.
No person other than Loews has the right to receive or the power to direct the
receipt of the dividends from, or the profits from the sale of, the shares of
Common Stock and Series A Preferred Stock beneficially owned by it.
[Amendment No. 37] Since November 1979, Loews has purchased the following
shares of Series A Preferred Stock. Except as noted below, all such purchases
were made on the New York Stock Exchange.
Purchase Price
Date Number of Shares Per Share
---- ---------------- --------------
3/10/80 200,000* $19.00
3/10/80 50,000 $19.50
4/10/80 25,000 $16.75
- -----------
* These shares were purchased in a private transaction.
Loews is the beneficial owner of 41,873,092 shares of Common Stock,
representing approximately 86.4% of the total number of shares of Common Stock
outstanding on April 30, 1980 and 4,941,585 shares of Series A Preferred Stock,
representing approximately 61% of the total number of shares of Series A
Preferred Stock outstanding on April 30, 1980. Assuming the conversion of the
Series A Preferred Stock beneficially owned by Loews, Loews would be the
beneficial owner of an aggregate of 48,050,073 shares of Common Stock,
representing approximately 87.9% of the total number of shares of Common Stock
outstanding on April 30, 1980 after giving effect to such conversion. The
shares of common Stock and Series A Preferred Stock presently owned by Loews
constitute approximately 82.8% of the outstanding voting securities of CNA.
[Amendment No. 38] Since April 10, 1980 through May 31, 1980, Loews has
purchased the following additional shares of Common Stock and Series A Preferred
Stock on the New York Stock Exchange.
Number Purchase Price
Date Class of Share of Shares Per Share
---- -------------- --------- --------------
5/19/80 Common 26,900 $16.25
5/19/80 Series A Preferred 195,000 20.00
5/28/80 Common 400 15.75
5/28/80 Series A Preferred 9,700 20.00
Loews is the beneficial owner of 41,900,392 shares of Common Stock,
representing approximately 86.5% of the total number of shares of Common Stock
outstanding on May 31, 1980 and 5,146,285 shares of Series A Preferred Stock,
representing approximately 63.6% of the total number of shares of Series A
Preferred Stock outstanding on such date. Assuming the conversion of the Series
A Preferred Stock beneficially owned by Loews, Loews would be the beneficial
owner of an aggregate of 48,333,248 shares of Common Stock, representing
approximately 88% of the total number of shares of Common Stock outstanding on
May 31, 1980 after giving effect to such conversion. The shares of Common Stock
and Series A Preferred Stock presently owned by Loews constitute approximately
83.2% of the outstanding voting securities of CNA.
[Amendment No. 39] Since June 1, 1980 through September 28, 1982, Loews has
purchased the following additional shares of Common Stock and Series A Preferred
Stock on the New York Stock Exchange.
Page 15
Number Purchase Price
Date Class of Share of Shares Per Share
---- -------------- --------- --------------
6/02/80 Common 1,000 $15.625
6/03/80 " 10,600 16.00
6/10/80 " 600 15.75
6/16/80 Series A Preferred 15,000 20.00
6/17/80 Common 11,600 16.00
6/17/80 " 185,000 15.625
7/30/80 " 8,400 16.125
8/01/80 " 6,000 16.00
8/26/80 " 18,900 16.50
9/15/80 " 18,500 16.625
9/16/80 " 30,000 17.00
9/24/80 Series A Preferred 19,000* 21.25
9/26/80 Common 14,900 16.25
9/30/80 Common 24,000* 16.25
10/9/80 " 26,700 19.00
1/08/81 " 115,900 16.50
1/26/81 " 7,900 14.625
9/16/81 Series A Preferred 79,600 15.75
5/11/82 " " " 58,200 17.375
5/27/82 Common 26,800 12.50
5/27/82 " 7,700*** 12.625
6/02/82 " 20,000*** 12.25
6/17/82 " 24,900 10.50
6/22/82 Series A Preferred 5,000 14.00
9/24/82 Common 1,190,500** 14.75
9/27/82 Series A Preferred 174,100 18.625
- -----------
* Midwest Stock Exchange
** Pacific Stock Exchange
*** Over-the-Counter
Loews is the beneficial owner of 43,650,292 shares of Common Stock,
representing approximately 89.5% of the total number of shares of Common Stock
presently outstanding and of 5,497,185 shares of Series A Preferred Stock,
representing approximately 69.4% of the total number of shares of Series A
Preferred Stock presently outstanding. Assuming the conversion of the Series A
Preferred Stock beneficially owned by Loews, Loews would be the beneficial owner
of an aggregate of 50,521,773 shares of Common Stock, representing approximately
90.8% of the total number of shares of Common Stock outstanding after giving
effect to such conversion. The shares of Common Stock and Series A Preferred
Stock presently owned by Loews constitute approximately 86.7% of the presently
outstanding voting securities of CNA.
[Amendment No. 40] On November 23, 1982 Loews purchased 43,200 additional
shares of Series A Preferred Stock at a price of $20.75 per share, in an
over-the-counter transaction, and on December 27, 1982 Loews purchased 15,000
additional shares of Series A Preferred Stock at a price of $21.25 per share, on
the New York Stock Exchange, increasing the number of shares of Series A
Preferred Stock beneficially owned by Loews to 5,555,385 shares.
In December 1982, Loews transferred all of the Common Stock and Series A
Preferred Stock owned by it to a newly incorporated, wholly-owned Delaware
subsidiary, CNA Holdings, Inc. ("Holdings"). Thereafter, on December 29, 1982,
Loews transferred 490 shares of Holdings Common Stock, representing 49% of the
outstanding voting securities of Holdings, to Loew's Theatres, Inc., a New York
corporation ("LTI") in connection with the satisfaction of approximately
$424,000,000 of intercompany indebtedness owed by it to LTI. LTI is a
wholly-owned subsidiary of Loews. Accordingly, Holdings and LTI may be deemed
to be the beneficial owners of all and 49%, respectively, of the Common Stock
Page 16
and Series A Preferred Stock beneficially owned by Loews. Each individual who
serves as a director or executive officer of Holdings and LTI also serves as a
director or executive officer of Loews.
[Amendment No. 41] On August 8, 1983 Loews purchased 65,000 shares of Common
Stock at $20.25 per share in a transaction effected on the New York Stock
Exchange.
On December 29, 1983, Loews converted all of the 5,555,385 shares of Series A
Preferred Stock owned by it into 6,944,231 shares of Common Stock, in accordance
with CNA's Certificate of Incorporation. As a result of such conversion, Loews
no longer owns any shares of Series A Preferred Stock and this Schedule 13D will
no longer relate to Series A Preferred Stock. The conversion of Series A
Preferred Stock was effected in connection with the redemption by CNA of all of
the issued and outstanding shares of Series A Preferred Stock, at a redemption
price of $26.27 per share, on December 29, 1983.
As a result of the foregoing, Loews is the beneficial owner of 50,659,523
shares of Common Stock, representing approximately 88.2% of the total number of
shares of Common Stock outstanding on December 31, 1983. All such shares of
Common Stock beneficially owned by Loews are held by CNA Holdings, Inc., a
wholly-owned subsidiary of Loews. On December 29, 1983 Loew's Theatres, Inc., a
wholly-owned subsidiary of Loews, transferred by way of dividend in kind, its
holding of 49% of the outstanding voting securities of CNA Holdings, Inc. to
Loews. Accordingly, Loews owns directly all of the outstanding voting
securities of CNA Holdings, Inc.
[Amendment No. 42] Loews is the beneficial owner of 51,303,123 shares of
Common Stock, representing approximately 89.2% of the total number of shares of
Common Stock outstanding. All such shares of Common Stock beneficially owned by
Loews are held by CNA Holdings, Inc., a wholly-owned subsidiary of Loews.
On December 12, 1984, Loews purchased 607,000 shares of Common Stock in a
privately negotiated transaction at a purchase price of $29 per share.
[Amendment No. 43] Loews is the beneficial owner of 51,303,160 shares of
Common Stock. During 1987, CNA has purchased approximately 1,458,000 shares of
its Common Stock. As a result of these purchases by CNA and public offerings of
Common Stock by CNA since the filing of the last amendment to this Schedule 13D,
these shares of Common Stock owned by Loews now constitute approximately 81.9%
of the total number of shares of Common Stock outstanding. All such shares are
held directly by Loews.
[Amendment No. 44] Since the filing of Amendment No. 43 to this Schedule 13D,
through April 30, 1989 CNA has purchased approximately 817,600 shares of its
Common Stock. As a result of these purchases by CNA, the 51,303,160 shares of
Common Stock beneficially owned by Loews now constitute approximately 82.96% of
the total number of shares of Common Stock outstanding.
[Amendment No. 45] Since the filing of Amendment No. 44 to this Schedule 13D
through September 13, 1994, Loews has purchased an aggregate of 626,200 shares
of the Common Stock of CNA. As a result of these purchases, Loews owns
beneficially and of record an aggregate of 51,929,360 shares of such Common
Stock, which constitutes approximately 84.03% of the total number of shares
outstanding.
The table set forth below contains information regarding purchases of Common
Stock in the past 60 days. All such purchases were effected on the New York
Stock Exchange.
Page 17
Number of Shares
Date Purchased Price Per Share
---- ---------------- ---------------
8/17/94 3,000 $61.50
8/18/94 47,500 60.842
8/19/94 400 61.00
8/22/94 200 60.875
8/22/94 3,800 61.125
8/23/94 100 61.125
8/23/94 300 61.50
8/24/94 1,000 61.50
8/25/94 1,900 61.00
8/25/94 10,000 61.125
8/25/94 1,000 61.25
8/25/94 200 61.50
8/26/94 180,500 61.00
8/26/94 25,000 61.125
8/26/94 1,000 61.375
8/26/94 220,000 61.25
8/29/94 2,000 62.00
8/30/94 2,000 62.00
8/31/94 4,200 61.25
8/31/94 2,000 61.50
9/01/94 1,400 61.00
9/01/94 5,600 61.125
9/06/94 2,000 61.25
9/07/94 400 61.375
9/08/94 9,200 61.25
9/08/94 1,000 61.25
9/08/94 500 61.375
9/09/94 3,600 61.00
9/09/94 14,000 61.125
9/12/94 4,000 61.25
9/13/94 28,700 61.125
Item 6. Contracts, Arrangements, Understandings or Relationships
--------------------------------------------------------
with Respect to securities of the Issuer
----------------------------------------
Loews has no contracts, arrangements or understandings with any person
regarding any securities of the Issuer.
[Amendment No. 28] On May 3, 1974, Loews first announced that it was
contemplating making a tender offer for the Stock and thereafter began seeking
the state insurance department approvals it considered necessary for making such
tender offer (see response to Item 4 above). On August 23, 1974, Loews
announced that its intended tender offer prices were $6.00 per share of Common
Stock and $8.00 per share of Preferred Stock and that it was continuing to seek
the remaining such approvals.
On October 28, 1974, the day before receipt of the last of such approvals, the
Board of Directors of CNA announced that it was prepared to recommend that
stockholders of CNA accept the then proposed offer by Loews to purchase Stock at
the proposed prices of $6.00 per share of Common Stock and $8.00 per share of
Preferred Stock. At the same time, CNA also announced that it would be
reporting a loss for its third quarter ended September 30, 1974, of
approximately $135,000,000 (subsequently reported as $145,000,000 as a result of
realized losses on securities sales), including an increase of approximately
$40,000,000 in casualty insurance reserves for prior years of Casualty,
operating losses of approximately $50,000,000 of Larwin Group, Inc. and its
subsidiaries ("Larwin"), and an approximately $38,000,000 provision for loss of
CNA's remaining investment in its Larwin subsidiaries. Such losses were in
Page 18
addition to previously reported losses of about $55,000,000 for the first six
months of 1974. Additional information concerning CNA and its results of
operations for its third quarter ended September 30, 1974, is contained in the
letter from CNA to its stockholders annexed hereto as Exhibit 10 and in CNA's
November 6, 1974 press release attached thereto.
The CNA announcement of October 28 also stated that the stock market decline
in the third quarter of 1974 had caused a decrease of approximately $85,000,000
in the market value of the equity securities in Casualty's investment portfolio
as of September 30, 1974 which was not reflected in earnings but reduced
Casualty's surplus. CNA has informed Loews that, as of November 5, 1974,
increases in such market values added approximately $35,000,000 to Casualty's
surplus since September 30, 1974.
The October 28 announcement by CNA said that the $40,000,000 increase in
Casualty's reserves was made after receipt of a preliminary draft report by
Milliman & Robertson, Inc., an actuarial consulting firm retained by CNA, which
concludes that, assuming claim costs continue to escalate in the future as they
have in the past, it is most probable that a total of $122,000,000 in additional
reserves will be required for ultimate disposition of present reported and
unreported claims on the insurance lines under study. Noting that actual claim
experience could vary from this reserve estimate by as much as $87,000,000 in
either direction, Milliman & Robertson recommended that Casualty's reserves
should be increased at present by at least $35,000,000. This recommended amount
is included as part of the $40,000,000 increase in reserves during the third
quarter of 1974 and in the $122,000,000 Milliman & Robertson figure noted above.
Following CNA's October 28 announcement, the Illinois Department of Insurance
completed a review which included discussions with Milliman & Robertson and the
independent accountants for CNA and Casualty. On November 1, 1974, the Illinois
Insurance Department announced that it had concluded that "the $40,000,000
addition to reserves by the Casualty Company is an appropriate current response
to the Milliman & Robertson recommendation" and that arrangements have been made
for semi-annual review by the Illinois Insurance Department with Milliman &
Robertson of the reserve requirements of Casualty.
Commencing October 29, 1974, representatives of Loews met with the Board of
Directors and Management of CNA and with independent accountants, actuaries and
counsel for CNA to discuss and evaluate various matters referred to in CNA's
announcement of October 28 and to investigate the business, financial condition
and prospects of CNA. During such meetings, CNA advised Loews that it was
projecting under certain circumstances a substantial cash deficiency for the
period ending April 1, 1975, caused in large part by the fact that Casualty
could no longer pay dividends to CNA because its surplus had been depleted by
additions to reserves and because of the decline in the market value of its
investment portfolio of equity securities referred to above. In Loews's view,
this situation may have a long-term impact on the cash needs of CNA. Moreover,
since it is the practice in the casualty insurance industry that the amount of
new insurance undertaken by a company is related to the size of its surplus, the
depletion of Casualty's surplus, while due in large measure to the industry-wide
problems of adverse claim experience and declining portfolio values, may well
cause Casualty to reduce the amount of its new business. Loews has been
informed by CNA that CNA is considering, among other possibilities, contributing
some of CNA's income-producing assets to Casualty, including, but not limited
to, Assurance, thereby increasing Casualty's surplus in order to permit Casualty
to undertake a larger amount of new business than it would otherwise be in a
position to do. Any such action would be likely to have the effect of reducing
CNA's cash flow and could have a consequent material long-term effect on the
financial position of CNA. Neither CNA nor Casualty nor Loews have made any
determinations respecting possible reductions in Casualty's business or possible
contributions to its surplus. In addition, Loews was advised that, as a result
of certain covenants contained in CNA's various loan agreements, CNA and its
insurance subsidiaries could not incur any additional debt (except short term or
subordinated debt) and that CNA was considering various steps it might take to
improve its cash position, including sale of non-insurance assets, such as
Page 19
General Finance, and the suspension of dividends on the Preferred Stock. CNA
advised Loews that its projections and considerations were preliminary and that
no steps had been decided upon. The response to Item 4 above contains
additional information as to proposals relating to Assurance and General
Finance.
On November 6, 1974, CNA announced that its Board of Directors, as set forth
in CNA's November 6, 1974 press release attached to Exhibit 10 annexed hereto,
determined to defer consideration of the next quarterly dividend payment on the
Preferred Stock normally payable January 2, 1975 until December 4, 1974 and to
omit the next dividend on the Common Stock. Loews makes no representation as to
when or whether CNA will pay future dividend on the Preferred or Common Stock.
CNA has advised Loews that Assurance may be in default under a covenant
requiring maintenance of a minimum surplus contained in a loan agreement
pursuant to which it borrowed $40,000,000 to finance the CNA Plaza Building in
Chicago. CNA has further advised Loews that the lenders have orally agreed to
waive the default, if any, subject to the imposition of certain restrictions on
the payment of dividends by, and inter-corporate borrowings from, Assurance.
CNA has also advised Loews that pursuant to an agreement made in 1973 with
certain of Larwin's lenders it is obligated to purchase from such lenders
approximately $15,000,000 of trust deeds, subject to certain conditions, if so
requested by such lenders. CNA has further informed Loews that such lenders
have so requested and that CNA does not presently have sufficient available
funds to purchase such trust deeds. CNA has informed Loews that while it
believes that those lenders will accept CNA's short term notes in lieu of
immediate payment, there can be no assurance thereof. CNA has advised Loews
that Larwin is indebted to a group of banks on a demand basis in the principal
amount of $145,000,000 (such indebtedness having been converted to a demand
basis after Larwin's failure to comply with certain net worth and other
covenants) and that Larwin, pursuant to the original bank loan agreement, has
delivered substantially all of its assets to such banks as security. CNA has
also advised Loews that Larwin is in default on $20,000,000 principal amount of
subordinated notes. CNA has announced that it does not intend to provide
further financial support to Larwin. Loews is unable to predict whether any
such bank lenders or subordinated note holders, or any other lender to or
claimant against a CNA subsidiary, will seek to recover any indebtedness of
Larwin, or claims against or indebtedness of such other subsidiary, from CNA or
whether any such efforts could be successful. CNA has advised Loews that in
certain instances its withdrawal of financial support for Larwin may have
adversely affected the banking relations of CNA and certain of its subsidiaries.
Loews believes that the current financial condition and operations of certain
of CNA's non-insurance subsidiaries, excluding General Finance, might result in
the substantial write-down of CNA's investments in such subsidiaries.
In light of these developments, and in order to provide CNA with needed
additional capital, Loews revised the prices it would offer for the Stock as set
forth herein and agreed to purchase the New Preferred Stock from CNA as
described more fully below. Loews's decision to revise and go forward with the
Offer was based on its belief that, despite the above developments, the
long-term future business and financial prospects of CNA are favorable.
Although Loews has made such decision, it should be noted that such decision was
based on consideration of the business risks and opportunities facing Loews
which is seeking control of CNA, which risks and opportunities may be
significantly different from those that may be faced by other holders or
potential holders of CNA Stock.
On October 30, 1974, a purported class action alleging violations of the
Securities Exchange Act of 1934 and the common law, and naming as defendants
CNA, its directors, certain officers; and former employees, and the independent
auditors for CNA and for Larwin was filed in the United States District Court
for the Northern District of Illinois on behalf of all purchasers of the Common
Stock since January 1, 1969. The complaint alleges various disclosure
Page 20
violations and breaches of fiduciary duties. The complaint seeks actual damages
in an unspecified amount and punitive and exemplary damages of $4,000,000.
Loews and CNA have agreed that concurrently with the purchase of Stock
pursuant to the Offer, CNA will sell, and Loews will purchase, 3,703,704 shares
of a newly authorized $.80 Cumulative Convertible Series C Preferred Stock ("New
Preferred Stock") of CNA for $6.75 per share, representing an aggregate purchase
price of $25,000,000. The agreement providing for such sale and purchase
contains certain usual warranties and conditions. Subject to the terms of such
agreement, Loews will be obligated to purchase the New Preferred Stock if it
purchases any Stock under the Offer. The purchase of the New Preferred Stock
and the purchase of any Stock pursuant to the Offer is each conditioned on the
occurrence of the other.
The New Preferred Stock will have an annual dividend rate of $.80 per share
and will have a liquidation value and redemption price of $6.75 per share. In
all other respects, the New Preferred Stock will be substantially identical to
the Preferred Stock and accordingly: will have one vote per share; will have the
right to elect, together with the Preferred Stock, two directors in the event
six or more quarterly dividends shall be in arrears, and, under limited
circumstances, other rights to vote as a separate class; and each share of New
Preferred Stock will be convertible into 1.25 shares of Common Stock. The New
Preferred Stock and the Preferred Stock will rank equally with respect to
dividends and upon liquidation.
Loews cannot predict whether the $25,000,000 of additional capital to be
provided by the purchase of the New Preferred Stock will be sufficient.
Although Loews has not made any commitment to provide CNA's with additional
capital other than through the purchase of the New Preferred Stock, Loews is
making the Offer in light of the financial condition of CNA as disclosed to
Loews, and Loews believes that its financial resources are sufficient to enable
Loews to provide additional capital to CNA if Loews in the future should
determine to provide such capital. The terms on which such capital is provided
could result in substantial dilution of the interests of other stockholders of
CNA.
On November 4, 1974, CNA announced that its Board of Directors was
recommending that CNA's stockholders accept the Offer. CNA has arranged for
Loews to use the facilities of CNA's transfer agent in connection with the
mailing of the Offer and any related communications to CNA's stockholders.
Loews has been advised that the members of CNA's Board of Directors intend to
tender the Stock owned by them, directly or indirectly, as set forth below.
Shares Shares of
of Common Preferred Present intention
Director Stock held Stock held as to tender
-------- ---------- ---------- -----------------
Bowen Blair 97,682 12,381 All Common to be tendered
All Preferred to be
retained
Hans Braunschweiler 1,000 --- No present intent
Robert P. Gwinn 632 125 All Common to be tendered
All Preferred to be
retained
Ward C. McAllister 100 --- All Common to be tendered
Elmer L. Nicholson 969 1,000 None to be tendered
Richard B. Ogilvie 100 --- None to be tendered
Jacque W. Sammet 3,087 1,073 No present intent
Richard H. Samuels 7,125 662 All Common to be tendered
No present intent as
to Preferred
John E. Stipp 1,128 455 No present intent
Page 21
Robert D. Stuart, Jr. 6,816 4,494 No present intent as to
Common; No Preferred to be
tendered
Richard L. Thomas 2,506 --- 1,500 Common to be tendered
Lawrence Weinberg 2,562,313 --- 60% to 90% to be tendered
Harold M. Williams 1,000 --- All to be tendered
Kenneth W. Zweiner 600 100 All to be tendered
- -----------
* Loews is advised that Accident and Casualty Insurance Company of Winterthur,
Switzerland, of which Mr. Braunschweiler is Chairman, has not determined whether
or not it will tender the 2,529,328 shares of common and 530,013 shares of
Preferred Stock owned it.
Salomon Brothers, which is acting as Dealer Manager for the Offer, has
informed Loews that it intends to tender pursuant to the Offer the shares of
Stock it owns as principal.
Loews will pay $.25 for each share of Common Stock and $.25 for each share of
Preferred Stock purchased by Loews under the Offer to any broker or dealer
(including the Dealer Manager) who is a member of any registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or to any foreign broker or dealer, or to any bank or trust company, whose name
and address appear in the appropriate space in the Letter of tender; provided,
however, that Loews will not pay an aggregate commission in excess of $5,000
with respect to Stock purchased from any one tendering stockholder except that
where a broker, dealer, bank or trust company, or its nominee, advises the
Depositary in writing that the Stock tendered by any one stockholder is
beneficially owned, in whole or in part, by someone other than the tendering
stockholder, such maximum aggregate commissioner shall be applied separately as
to each beneficial owner. No such broker, dealer, bank or trust company shall
be the agent of Loews, the Dealer Manager, the Depositary or the Forwarding
Agent for purposes of the Offer. Salomon Brothers in acting as Dealer Manager
for Loews in connection with the Offer and will receive $.10 for each share of
Stock purchased by Loews under the Offer for its services as such, in addition
to any fees earned as a soliciting dealer; provided, however, that in no event
shall the aggregate fee to the Dealer Manager as such be less than $50,000 or
more than $500,000. In addition, Loews and the Dealer Manager have agreed to
indemnify each other against certain liabilities and expenses in connection with
the Offer. The Dealer Manager has performed and may continue to perform
investment banking services for certain subsidiaries of CNA.
Continental Illinois bank and Trust Company of Chicago and First National City
Bank have been retained to act as, Depositary and Forwarding Agent,
respectively, in connection with the Offer. Loews has also retained The
Kissel-Blake Organization, Inc. as Soliciting Agent to aid in soliciting
responses to the Offer. The Kissel-Blake Organization, Inc. will solicit
responses by mail, telephone, telegraph and personal interview and may request
brokers, dealers; and other nominee stockholders to forward soliciting materials
to beneficial owners. The Depositary, Forwarding Agent and Soliciting Agent
will receive, reasonable compensation from Loews for their services and will be
reimbursed by Loews for certain out-of-pocket expenses in connection with the
Offer.
[Amendment No. 32] Loews accepted 17,774,997 shares of Common Stock and
2,230,622 shares of Preferred Stock, or approximately 76% of the Common Stock
and of the Preferred Stock tendered pursuant to its Offer to Purchase dated
November 11, 1974 (the "Offer"). On December 18, 1974 Loews completed the
purchase of, and payment for, the shares of Stock accepted by it. The purchase
price was $5.00 per share of Common Stock and $6.75 per share of Preferred
Stock, or an aggregate of $103,931,683, for the shares of Stock purchased. The
excess of 5,619 shares of Stock purchased by Loews over the 20,000,000 shares of
Stock sought by Loews in the Offer results from purchases being made on a
pro-rata basis with adjustments to avoid the purchase of fractional shares as
Page 22
set forth in the Offer.
On December 16, 1974 Loews purchased from CNA 3,703,704 shares of CNA's newly
authorized $.80 Cumulative Convertible Shares C Preferred Stock at $6.75 per
share, or an aggregate purchase price of $25,000,002.
Item 7. Material to be Filed as Exhibits
--------------------------------
Inapplicable.
[Amendment No. 7] (1) Amendment No. 1 to statement filed with the Illinois
Department of Insurance, including a form of Offer to Purchase and Letter of
Tender annexed thereto as Appendix A.
(2) Complaint filed by Loews on May 22, 1974 in the United
States District Court for the Northern District of Illinois.
[Amendment No. 28] (1) Offer to Purchase.
(2) Letter of Tender to tender shares of Common Stock.
(3) Letter of Tender to tender shares of Preferred Stock.
(4) Tombstone newspaper advertisement.
(5) Letter of Dealer Manager to brokers and dealers.
(6) "To Our Clients" letter for use by brokers and
dealers.
(7) Letter which may be used for solicitation in the
States of Indiana and Ohio.
(8) Letter of Dealer Manager to soliciting dealers.
(9) Letter of Dealer Manager to soliciting dealers in Ohio
and Indiana.
(10) Letter from CNA to its stockholders relating to the
Offer to Purchase and November 6, 1974 press release
attached thereto.
SIGNATURE
---------
The undersigned certifies that after reasonable inquiry and to the best of its
knowledge and belief, the information set forth in this Statement is true,
complete and correct.
LOEWS CORPORATION
Dated: September 14, 1994 By: Barry Hirsch
Senior Vice President
and Secretary
Page 23
APPENDIX A
Executive Officers and Directors of Loews
-----------------------------------------
The name and principal occupation or employment of each executive officer and
director of Loews are set forth below. Except as otherwise notes, the business
address of each such person is 667 Madison Avenue, New York, New York 10021.
All of the persons listed below are United States citizens.
Kenneth Abrams
Vice President-Personnel of Loews
One Park Avenue,
New York, New York 10016
Charles B. Benenson
Director of Loews; President of Benenson
Realty Company (real estate investments)
708 Third Avenue,
New York, New York 10017
John Brademas
Director of Loews; President Emeritus of New
York University, 11 West 42nd Street,
New York, New York 10036
Gary W. Garson
Vice President of Loews
Robert J. Hausman
Vice President of Loews and
Chairman of the Board of the Hotel Division
of Loews
Barry Hirsch
Senior Vice President,
Secretary and General Counsel of Loews
Herbert C. Hofmann
Senior Vice President of Loews
President of Bulova Corporation
John J. Kenny
Treasurer of Loews
One Park Avenue,
New York, New York 10016
Guy A. Kwan
Controller of Loews
One Park Avenue,
New York, New York 10016
John G. Malino
Vice President-Real Estate of Loews
Bernard Myerson
Director of Loews
711 Fifth Avenue
New York, New York 10022
Page 24
APPENDIX A
(Continued)
Edward J. Noha
Director of Loews and Chairman of the Board
of CNA Financial Corporation,
CNA Plaza,
Chicago, Illinois 60685
Stuart B. Opotowsky
Vice President-Tax of Loews
One Park Avenue
New York, New York 10016
Richard E. Piluso
Vice President-Internal Audit of Loews
One Park Avenue
New York, New York 10016
Lester Pollack
Director of Loews, Chief Executive Office of
Centre Partners (investments), a general partner
of Lazard Freres & Co. (investment banking) and
Sr. Managing Director of Corporate Partners
(investment fund),
One Rockefeller Plaza,
New York, New York 10020
Roy E. Posner
Senior Vice President and
Chief Financial Officer of Loews
Gloria R. Scott
Director of Loews
President, Bennett College
900 E. Washington Street
Greensboro, North Carolina 27401
Dennis Smith
Vice President-Management
Information Services of Loews
One Park Avenue
New York, New York 10016
Andrew H. Tisch
Director of Loews
Chairman and Chief Executive Officer
of Lorillard Tobacco Company
James S. Tisch
Director of Loews
Executive Vice President of Loews
Jonathan M. Tisch
Director of Loews
Vice President of Loews and Chief Executive
Officer and President of the Hotel Division of
Loews
Laurence A. Tisch
Chairman of the Board of Directors and
Co-Chief Executive Officer of Loews
President and Chief Executive Officer
of CBS Inc.
Page 25
APPENDIX A
(Continued)
Preston R. Tisch
Director and President and Co-Chief Executive
Officer of Loews
Page 26