Cna Financial Corp – ‘424B2’ on 4/17/98

As of:  Friday, 4/17/98   ·   Accession #:  950131-98-2622   ·   File #:  333-33821

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Prospectus   —   Rule 424(b)(2)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B2       Final Prospectus Supplement                           39    256K 

Document Table of Contents

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                                                Filed Pursuant to Rule 424(b)(2)
                                          Registration No. 333-33821

PROSPECTUS SUPPLEMENT                                                           
(TO PROSPECTUS DATED AUGUST 22, 1997)                                           

$500,000,000

CNA FINANCIAL CORPORATION 

6.50% NOTES DUE APRIL 15, 2005

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

Interest on the 6.50% Notes due April 15, 2005 (the Notes) will be payable  
semi-annually on April 15 and October 15 of each year, commencing October 15,   
1998. The Notes will not be redeemable prior to maturity. See "Description of   
the Notes."                                                                     

The Notes will be represented by Global Securities registered in the name of
the nominee of The Depository Trust Company, which will act as the Depositary   
(the Depositary). Interests in the Global Securities will be shown on, and      
transfers thereof will be effected only through, records maintained by the      
Depositary and its participants. Except as described herein, Notes in           
definitive form will not be issued. Settlement for the Notes will be made in    
immediately available funds. The Notes will trade in the Depositary's Same-Day  
Funds Settlement System until maturity, and secondary market trading activity   
for the Notes will therefore settle in immediately available funds. All         
payments of principal and interest will be made by the Company in immediately   
available funds. See "Description of the Notes--Same-Day Settlement and         
Payment."                                                                       

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

SEE "RISK FACTORS" BEGINNING ON PAGE S-6 FOR CERTAIN INFORMATION RELATING TO
AN INVESTMENT IN THE NOTES.                                                     
----------------- 

THESE SECURITIES HAVE NOT BEEN APPROVED  OR DISAPPROVED BY THE SECURITIES  AND
EXCHANGE  COMMISSION  OR  ANY  STATE  SECURITIES  COMMISSION  NOR  HAS   THE
SECURITIES AND  EXCHANGE COMMISSION  OR  ANY STATE  SECURITIES  COMMISSION
PASSED UPON THE ACCURACY  OR ADEQUACY OF  THIS PROSPECTUS SUPPLEMENT  OR
THE  PROSPECTUS  TO  WHICH  IT  RELATES.  ANY  REPRESENTATION  TO  THE
CONTRARY IS A CRIMINAL OFFENSE.                                     

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

                                                                [Download Table]

                            Price to          Underwriting         Proceeds to  
                            Public(1)          Discount(2)        Company(1)(3) 
------------------------------------------------------------------------------- 
                                                                                
Per Note.............        99.929%             0.625%              99.304%    
------------------------------------------------------------------------------- 
Total................     $499,645,000         $3,125,000         $496,520,000  
------------------------------------------------------------------------------- 
--------------------------------------------------------------------------------

(1) Plus accrued interest, if any, from April 20, 1998.                         
(2) The Company has agreed to indemnify the Underwriters against certain        
liabilities, including certain liabilities under the Securities Act of  
1933, as amended. See "Underwriting."                                   
(3) Before deducting expenses payable by the Company estimated to be $300,000.  

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

The Notes are offered by the several Underwriters, subject to prior sale,   
when, as and if issued to and accepted by them, subject to approval of certain  
legal matters by counsel for the Underwriters. The Underwriters reserve the     
right to reject orders in whole or in part. It is expected that delivery of the 
Notes will be made through the book-entry facilities at the Depositary on or    
about April 20, 1998 against payment therefor in immediately available funds.   

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

LEHMAN BROTHERS                                                                 
GOLDMAN, SACHS & CO.                                      
MERRILL LYNCH & CO.               
          SALOMON SMITH BARNEY
                                                         ABN AMRO INCORPORATED
The date of this Prospectus Supplement is April 15, 1998.                       

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CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS    
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF THE NOTES      
OFFERED HEREBY. SUCH TRANSACTIONS MAY INCLUDE STABILIZING AND THE PURCHASE OF   
NOTES TO COVER SHORT POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE      
"UNDERWRITING."                                                                 

FOR NORTH CAROLINA INVESTORS: THESE SECURITIES HAVE NOT BEEN APPROVED OR    
DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA    
(THE "NORTH CAROLINA INSURANCE COMMISSIONER") NOR HAS THE NORTH CAROLINA        
INSURANCE COMMISSIONER RULED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS   
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.                                      

When included in this Prospectus Supplement and the accompanying Prospectus,
the words "believes," "expects," "intends," "anticipates," "estimates," and     
analogous expressions are intended to identify forward-looking statements.      
Such statements inherently are subject to a variety of risks and uncertainties  
that could cause actual results to differ materially from those projected.      
Such risks and uncertainties include, among others, general economic and        
business conditions, competition, changes in financial markets (interest rate,  
credit, currency, commodities and stocks), changes in foreign, political,       
social and economic conditions, regulatory initiatives and compliance with      
governmental regulations, judicial decisions and rulings, and various other     
matters, many of which are beyond the Company's control. See "Risk Factors" on  
page S-6 for a discussion of how these various risks may affect CNA. These      
forward-looking statements speak only as of the date of this Prospectus         
Supplement. The Company expressly disclaims any obligation or undertaking to    
release publicly any updates or revisions to any forward-looking statement      
contained in this Prospectus Supplement and the accompanying Prospectus to      
reflect any change in the Company's expectations with regard thereto or any     
change in events, conditions or circumstances on which any statement is based.  

THE COMPANY 

CNA Financial Corporation (the Company or CNAF) is a holding company whose  
subsidiaries consist primarily of property/casualty and life insurance          
companies (herein, collectively, CNA). CNA is one of the largest writers of     
commercial property/casualty insurance and one of the ten largest insurance     
organizations in the United States. CNAF had assets of $61.3 billion and        
stockholders' equity of $8.3 billion as of December 31, 1997. CNAF's common     
stock is traded on the New York Stock Exchange. As of March 31, 1998, Loews     
Corporation owned approximately 84% of CNAF's common stock.                     

CNAF was incorporated as a Delaware corporation in 1967. CNAF's principal   
subsidiaries are Continental Casualty Company (CCC), which was incorporated in  
1897, Continental Assurance Company (CAC), incorporated in 1911, and The        
Continental Corporation (Continental), which is the holding company of The      
Continental Insurance Company (CIC), incorporated in 1853.                      

CNA's principal business is insurance. CNA's property and casualty insurance
operations are conducted by CCC and its property and casualty insurance         
affiliates, and CIC and its property and casualty insurance affiliates. CNA's   
life insurance operations are conducted principally by CAC and Valley Forge     
Life Insurance Company. CNA's principal market for insurance products is the    
United States.                                                                  

CNA is a multiple-line insurer which serves a wide spectrum of customers,   
including small, medium and large businesses; associations; professionals;      
groups and individuals with a broad range of insurance and risk management      
products and services. Insurance products include property and casualty         
coverages; life, accident and health insurance; and pension products and        
annuities. CNA also sells insurance related services including risk             
management, information services, health care management and claims             
administration. CNA products and services are marketed through agents,          
brokers, general agents and direct sales.                                       

For a description of certain risk factors relating to CNA and its business, 
see "Risk Factors" beginning on page S-6.                                       

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USE OF PROCEEDS 

The net proceeds from the sale of the Notes will be used to prepay existing 
first mortgages (the Mortgage Notes) in the amount of approximately $215        
million, to refinance the existing bank debt outstanding under the Company's    
revolving credit facility in the amount of approximately $250 million and to    
refinance a portion of the Company's outstanding commercial paper in the        
amount of approximately $35 million. The Mortgage Notes have an effective       
interest rate of 11% and a maturity of June 1, 2013. See footnote (b) under     
"Capitalization." As of April 1, 1998, outstanding loans under the revolving    
credit facility were $250 million and outstanding commercial paper totaled      
$675 million. The weighted-average interest rate (interest, facility fees and   
the effect of interest rate swaps) on these loans at April 1, 1998 was 6.12%.   
The revolving credit facility matures in May 2001. The commercial paper         
borrowings are classified as long-term because $675 million of the committed    
revolving credit facility supports the commercial paper program. As of April    
1, 1998, there was no unused borrowing capacity under the revolving credit      
facility after giving effect to its support of the commercial paper program.    

RECENT DEVELOPMENT  

On April 7, 1998, a subsidiary of the Company entered into an agreement to  
acquire Maritime Insurance Co., a U.K.-based insurer, for (Pounds)56 million    
(approximately $93.6 million as of April 1, 1998). Maritime Insurance Co. is a  
marine, aviation and transportation insurer. The completion of the acquisition  
is subject to certain regulatory approvals, and no assurance can be given that  
the acquisition will be consummated. The Company plans to finance the           
acquisition with the proceeds of new debt arrangements.                         

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CAPITALIZATION  

The following table sets forth the consolidated capitalization of the       
Company as of December 31, 1997 and as adjusted to reflect the sale on January  
13, 1998 of $150 million 6.45% Notes due January 15, 2008 and $150 million      
6.95% Notes due January 15, 2018, the refinancing of $150 million 8 7/8% Notes  
due March 1, 1998 and the sale of the Notes and the application of the net      
proceeds therefrom. The following information should be read in conjunction     
with the consolidated financial statements and related notes contained in the   
Company's Annual Report on Form 10-K for the year ended December 31, 1997.      

                                                                [Download Table]
------------------------------------------------------------------------------

                                                           December 31, 1997  
------------------------------------------------------------------------------
                                                          Actual   As Adjusted
                                                                              
Long-term debt (net of amortized discount):                                   
------------------------------------------------------------------------------
(In millions of dollars)                                                      
 Variable Rate Debt:                                                          
  Credit Facility                                         $   400    $   --   
  Commercial Paper                                            675        640  
  Credit Facility--CNA Surety (a)                             118        118  
 Senior Notes:                                                                
  8 7/8%, due March 1, 1998                                   150        --   
  8 1/4%, due April 15, 1999                                  102        102  
  7 1/4%, due March 1, 2003                                   146        146  
  6 1/4%, due November 15, 2003                               249        249  
  6 3/4%, due November 15, 2006                               248        248  
  8 3/8%, due August 15, 2012                                  98         98  
  6.45%, due January 15, 2008                                 --         149  
  6.95%, due January 15, 2018                                 --         148  
  The Notes                                                   --         497  
 7 1/4% Debentures, due November 15, 2023                     247        247  
 11% Secured Mortgage Notes, due June 30, 2013 (b)            389        155  
 6.9%-16.29% Secured Capital Leases, due through December                     
  31, 2011                                                     47         47  
 Other debt, due 1998 through 2019 (rates of 1% to                            
  12.71%)                                                      28         28  
------------------------------------------------------------------------------
  Total long-term debt                                    $ 2,897    $ 2,872  
------------------------------------------------------------------------------
Stockholders' Equity:                                                         
------------------------------------------------------------------------------
Preferred Stock, without par value--non-voting:                               
 Authorized 12,500,000 shares; issued and outstanding         150        150  
Common Stock with par value of $2.50--voting stock:                           
 Authorized 200,000,000 shares; issued 61,841,969,                            
  outstanding 61,798,262                                      155        155  
 Additional paid-in capital                                   435        435  
 Retained earnings                                          6,983      6,983  
 Net unrealized investment gains                              589        589  
 Treasury stock, at cost                                       (3)        (3) 
------------------------------------------------------------------------------
 Total Stockholders' Equity                                 8,309      8,309  
------------------------------------------------------------------------------
 Total Capitalization                                     $11,206    $11,181  
------------------------------------------------------------------------------
------------------------------------------------------------------------------

--------                                                                        
(a) CNA owns approximately 62% of the outstanding shares of CNA Surety on a     
fully diluted basis.                                                    
(b) The Company will pay a prepayment premium of approximately $15 million and  
will record an extraordinary gain, net of the prepayment premium, of    
 approximately $22 million on prepayment of the mortgage. This gain is the
result of the Mortgage Notes being stated at fair value on May 10, 1995,
because of the purchase of Continental on that date. The Company is     
amortizing the fair value adjustment to the maturity date.              

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SELECTED CONDENSED CONSOLIDATED FINANCIAL INFORMATION 

The following selected condensed consolidated financial information of the  
Company is derived from and should be read in conjunction with the more         
detailed information and financial statements included in the Company's Annual  
Reports on Form 10-K for the years ended December 31, 1997, December 31, 1996,  
as amended, December 31, 1995, December 31, 1994 and December 31, 1993.         

                                                                [Download Table]

Year Ended December 31,               1997     1996    1995(a)   1994     1993   
---------------------------------------------------------------------------------
(In millions of dollars, except per                                              
share data and ratios)                                                           
                                                                                 
RESULTS OF OPERATIONS:                                                           
Revenues                             $17,072  $16,988  $14,700  $11,000  $11,011 
---------------------------------------------------------------------------------
Income (loss) before income tax      $ 1,358  $ 1,345  $ 1,042  $  (134) $    93 
---------------------------------------------------------------------------------
Net income (loss) excluding net                                                  
 realized investment gains/losses    $   488  $   578  $   463  $   187  $  (252)
Net realized investment gains                                                    
 (losses)                                478      387      294     (151)     519 
---------------------------------------------------------------------------------
Net income                           $   966  $   965  $   757  $    36  $   267 
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Earnings per share:                                                              
 Net income (loss) excluding net                                                 
  realized investment gains                                                      
  (losses)                           $  7.78  $  9.25  $  7.37  $  2.94  $ (4.14)
 Net realized investment gains                                                   
  (losses)                              7.74     6.26     4.77    (2.43)    8.40 
---------------------------------------------------------------------------------
 Net income                          $ 15.52  $ 15.51  $ 12.14  $  0.51  $  4.26 
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Ratios:                                                                          
 Earnings to fixed charges (b)           6.8      6.8      5.6       (c)     2.7 
 Earnings to fixed charges and                                                   
  preferred dividends (d)                6.6      6.5      5.4       (e)     2.6 
 Net income, as adjusted, to fixed                                               
  charges and preferred dividends                                                
  (f)                                    7.1      7.4      5.8      1.5      7.6 
BUSINESS SEGMENT DATA:                                                           
 Net income (loss) excluding net                                                 
  realized investment gains                                                      
  (losses):                                                                      
 Property/casualty--commercial       $   200  $   586  $   431  $   169  $  (242)
 Property/casualty--personal             184       (6)      22      (42)      13 
 Property/casualty--involuntary                                                  
  risks                                  117       (4)       2       21      (38)
 Life--individual                         58       66       43       30       10 
 Life--group                              42       44       61       57       34 
 Interest, other and intercompany                                                
  eliminations                          (113)    (108)     (98)     (48)     (29)
---------------------------------------------------------------------------------
                                     $   488  $   578  $   463  $   187  $  (252)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

At December 31,                       1997     1996     1995     1994     1993   
---------------------------------------------------------------------------------
                                                                                 
BALANCE SHEET DATA:                                                              
 Total assets                        $61,269  $60,455  $60,360  $44,320  $41,912 
 Debt                                  2,897    2,765    3,026      914      915 
 Stockholders' equity                  8,309    7,060    6,736    4,546    5,381 
 Book value per share                 132.02   111.81   106.56    71.13    84.65 
 Shares outstanding (in millions of                                              
  shares)                               61.8     61.8     61.8     61.8     61.8 
---------------------------------------------------------------------------------

See corresponding notes on the following page.  

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--------                                                                        
(a) Includes the results of Continental from May 10, 1995, as a result of a     
merger consummated on May 10, 1995.                                     
(b) For purposes of computing this ratio, earnings consist of income before     
income taxes plus fixed charges. Fixed charges consist of interest and  
that portion of operating lease rental expense which is deemed to be an 
interest factor for such rentals.                                       
(c) Earnings were insufficient to cover fixed charges in the year ended         
December 31, 1994, by $134 million due to capital losses of $246 million
which exceeded operating income of $101 million.                        
(d) For purposes of computing this ratio, earnings have been adjusted to        
 include fixed charges. Fixed charges consist of interest and that portion
  of operating lease rental expense which is deemed to be an interest factor
for such rentals, before the effect of income taxes. Fixed charges were 
increased by the preferred stock dividend amounts that would be required
to meet such dividend payments.                                         
(e) Earnings, as adjusted for interest expense and interest element of          
operating leases, were insufficient to cover fixed charges in the year  
ended December 31, 1994, by $39 million due to capital losses of $246   
million which exceeded operating income of $101 million.                
(f) For purposes of computing this ratio, net income has been adjusted to       
include fixed charges after tax. Fixed charges consist of interest and  
that portion of operating lease rental expense which is deemed to be an 
interest factor for such rentals. Fixed charges were increased by the   
preferred stock dividend amounts that would be required to meet such    
dividend payments.                                                      

RISK FACTORS  

ENVIRONMENTAL POLLUTION AND ASBESTOS-RELATED CLAIMS                             

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 have, in many    
cases, expanded the scope of coverage and liability beyond the original intent  
of the policies.                                                                

The Comprehensive Environmental Response Compensation and Liability Act of  
1980 (Superfund) and comparable state statutes (mini-Superfund) govern the      
clean-up and restoration of abandoned toxic waste sites and formalize the       
concept of legal liability for clean-up and restoration by Potentially          
Responsible Parties (PRPs). Superfund and the mini-Superfunds establish         
mechanisms to pay for clean-up of waste sites if PRPs fail to do so, and to     
assign liability to PRPs. 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 its National         
Priorities List (NPL). The addition of new clean-up sites to the NPL has        
slowed in recent years. Many clean-up sites have been designated by state       
authorities as well.                                                            

Many policyholders have made claims against various CNA insurance           
subsidiaries for defense costs and indemnification in connection with           
environmental pollution matters. CNA and other members of the insurance         
industry are disputing coverage for many such claims. Key coverage issues       
include whether clean-up costs are considered damages under the policies,       
trigger of coverage, applicability of pollution exclusions and owned property   
exclusions, the potential for joint and several liability and definition of an  
occurrence. To date, courts have been inconsistent in their rulings on these    
issues.                                                                         

A number of proposals to reform Superfund have been made by various parties.
However, no reforms were enacted by Congress in 1997. It is unclear what        
positions the Congress or the Administration will take in the future and what   
legislation, if any, will result. If there is legislation, and in some          
circumstances even if there is no legislation, the federal role in              
environmental clean-up may be substantially reduced in favor of state action.   

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Significant changes in the federal statute or the activity of the EPA may       
cause states to reconsider their environmental clean up statutes and            
regulations. There can be no meaningful prediction of the regulation that       
would result.                                                                   

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 ultimate liability of     
CNA for environmental pollution claims may vary substantially from the amount   
currently recorded.                                                             

As of December 31, 1997 and 1996, CNA carried approximately $773 million and
$908 million, respectively, of claim and claim expense reserves, net of         
reinsurance recoverables, for reported and unreported                           
environmental pollution claims. The reserves relate to claims for accident      
years 1988 and prior, which coincides with CNA's adoption of the Simplified     
Commercial General Liability coverage form which included an absolute           
pollution exclusion.                                                            

CNA's insurance subsidiaries have exposure to asbestos claims, including    
those attributable to CNA's litigation with Fibreboard Corporation. A detailed  
discussion of CNA's litigation with Fibreboard Corporation regarding asbestos-  
related bodily injury claims can be found in the Company's Annual Report on     
Form 10-K for the year ended December 31, 1997. Estimation of asbestos claim    
reserves involves many of the same limitations discussed above for              
environmental pollution claims such as inconsistency of court decisions,        
specific policy provisions, allocation of liability among insurers, missing     
policies and proof of coverage. As of December 31, 1997 and 1996, CNA carried   
approximately $1,400 million and $1,506 million, respectively, of claim and     
claim expense reserves, net of reinsurance recoverables, for reported and       
unreported asbestos-related claims.                                             

The results of operations in future years may continue to be adversely      
affected by environmental pollution and asbestos claims and claim expenses.     
Management will continue to monitor these liabilities and make further          
adjustments as warranted.                                                       

The following table provides additional data related to CNA's environmental 
pollution and asbestos-related claims reserves.                                 

Reserve Summary                                                                 
------------------------------------------------------------------------------- 

                                                                [Download Table]

                                        1997                   1996         
December 31,                   ---------------------- ----------------------
                               Environmental          Environmental         
                                 Pollution   Asbestos   Pollution   Asbestos
----------------------------------------------------------------------------
                                                                            
(In millions of dollars)                                                    
Reported claims:                                                            
 Gross reserves                    $279       $1,384      $289       $1,551 
 Less reinsurance recoverable       (36)        (117)      (95)        (139)
                               ---------------------------------------------
 Net reported claims                243        1,267       194        1,412 
Net unreported claims               530          133       714           94 
----------------------------------------------------------------------------
Net reserves                       $773       $1,400      $908       $1,506 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

TOBACCO LITIGATION                                                              

CNA's primary property/casualty subsidiaries have been named as defendants  
as part of a direct action lawsuit, Richard P. Ieyoub v. The American Tobacco   
Company, et al. The case was filed by the Attorney General for the State of     
Louisiana, in state court, Calcasieu Parish, Louisiana. In that suit, filed     
against certain tobacco manufacturers and distributors (the Tobacco             
Defendants) and over 100 insurance companies, the State of Louisiana seeks to   
recover medical expenses allegedly incurred by the State as a result of         
tobacco-related illnesses.                                                      

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The original suit was filed on March 13, 1996 against the Tobacco Defendants
only. The insurance companies were added to the suit in March 1997 under a      
direct action statute in Louisiana. Under the direct action statute, the        
Louisiana Attorney General is pursuing liability claims against the Tobacco     
Defendants and their insurers in the same suit, even though none of the         
Tobacco Defendants has made a claim for insurance coverage.                     

Recently, the United States District Court for the Western District of      
Louisiana, Lake Charles Division, granted a petition to remove this litigation  
to the federal district court. The District Court's decision is currently on    
appeal to the United States Fifth Circuit Court of Appeals. During the pending  
appeal, all proceedings in state court and in the federal district court are    
stayed. Because of the uncertainties inherent in assessing the risk of          
liability at this very early stage of the litigation, management is unable to   
make a meaningful estimate of the                                               
amount or range of any loss that could result from an unfavorable outcome of    
the pending litigation. However, management believes that the ultimate outcome  
of the pending litigation should not materially affect the results of           
operations or equity of CNA.                                                    

MARKET RISK                                                                     

"Market risk" is a broadly defined term which includes exposure to economic 
losses due to adverse changes in the fair value of a financial instrument.      
Market risk is inherent to all financial instruments, and accordingly, the      
Company's risk management policies and procedures address all market risk       
sensitive financial instruments.                                                

A significant component of market risk is price risk. Price risk relates to 
changes in the level of prices due to changes in interest rates, equity         
prices, foreign exchange rates or other factors that relate to market           
volatility of the rate, index, or price underlying the financial instrument.    
The Company's primary market risk exposures are to changes in interest rates,   
although the Company has certain exposures to changes in equity prices and      
foreign currency exchange rates.                                                

Active management of market risk is integral to the Company's operations.   
The Company may use the following tools to manage its exposure to market risk   
within defined tolerance ranges: 1) change the character of future investments  
purchased or sold, 2) use derivatives to offset the market behavior of          
existing assets and liabilities or assets expected to be purchased and          
liabilities to be incurred or 3) rebalance its existing asset and liability     
portfolios.                                                                     

The Company classifies its market risk sensitive instruments as being held  
for purposes other than trading. The Company does not generally hold or issue   
derivatives for trading purposes.                                               

Interest Rate Risk                                                              

The Company has exposure to economic losses due to interest rate risk,      
arising from changes in the level or volatility of market interest rates. The   
Company attempts to mitigate its exposure to interest rate risk through active  
portfolio management. The Company may also reduce this risk by utilizing        
instruments such as interest rate swaps, interest rate caps, commitments to     
purchase securities, options, futures and forwards. This exposure is also       
mitigated, where appropriate, by the Company's asset/liability matching         
strategy.                                                                       

Equity Price Risk                                                               

The Company is exposed to equity price risk as a result of its investment in
equity securities and equity derivatives. Equity price risk results from        
changes in the level or volatility of equity prices which affect the value of   
equity securities or instruments which derive their value from such securities  
or indexes. CNA attempts to mitigate its exposure to such risks by limiting     
its investment in any one security or index.                                    

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Foreign Exchange Risk                                                           

Foreign exchange rate risk arises from the possibility that changes in      
foreign currency exchange rates will impact the value of financial              
instruments. The Company has foreign exchange exposure when it buys or sells    
foreign currencies or financial instruments denominated in a foreign currency.  
The Company's foreign transactions are primarily denominated in Canadian        
Dollars, British Pounds, German Deutschemarks, and Japanese Yen. This exposure  
is mitigated by the Company's asset/liability matching strategy and through     
the use of forwards for those instruments which are not matched.                

IMPACT OF YEAR 2000                                                             

The widespread use of computer programs, both in the United States and      
internationally, that rely on two digit date fields to perform computations     
and decision making functions may cause computer systems to malfunction when    
processing information involving dates after 1999. Such malfunctions could      
lead to business delays and disruptions. The Company is in the process of       
replacing many of its legacy systems and is upgrading its systems to            
accommodate business for the year 2000 and beyond. The Company believes that    
it will be able to resolve the year 2000 issue in a timely manner. Based upon   
its current assessment, the Company estimates that the total cost to replace    
and upgrade its systems to accommodate year 2000 processing will be             
approximately $60 to $70 million. However, due to the interdependent nature of  
computer systems, the Company may be adversely impacted depending upon whether  
it or other entities not affiliated with the Company (vendors and business      
partners) address this issue successfully. To mitigate this impact, the         
Company is communicating with its vendors and business partners to coordinate   
the year 2000 conversion.                                                       

In addition, property/casualty insurance companies may have an underwriting 
exposure related to year 2000. Although CNA has not received any claims for     
coverage from its policyholders based on losses resulting from year 2000        
issues, there can be no assurance that policyholders will not suffer losses of  
this type and seek compensation under CNA's insurance policies. If any claims   
are made, coverage, if any, will depend on the facts and circumstances of the   
claim and the provisions of the policy. At this time, the Company is unable to  
determine whether the adverse impact, if any, in connection with the foregoing  
circumstances would be material to the Company.                                 

HOLDING COMPANY STRUCTURE                                                       

The Company is a holding company and derives its operating income and       
operating cash flow from its subsidiaries. The Company relies upon              
distributions from its subsidiaries as well as returns on its cash and          
invested assets to generate the funds necessary to meet its obligations,        
including the payment of principal and interest on the Debt Securities (such    
as the Notes) and dividends on the Company's preferred stock. The ability of    
the Company's subsidiaries to make such payments will be subject to, among      
other things, applicable state laws and any restrictions that may be contained  
in credit agreements or other financing arrangements entered into by such       
subsidiaries. Claims of creditors of the Company's subsidiaries will generally  
have priority as to the assets of such subsidiaries over the claims of the      
Company and the holders of the Company's indebtedness and capital stock,        
including the Notes and preferred stock.                                        

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, 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, payment of dividends by insurance       
subsidiaries and regulating solvency and the type and amount of investments     
permitted. Regulatory powers also extend to premium rate regulations which      
require that rates not be excessive, inadequate or unfairly discriminatory. In  
addition to regulations discussed above, intercompany transfers of assets may   
be subject to prior notice to or approval by various insurance regulatory       
bodies, depending on the size of such transfers and payments in relation to     
the financial position of the insurance affiliates making the transfer.         

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The payment of dividends to the Company by its insurance affiliates without 
prior approval of the affiliates' domiciliary state insurance commissioners is  
limited to amounts determined by formula in accordance with the accounting      
practices prescribed or permitted by the states' insurance departments. This    
formula varies by state. The formula for the majority of the states is the      
greater of 10% of prior year statutory surplus or prior year                    
statutory net income, less the aggregate of all dividends paid during the       
twelve months prior to date of payment. Some states, however, have an           
additional stipulation that dividends cannot exceed prior year earned surplus.  
Based upon the various state formulas, approximately $677 million in dividends  
can be paid to CNAF by its insurance affiliates in 1998 without prior           
approval. All dividends must be reported to the domiciliary insurance           
department prior to declaration and payment.                                    

In addition to regulation of dividends by insurance subsidiaries, the       
National Association of Insurance Commissioners (NAIC) developed industry       
minimum Risk-Based Capital (RBC) requirements, established a formal state       
accreditation process designed to more closely regulate for solvency,           
minimized the diversity of approved statutory accounting and actuarial          
practices and increased the annual statutory statement disclosure               
requirements.                                                                   

The RBC formulas are designed to identify an insurer's minimum capital      
requirements based upon the inherent risks (e.g., asset default, credit and     
underwriting) of its operations. In addition to the minimum capital             
requirements, the RBC formula and related regulations identify various levels   
of capital adequacy and corresponding actions that the state insurance          
departments should initiate. The level of capital adequacy below which          
insurance departments would take action is defined as the Company Action        
Level. As of December 31, 1997, all of CNA's property/casualty and life         
insurance affiliates have adjusted capital amounts in excess of Company Action  
Levels.                                                                         

No assurance can be given that there will not be further regulatory actions 
restricting the ability of the Company's subsidiaries to pay dividends and,     
accordingly, that funds held by the Company's subsidiaries will be available    
to the Company for payment of principal or interest on the Debt Securities      
(including the Notes) or for payment of dividends on preferred stock.           

DESCRIPTION OF THE NOTES  

The following description of the particular terms of the Notes (referred to 
in the Prospectus as the "Senior Debt Securities" and the "Offered              
Securities") supplements, and to the extent inconsistent therewith replaces,    
the description of the general terms and provisions of the Debt Securities set  
forth in the Prospectus, dated August 22, 1997 (the "Prospectus"), to which     
reference is hereby made.                                                       

GENERAL                                                                         

The Notes are to be issued under an indenture, dated as of March 1, 1991, as
supplemented by a supplemental indenture dated as of October 15, 1993 (the      
"Indenture"), between the Company and The First National Bank of Chicago, as    
trustee (the "Trustee"). The Company believes that the following summary of     
certain provisions of the Indenture, together with the "Description of Senior   
Debt Securities" contained in the Prospectus, is a complete discussion of all   
material terms of the Indenture. Capitalized terms not otherwise defined under  
the heading "Description of the Notes" have the meanings given to them in the   
Prospectus and the Indenture.                                                   

The aggregate principal amount of the Notes will be $500,000,000 and the    
Notes will mature on April 15, 2005. The Notes will not be redeemable prior to  
maturity. The Notes will be unsecured and will rank pari passu with all other   
unsecured senior indebtedness of the Company from time to time outstanding. As  
of December 31, 1997, the Company had $1,725 million of senior indebtedness     
outstanding, none of which was secured indebtedness. In addition, the           
Company's subsidiaries had $925 million of indebtedness outstanding as of       
December 31, 1997, which would be structurally senior to the Notes. See "Risk   
Factors--Holding Company                                                        

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Structure." The Indenture does not limit the aggregate principal amount of      
Debt Securities that may be issued and provides that Debt Securities may be     
issued from time to time in one or more series.                                 

The Notes will bear interest at 6.50% per annum from April 20, 1998 or from 
the most recent Interest Payment Date to which interest has been paid or        
provided for, payable semi-annually in arrears on April 15 and October 15 of    
each year, commencing October 15, 1998 (each an "Interest Payment Date"), to    
the persons in whose names such Notes were registered at the close of business  
on the next preceding March 31 and September 30, whether or not a Business Day  
(as defined below) (each a "Regular Record Date"), respectively. Interest on    
the Notes will be computed on the basis of a 360-day year comprised of twelve   
30-day months.                                                                  

Interest payable on a Note on any Interest Payment Date or at maturity shall
be the amount of interest accrued from and including the next preceding         
Interest Payment Date in respect of which interest has been paid or provided    
for (or from and including April 20, 1998, if no interest has been paid or      
provided for with respect to such Note) to, but excluding, the Interest         
Payment Date or the date of maturity, as the case may be. If any Interest       
Payment Date or the maturity date of a Note falls on a day that is not a        
Business Day, the payment shall be made on the next Business Day as if it were  
made on the date such payment was due and no interest shall accrue on the       
amount so payable for the period from and after such Interest Payment Date or   
the maturity date, as the case may be. "Business Day" means any day, other      
than a Saturday, Sunday, legal holiday, or other day on which banks in The      
City of New York are required or authorized by law, regulation or executive     
order to close.                                                                 

The provisions of Article Three of the Indenture relating to defeasance,    
described in the Prospectus under "Description of Senior Debt Securities--      
Defeasance," are applicable to the Notes.                                       

SAME-DAY SETTLEMENT AND PAYMENT                                                 

Settlement for the Notes will be made by the Underwriters in immediately    
available funds. All payments of principal and interest will be made by the     
Company in U.S. dollars in immediately available funds.                         

The Notes will trade in the Depositary's Same-Day Funds Settlement System   
until maturity, and secondary market trading activity in the Notes will         
therefore be required by the Depositary to settle in immediately available      
funds.                                                                          

BOOK-ENTRY, DELIVERY AND FORM                                                   

The Notes will be represented by Global Securities registered in the name of
the nominee of the Depositary. Beneficial interests in each Global Security     
will be shown on, and transfers thereof will be effected only through, records  
maintained by the Depositary (with respect to beneficial interests of           
participants) or by participants or persons that hold interests through         
participants (with respect to beneficial interests of owners). Owners of        
beneficial interests in the Global Securities will be entitled to physical      
delivery of Notes in certificated form equal in principal amount to their       
respective beneficial interests only under limited circumstances as specified   
in the Prospectus.                                                              

The following is based on information furnished by the Depositary: The      
Depositary is a limited-purpose trust company organized under the New York      
Banking Law, a "banking organization" within the meaning of the New York        
Banking Law, a member of the Federal Reserve System, a "clearing corporation"   
within the meaning of the New York Uniform Commercial Code, and a "clearing     
agency" registered pursuant to the provisions of Section 17A of the Securities  
Exchange Act of 1934, as amended. The Depositary holds securities that its      
participants ("Participants") deposit with the Depositary. The Depositary also  
facilitates the settlement among Participants of securities transactions, such  
as transfers and pledges, in deposited securities through electronic            
computerized book-entry changes in Participants' accounts, thereby eliminating  
the need for physical movement of securities certificates. Direct Participants  
of the Depositary ("Direct Participants") include securities brokers and        
dealers, banks, trust companies, clearing corporations and certain other        
organizations. The                                                              

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Depositary is owned by a number of its Direct Participants and by the New York  
Stock Exchange, Inc., the American Stock Exchange, Inc., and the National       
Association of Securities Dealers, Inc. Access to the Depositary's system is    
also available to others such as securities brokers and dealers, banks and      
trust companies that clear through or maintain a custodial relationship with a  
Direct Participant, either directly or indirectly. The rules applicable to the  
Depositary and its Participants are on file with the Securities and Exchange    
Commission.                                                                     

UNDERWRITING  

Subject to the terms and conditions set forth in an underwriting agreement  
(the "Underwriting Agreement") among the Company and Lehman Brothers Inc.,      
Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,       
Salomon Brothers Inc and ABN AMRO Incorporated (the "Underwriters"), the        
Company has agreed to sell to the Underwriters, and the Underwriters have       
severally agreed to purchase, the respective principal amounts of the Notes     
set forth opposite their names below. The Underwriting Agreement provides that  
the obligations of the Underwriters are subject to certain conditions           
precedent and that the Underwriters will be obligated to purchase all of the    
Notes if any are purchased.                                                     

                                                                [Download Table]

                                                              PRINCIPAL  
                                                              AMOUNT OF  
     UNDERWRITER                                                NOTES    
     -----------                                             ------------
                                                                         
Lehman Brothers Inc......................................... $117,000,000
Goldman, Sachs & Co.........................................  116,500,000
Merrill Lynch, Pierce, Fenner & Smith                                    
 Incorporated...............................................  116,500,000
Salomon Brothers Inc........................................  116,500,000
ABN AMRO Incorporated.......................................   33,500,000
                                                             ------------
     Total.................................................. $500,000,000
                                                             ============

The Underwriters have advised the Company that they propose initially to    
offer the Notes to the public at the public offering price set forth on the     
cover page of this Prospectus Supplement, and to certain dealers at such        
prices less a concession not in excess of .375% of the principal amount of the  
Notes. The Underwriters may allow, and such dealers may reallow, a discount     
not in excess of .150% of the principal amount of the Notes to certain other    
dealers. After the initial public offering, the public offering prices,         
concessions and discounts may be changed.                                       

The Company has been advised by the Underwriters that they intend to make a 
market in the Notes, but they are not obligated to do so and may discontinue    
such market making at any time without notice. No assurance can be given as to  
the development or liquidity of a trading market for the Notes.                 

Until the distribution of the Notes is completed, rules of the Securities   
and Exchange Commission may limit the ability of the Underwriters to bid for    
and purchase the Notes. As an exception to these rules, Lehman Brothers Inc.    
("Lehman Brothers"), as representative, will be permitted to engage in certain  
transactions that stabilize the price of the Notes. Such transactions consist   
of bids or purchases for the purpose of pegging, fixing or maintaining the      
price of the Notes.                                                             

If the Underwriters create a short position in the Notes in connection with 
this offering, i.e., if they sell a greater principal amount of the Notes than  
is set forth on the cover page of this Prospectus Supplement, Lehman Brothers   
may reduce that short position by purchasing Notes in the open market.          

In general, purchases of a security for the purpose of stabilization or to  
reduce a short position could cause the price of the security to be higher      
than it might be in the absence of such purchases.                              

Neither the Company nor the Underwriters make any representation or         
prediction as to the direction or magnitude of any effect that the              
transactions described above may have on the prices of the Notes. In addition,  

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neither the Company nor the Underwriters make any representation that Lehman    
Brothers will engage in such transactions or that such transactions, once       
commenced, will be discontinued without notice.                                 

The Company has agreed to indemnify the Underwriters against certain        
liabilities, including liabilities under the Securities Act of 1933, as         
amended.                                                                        

From time to time the Underwriters or affiliates thereof have engaged and   
may in the future engage in investment banking or commercial banking            
transactions with the Company or its affiliates in the ordinary course of       
business.                                                                       

LEGAL OPINIONS  

The legality of the Notes will be passed upon for the Company by Jonathan D.
Kantor, Senior Vice President, Secretary and General Counsel of the Company,    
and by Mayer, Brown & Platt, Chicago, Illinois, and for the Underwriters by     
Brown & Wood LLP, New York, New York.                                           

EXPERTS 

The consolidated financial statements and the related consolidated financial
statement schedules, as of December 31, 1997 and 1996, and for each of the      
three years in the period ended December 31, 1997, appearing in CNAF's Annual   
Report on Form 10-K for the year ended December 31, 1997, have been audited by  
Deloitte & Touche LLP, independent auditors, as set forth in their reports      
thereon incorporated herein by reference. Such financial statements are         
incorporated herein by reference in reliance upon such reports given upon the   
authority of Deloitte & Touche LLP as experts in accounting and auditing.       

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PROSPECTUS                                                                      
$1,000,000,000  

CNA FINANCIAL CORPORATION 

DEBT SECURITIES 

CNA Financial Corporation (the "Company") may offer from time to time its   
debt securities consisting of debentures, notes and/or other evidences of       
senior unsecured indebtedness (the "Senior Debt Securities"), subordinated      
unsecured debt securities ("Subordinated Debt Securities," and together with    
the Senior Debt Securities, the "Debt Securities"), or shares of preferred      
stock ("Preferred Stock," and together with the Debt Securities, the            
"Securities"). The Debt Securities and shares of Preferred Stock may be         
offered as separate series in amounts, at prices and on terms to be determined  
at the time of sale and to be set forth in a supplement to this Prospectus (a   
"Prospectus Supplement"). The Debt Securities may be offered in one or more     
series with the same or various maturities, at par or with an original issue    
discount and may be denominated either in U.S. dollars or foreign currencies,   
including the European Currency Units ("ECU"). The Securities will be sold      
directly, through agents designated from time to time or through one or more    
underwriters or dealers, or a group of underwriters. see "Plan of               
Distribution."                                                                  

Certain terms of the Securities in respect of which this Prospectus is being
delivered (the "Offered Securities"), such as (i) in the case of the Debt       
Securities, the specific designation, currency in which the debt Securities     
are denominated, aggregate principal amount, denominations, maturity (which     
may be fixed or extendible), interest rate or rates (which may be fixed or      
variable), if any, and time of payment of interest, if any, terms for           
redemption at the option of the Company or the holder, terms for exchange at    
the option of the Company or the holder into common stock of the Company,       
terms for sinking or purchase fund payment, and the application, if any, of     
restrictive covenants or events of default that are in addition to or           
different from those described herein, (ii) in the case of the Preferred        
Stock, the specific title, number of shares or fractional interests therein,    
any dividend, liquidation, redemption, exchange, voting and other rights,       
preferences and privileges, and (iii) in the case of any Security, the public   
offering price, the names of any underwriters or agents, the amounts to be      
purchased by underwriters and the compensation of such underwriters or agents,  
and the other terms in connection with the offering and sale of the Offered     
Securities, in each case, will be set forth in the accompanying Prospectus      
Supplement. See "Description of Securities." The Prospectus Supplement will     
also contain information, where applicable, about certain United States         
federal income tax considerations relating to Offered Securities covered by     
the Prospectus Supplement. All or a portion of the Securities may be issued in  
permanent or temporary global form (each a "Global Security").                  

The Debt Securities will be effectively subordinated to all existing and    
future obligations of the Company's subsidiaries, including claims of           
policyholders of the Company's insurance subsidiaries. The Company's            
subsidiaries had approximately $791.1 million aggregate principal amount of     
total indebtedness for borrowed money outstanding as of June 30, 1997. In       
addition, as of June 30, 1997, approximately $1,724.4 million aggregate         
principal amount of existing indebtedness for borrowed money of the Company     
would rank pari passu with the Senior Debt Securities and senior to the         
Subordinated Debt Securities. As of June 30, 1997, the Company had $247.1       
million in aggregate principal amount of existing indebtedness for borrowed     
money that would rank pari passu with the Subordinated Debt Securities.         

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

THESE  SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES  AND  
EXCHANGE  COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS  THE SECURI-  
TIES  AND EXCHANGE COMMISSION  OR ANY  STATE SECURITIES COMMISSION  PASSED  
UPON  THE ACCURACY OR ADEQUACY  OF THIS PROSPECTUS. ANY  REPRESENTATIONS  
TO THE CONTRARY IS A CRIMINAL OFFENSE.                                  

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

THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES UNLESS   
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.                                         

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

The date of this Prospectus is August 22, 1997. 

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AVAILABLE INFORMATION 

The Company is subject to the informational requirements of the Securities  
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance       
therewith, files reports, proxy statements and other information with the       
Securities and Exchange Commission (the "Commission"). Such reports, proxy      
statements and other information filed by the Company can be inspected and      
copied at the Public Reference Room of the Commission at Judiciary Plaza, 450   
Fifth Street, N.W., Washington, D.C. 20549 and at the public reference          
facilities maintained by the Commission at Seven World Trade Center, 13th       
Floor, New York, New York 10048, and Citicorp Center, 500 West Madison Street,  
Suite 1400, Chicago, Illinois 60661. Copies of such materials can be obtained   
at prescribed rates from the Public Reference Section of the Commission at 450  
Fifth Street, N.W., Washington, D.C. 20549 or from the Commission's worldwide   
web site at http://www.sec.gov. Documents filed by the Company can also be      
inspected at the offices of the New York Stock Exchange, Inc. (the "New York    
Stock Exchange"), 20 Broad Street, New York, New York 10005, the Chicago Stock  
Exchange, 440 South LaSalle Street, Chicago, Illinois 60605 and the Pacific     
Stock Exchange, 301 Pine Street, San Francisco, California 94104.               

This Prospectus constitutes a part of a Registration Statement on Form S-3  
(the "Registration Statement") filed by the Company with the Commission under   
the Securities Act of 1933, as amended (the "Securities Act"), relating to the  
Securities offered hereby. This Prospectus omits certain of the information     
contained in the Registration Statement, and reference is hereby made to the    
Registration Statement and to the exhibits thereto for further information      
with respect to the Company and the Securities offered hereby. Any statements   
contained herein concerning the provisions of any document are not necessarily  
complete, and in each instance reference is made to the copy of such document   
filed as an exhibit to the Registration Statement or otherwise filed with the   
Commission. Each such statement is qualified in its entirety by such            
reference.                                                                      

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

The following documents filed by the Company with the Commission (file no.  
1-5823) are incorporated in this Prospectus by reference and hereby made a      
part hereof:                                                                    

1. The Company's Current Reports on Form 8-K dated August 5, 1997;      

2. The Company's Annual Report on Form 10-K for the year ended December 
31, 1996, as amended; and                                                   

3. The Company's Quarterly Reports on Form 10-Q for the fiscal quarters 
ended March 31, 1997 and June 30, 1997.                                     

All reports and other documents subsequently filed by the Company pursuant  
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the          
termination of the offering of the Securities, shall be deemed to be            
incorporated by reference herein and to be a part hereof from the date of the   
filing of such reports and documents. Any statement contained in a document     
incorporated or deemed to be incorporated by reference herein shall be deemed   
to be modified or superseded for purposes of this Prospectus to the extent      
that a statement contained herein or in any other subsequently filed document   
which also is incorporated or deemed to be incorporated by reference herein     
modifies or supersedes such statement. Any such statement so modified or        
superseded shall not be deemed, except as so modified or superseded, to         
constitute a part of this Prospectus.                                           

The Company will provide without charge to each person to whom a copy of    
this Prospectus is delivered, upon the written or oral request of any such      
person, a copy of any or all of the documents incorporated herein by            
reference, other than exhibits to such documents (except for exhibits that are  
specifically incorporated by reference herein). Requests for such copies        
should be directed to the Company's principal executive offices located at CNA  
Plaza, 43S, Chicago, Illinois 60685, Attention: Secretary (telephone (312)      
822-5000).                                                                      

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

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY     
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS   
PROSPECTUS OR IN THE PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFER         
CONTAINED IN THIS PROSPECTUS OR IN THE PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR  
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING     
BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER, DEALER OR AGENT. THIS     
PROSPECTUS AND THE PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL  
OR SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY  
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR         
SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS AND THE      
PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN    
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.                        

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THE COMPANY 

CNA Financial Corporation ("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. On May 10, 1995, CNA acquired all the  
outstanding common stock of The Continental Corporation ("Continental") and it  
became a wholly-owned subsidiary of CNA. The Continental Corporation, a New     
York corporation incorporated in 1968, is an insurance holding company. Its     
principal subsidiary, The Continental Insurance Company ("CIC") was organized   
in 1853. The principal business of Continental is the ownership of a group of   
property and casualty insurance companies.                                      

CNA's property and casualty insurance operations are conducted by CCC and   
its property and casualty insurance affiliates and CIC and its property and     
casualty insurance affiliates. Life insurance operations are conducted by CAC   
and its life insurance affiliates. CNA's principal business is insurance        
conducted through its insurance subsidiaries. As multiple-line insurers, the    
insurance companies underwrite property, casualty, life and accident and        
health coverages, as well as pension products and annuities. Their principal    
market for insurance products is the United States.                             

USE OF PROCEEDS 

Unless otherwise specified in the accompanying Prospectus Supplement, a     
portion of the net proceeds will be used to pay down borrowings outstanding     
under the Company's revolving credit facility and/or commercial paper program.  
The revolving credit facility matures in May 2001, and bears interest at the    
rate of LIBOR plus .25% (5.89% as of July 31, 1997). The remaining proceeds     
will be added to the Company's general funds and used for general corporate     
purposes, which may include, but are not limited to, prepayment of other debt,  
and capital contributions to the Company's subsidiaries to strengthen such      
subsidiaries' continuing operations.                                            

DESCRIPTION OF SENIOR DEBT SECURITIES 

The Senior Debt Securities will be issued under an Indenture, dated March 1,
1991, between the Company and The First National Bank of Chicago, a national    
banking association, as trustee (referred to herein under the caption           
"Description of Senior Debt Securities" as the "Trustee"), as supplemented by   
a supplemental indenture, dated as of October 15, 1993 (as so supplemented,     
the "Senior Indenture"), copies of which are incorporated by reference as or    
filed as exhibits to the Registration Statement. The Company believes that the  
following summary of certain provisions of the Senior Indenture is a complete   
discussion of all material terms necessary to understand the Senior Indenture.  
Capitalized terms not otherwise defined under the heading "Description of       
Senior Debt Securities" have the meaning given to them in the Senior            
Indenture. As used in this section "Description of Senior Debt Securities,"     
unless the context indicates otherwise, the term "Company" means CNA Financial  
Corporation and does not include any of its subsidiaries.                       

GENERAL                                                                         

The Senior Debt Securities will rank equally with all other unsecured and   
unsubordinated indebtedness of the Company. As of June 30, 1997, approximately  
$1,724.4 million aggregate principal amount of indebtedness for borrowed money  
of the Company would rank pari passu with the Senior Debt Securities. The       
Senior Indenture does not limit the amount of debt, either secured or           
unsecured, that may be issued by the Company under the Senior Indenture or      
otherwise. The Senior Debt Securities may be issued in one or more series with  
the same or various maturities and may be sold at par, a premium or an          
original issue discount. Senior Debt Securities sold at an original issue       
discount may bear no interest or interest at a rate that is below market        
rates.                                                                          

Because the Company is a holding company, the right of the Company, and     
hence the rights of creditors and shareholders of the Company, to participate   
in any distribution of assets of any subsidiary upon its                        

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liquidation or reorganization or otherwise is accordingly subject to prior      
claims of creditors of the subsidiary and (in the case of an insurance          
subsidiary) its policyholders, except to the extent that claims of the Company  
itself as a creditor of the subsidiary may be recognized. The subsidiaries are  
separate and distinct legal entities and have no obligations, contingent or     
otherwise, to pay any amounts due pursuant to the Senior Debt Securities or to  
make any funds available therefor, whether by dividends, loans or other         
payments. The payment of dividends or the making of loans and advances to the   
Company by its subsidiaries may be subject to statutory restrictions, are       
contingent upon the earnings of those subsidiaries and are subject to           
insurance regulations and various business considerations.                      

Reference is made to the Prospectus Supplement for the following terms of   
the offered Senior Debt Securities (to the extent such terms are applicable to  
such Senior Debt Securities): (i) the title of such Senior Debt Securities or   
the particular series thereof; (ii) any limit on the aggregate principal        
amount of such Senior Debt Securities; (iii) whether such Senior Debt           
Securities are to be issuable as Registered Securities or Bearer Securities or  
both, whether any of such Senior Debt Securities are to be issuable initially   
in temporary global form and whether any of such Senior Debt Securities are to  
be issuable in permanent global form; (iv) the price or prices (generally       
expressed as a percentage of the aggregate principal amount thereof) at which   
such Senior Debt Securities will be issued; (v) the date or dates on which      
such Senior Debt Securities will mature; (vi) the rate or rates per annum, or   
the formula by which such rate or rates shall be determined, at which such      
Senior Debt Securities will bear interest, if any, the dates from which any     
such interest will accrue and the circumstances, if any, under which such       
interest rate or interest rate formula may be reset at the option of the        
Company; (vii) the Interest Payment Dates on which any such interest on such    
Senior Debt Securities will be payable, the Regular Record Date for any         
interest payable on such Senior Debt Securities that are Registered Securities  
on any Interest Payment Date, and the extent to which, or the manner in which   
any interest payable on a Global Security on an Interest Payment Date will be   
paid if other than in the manner described below under "Global Securities;"     
(viii) the person to whom any Registered Security of such series will be        
payable, if other than the person in whose name such Senior Debt Security (or   
one or more predecessor Senior Debt Securities) is registered at the close of   
business on the Regular Record Date for such interest, and the manner in        
which, or the person to whom, any interest on any Bearer Security of such       
series will be payable, if otherwise than upon presentation and surrender of    
the coupons thereto; (ix) if other than the principal amount of such Senior     
Debt Securities, the portion of the principal amount of such Senior Debt        
Securities which shall be payable upon declaration of acceleration of the       
maturity thereof or provable in bankruptcy; (x) any mandatory or optional       
sinking fund or analogous provisions; (xi) each office or agency where,         
subject to the terms of the Senior Indenture as described below under           
"Payments and Paying Agents," the principal of and any interest on such Senior  
Debt Securities will be payable and each office or agency where, subject to     
the terms of the Senior Indenture as described below under "Denominations,      
Registration and Transfer," such Senior Debt Securities may be presented for    
registration of transfer or exchange; (xii) the date, if any, after which and   
the price or prices at which such Senior Debt Securities may, pursuant to any   
optional or mandatory redemption provisions, be redeemed, in whole or in part,  
and the other detailed terms and provisions of any such optional or mandatory   
redemption provisions; (xiii) the denominations in which such Senior Debt       
Securities which are Registered Securities will be issuable, if other than      
denominations of U.S. $1,000 and any integral multiple thereof, and the         
denomination in which such Senior Debt Securities which are Bearer Securities   
will be issuable, if other than denominations of U.S. $5,000; (xiv) the         
currency or currencies of payment of principal of and any premium and interest  
on such Senior Debt Securities; (xv) any index used to determine the amount of  
payments of principal of and any interest on such Senior Debt Securities;       
(xvi) the application, if any, of any restrictive covenants or events of        
default that are in addition to or different from those described herein;       
(xvii) the form of such Senior Debt Security; and (xviii) any other terms and   
provisions of such Senior Debt Securities not inconsistent with the terms and   
provisions of the Senior Indenture. Any such Prospectus Supplement will also    
describe any special provisions for the payment of additional amounts with      
respect to such Senior Debt Securities. Senior Debt Securities of any series    
may be issued in one or more tranches as described in the applicable            
Prospectus Supplement.                                                          

If the purchase price of any of the offered Senior Debt Securities is       
denominated in a foreign currency or currencies or foreign currency unit or     
units or if the principal of and any premium and interest on any series of      

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Senior Debt Securities is payable in a foreign currency or currencies or        
foreign currency unit or units, the restrictions, elections, general tax        
considerations, specific terms and other information with respect to such       
issue of Senior Debt Securities and such foreign currency or currencies or      
foreign currency unit or units will be set forth in the applicable Prospectus   
Supplement.                                                                     

DENOMINATIONS, REGISTRATION AND TRANSFER                                        

The Senior Debt Securities will be issuable as Registered Securities, Bearer
Securities or both. Senior Debt Securities may be issuable in the form of one   
or more Global Securities, as described below under "Global Securities."        
Unless otherwise provided in the applicable Prospectus Supplement, Registered   
Securities denominated in U.S. dollars will be issued only in denominations of  
$1,000 or any integral multiple thereof and Bearer Securities denominated in    
U.S. dollars will be issued only in denominations of $5,000 with coupons        
attached. A Global Security will be issued in a denomination equal to the       
aggregate principal amount of outstanding Senior Debt Securities represented    
by such Global Security. The Prospectus Supplement relating to Senior Debt      
Securities denominated in a foreign or composite currency will specify the      
denominations thereof.                                                          

In connection with its original issuance, no Bearer Security shall be mailed
or otherwise delivered to any location in the United States (as defined below   
under "Limitations on Issuance of Bearer Security") and a Bearer Security may   
be delivered in connection with its original issuance only if the person        
entitled to receive such Bearer Security furnishes written certification, in    
the form required by the Senior Indenture, to the effect that such Bearer       
Security is not being acquired by or on behalf of a United States person (as    
defined below under "Limitations on Issuance of Bearer Securities"), or, if a   
beneficial interest in such Bearer Security is being acquired by or on behalf   
of a United States person, that such United States person is a financial        
institution (as defined in Treasury Regulation Section 1.165-12(c)(1)(v)) that  
is purchasing for its own account or for the account of a customer and which    
agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of   
the United States Internal Revenue Code of 1986, as amended (the "Code"), and   
the regulations thereunder. See "Global Securities" and "Limitations on         
Issuance of Bearer Securities" below.                                           

Registered Securities of any series will be exchangeable for other          
Registered Securities of the same series and of a like aggregate principal      
amount and tenor of different authorized denominations. In addition, if Senior  
Debt Securities of any series are issuable as both Registered Securities and    
as Bearer Securities, at the option of the holder upon request confirmed in     
writing, and subject to the terms of the Senior Indenture, Bearer Securities    
(with all unmatured coupons, except as provided below, and all matured coupons  
in default attached) of such series will be exchangeable for Registered         
Securities of the same series of any authorized denominations and of a like     
aggregate principal amount and tenor. Unless otherwise indicated in an          
applicable Prospectus Supplement, any Bearer Security surrendered in exchange   
for a Registered Security between a record date and the relevant date for       
payment of interest shall be surrendered without the coupon relating to such    
date for payment of interest attached and interest will not be payable in       
respect of the Registered Security issued in exchange for such Bearer           
Security, but will be payable only to the holder of such coupon when due in     
accordance with the terms of the Senior Indenture. Except as provided in an     
applicable Prospectus Supplement, Bearer Securities will not be issued in       
exchange for Registered Securities.                                             

Senior Debt Securities may be presented for exchange as provided above, and 
Registered Securities (other than a Global Security) may be presented for       
registration of transfer (with the form of transfer duly executed), at the      
office of the security registrar designated by the Company or at the office of  
any transfer agent designated by the Company for such purpose with respect to   
any series of Senior Debt Securities and referred to in an applicable           
Prospectus Supplement, without service charge and upon payment of any taxes     
and other governmental charges as described in the Senior Indenture. Such       
transfer or exchange will be effected upon the security registrar or such       
transfer agent, as the case may be, being satisfied with the documents of       
title and identity of the person making the request. The Company has initially  
appointed the Trustee as the security registrar under the Senior Indenture. If  
a Prospectus Supplement refers to any transfer agent (in addition to the        
security registrar) initially designated by the Company with respect to any     
series of Senior Debt Securities, the Company may at any time rescind the       
designation of any such transfer agent or approve a change in the location      

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through which any such transfer agent acts, except that, if Senior Debt         
Securities of a series are issuable only as Registered Securities, the Company  
will be required to maintain a transfer agent in each Place of Payment for      
such series and, if Senior Debt Securities of a series are issuable as Bearer   
Securities, the Company will be required to maintain (in addition to the        
security registrar) a transfer agent in a Place of Payment for such series      
located outside the United States. The Company may at any time designate        
additional transfer agents with respect to any series of Senior Debt            
Securities.                                                                     

In the event of any redemption in part, the Company shall not be required to
(i) issue, register the transfer of or exchange Senior Debt Securities of any   
series during a period beginning at the opening of business 15 days before the  
day of the mailing of a notice of redemption of Senior Debt Securities of that  
series selected to be redeemed and ending at the close of business on (a) if    
Senior Debt Securities of the series are issuable only as Registered            
Securities, the day of mailing of the relevant notice of redemption, and (b)    
if Senior Debt Securities of the series are issuable as Bearer Securities, the  
day of the first publication of the relevant notice of redemption or, if        
Senior Debt Securities of that series are also issuable as Registered           
Securities and there is no publication, the mailing of the relevant notice of   
redemption; (ii) register the transfer of or exchange any Registered Security,  
or portion thereof, called for redemption, except the unredeemed portion of     
any Registered Security being redeemed in part; or (iii) exchange any Bearer    
Security called for redemption, except to exchange such Bearer Security for a   
Registered Security of that series and like tenor which is immediately          
surrendered for redemption.                                                     

PAYMENTS AND PAYING AGENTS                                                      

Unless otherwise indicated in an applicable Prospectus Supplement, payment  
of principal of and any interest on Registered Securities (other than a Global  
Security) will be made at the office of such Paying Agent or Paying Agents as   
the Company may designate from time to time, except that, at the option of the  
Company, payment of any interest may be made by check mailed to the address of  
the payee entitled thereto as such address shall appear in the Security         
Register. Unless otherwise indicated in an applicable Prospectus Supplement,    
payment of any installment of interest on Registered Securities will be made    
to the person in whose name such Registered Security is registered at the       
close of business on the Regular Record Date for such interest payment.         

Unless otherwise indicated in an applicable Prospectus Supplement, payment  
of principal of and any premium and interest on Bearer Securities will be       
payable (subject to applicable laws and regulations) at the offices of such     
Paying Agent or Paying Agents outside the United States as the Company may      
designate from time to time, except that, at the option of the Company,         
payment of any interest may be made by check or by wire transfer to an account  
maintained by the payee outside the United States. Unless otherwise indicated   
in an applicable Prospectus Supplement, payment of interest on Bearer           
Securities on any Interest Payment Date will be made only against surrender of  
the coupon relating to such Interest Payment Date. No payment with respect to   
any Bearer Security will be made at any office or agency of the Company in the  
United States or by check mailed to any address in the United States or by      
wire transfer to an account maintained in the United States. Payments will not  
be made in respect of Bearer Securities or coupons appertaining thereto         
pursuant to presentation to the Company or its Paying Agents within the United  
States. Notwithstanding the foregoing, payment of principal of and any          
interest on Bearer Securities denominated and payable in U.S. dollars will be   
made at the office of the Company's Paying Agent in the United States if, and   
only if, payment of the full amount thereof in U.S. dollars at all offices or   
agencies outside the United States is illegal or effectively precluded by       
exchange controls or other similar restrictions and the Company has delivered   
to the Trustee an opinion of counsel to that effect.                            

Unless otherwise indicated in an applicable Prospectus Supplement, the      
principal office of the Trustee in The City of New York will be designated as   
the Company's sole Paying Agent for payments with respect to Senior Debt        
Securities which are issuable solely as Registered Securities. Any Paying       
Agent outside the United States and any other Paying Agent in the United        
States initially designated by the Company for the Senior Debt Securities will  
be named in the applicable Prospectus Supplement. The Company may at any time   
designate additional Paying Agents or rescind the designation of any Paying     
Agent or approve a change in the office through which any Paying Agent acts,    
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Registered Securities, the Company will be required to maintain a Paying Agent  
in each Place of Payment for such series and, if Senior Debt Securities of a    
series are issuable as Bearer Securities, the Company will be required to       
maintain (i) a Paying Agent in each Place of Payment for such series in the     
United States for payments with respect to any Registered Securities of such    
series (and for payments with respect to Bearer Securities of such series in    
the circumstances described above, but not otherwise), (ii) a Paying Agent in   
each Place of Payment located outside the United States where Senior Debt       
Securities of such series and any coupons appertaining thereto may be           
presented and surrendered for payment; provided that if the Senior Debt         
Securities of such series are listed on The International Stock Exchange,       
London or the Luxembourg Stock Exchange or any other stock exchange located     
outside the United States and such stock exchange shall so require, the         
Company will maintain a Paying Agent in London or Luxembourg City or any other  
required city located outside the United States, as the case may be, for        
Senior Debt Securities of such series, and (iii) a Paying Agent in each Place   
of Payment located outside the United States where (subject to applicable laws  
and regulations) Registered Securities of such series may be surrendered for    
registration of transfer or exchange and where notices and demands to or upon   
the Company may be served.                                                      

All monies paid by the Company to a Paying Agent for the payment of         
principal of and any interest on any Senior Debt Security that remains          
unclaimed at the end of two years after such principal, premium or interest     
shall have become due and payable will be repaid to the Company and thereafter  
the holder of such Senior Debt Security or any coupon appertaining thereto      
will look only to the Company for payment thereof.                              

GLOBAL SECURITIES                                                               

The Senior Debt Securities of a series may be issued in whole or in part in 
the form of one or more Global Securities that will be deposited with, or on    
behalf of, a depository (the "Depository") identified in the Prospectus         
Supplement relating to such series. Global Securities may be issued only in     
fully registered                                                                
form and may be issued in either temporary or permanent form. Unless and until  
it is exchanged in whole or in part for the individual Senior Debt Securities   
represented thereby, a Global Security may not be transferred except as a       
whole by the Depository for such Global Security to a nominee of such           
Depository or by a nominee of such Depository to such Depository or another     
nominee of such Depository or by the Depository or any nominee of such          
Depository to a successor Depository or any nominee of such successor.          

The specific terms of the depository arrangement with respect to a series of
Senior Debt Securities will be described in the Prospectus Supplement relating  
to such series. The Company anticipates that the following provisions will      
generally apply to depository arrangements.                                     

Upon the issuance of a Global Security, the Depository for such Global      
Security or its nominee will credit on its book-entry registration and          
transfer system the respective principal amounts of the individual Senior Debt  
Securities represented by such Global Security to the accounts of persons that  
have accounts with such Depository ("Participants"). Such accounts shall be     
designated by the underwriters, dealers or agents with respect to such Senior   
Debt Securities or by the Company if such Senior Debt Securities are offered    
and sold directly by the Company. Ownership of beneficial interests in a        
Global Security will be limited to Participants or persons that may hold        
interests through Participants. Ownership of beneficial interests in such       
Global Security will be shown on, and the transfer of that ownership will be    
effected only through, records maintained by the applicable Depository or its   
nominee (with respect to interests of Participants) and records of              
Participants (with respect to interests of persons who hold through             
Participants). The laws of some states require that certain purchasers of       
securities take physical delivery of such securities in definitive form. Such   
limits and such laws may impair the ability to own, pledge or transfer          
beneficial interest in a Global Security.                                       

So long as the Depository for a Global Security or its nominee is the       
registered owner of such Global Security, such Depository or such nominee, as   
the case may be, will be considered the sole owner or holder of the Senior      
Debt Securities represented by such Global Security for all purposes under the  
Senior Indenture. Except as provided below, owners of beneficial interests in   
a Global Security will not be entitled to have any of the individual Senior     
Debt Securities of the series represented by such Global Security registered    
in their names,                                                                 

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will not receive or be entitled to receive physical delivery of any such        
Senior Debt Securities of such series in definitive form and will not be        
considered the owners or holders thereof under the Securities Indenture.        

Payments of principal of and any premium and any interest on individual     
Senior Debt Securities represented by a Global Security registered in the name  
of a Depository or its nominee will be made to the Depository or its nominee,   
as the case may be, as the registered owner of the Global Security              
representing such Senior Debt Securities. None of the Company, the Trustee,     
any Paying Agent or the Security Registrar for such Senior Debt Securities      
will have any responsibility or liability for any aspect of the records         
relating to or payments made on account of beneficial ownership interests in    
the Global Security for such Senior Debt Securities or for maintaining,         
supervising or reviewing any records relating to such beneficial ownership      
interests.                                                                      

The Company expects that the Depository for a series of Senior Debt         
Securities or its nominee, upon receipt of any payment of principal, premium    
or interest in respect of a permanent Global Security representing any of such  
Senior Debt Securities, immediately will credit Participants' accounts with     
payments in amounts proportionate to their respective beneficial interests in   
the principal amount of such Global Security for such Senior Debt Securities    
as shown on the records of such Depository or its nominee. The Company also     
expects that payments by Participants to owners of beneficial interests in      
such Global Security held through such Participants will be governed by         
standing instructions and customary practices, as is now the case with          
securities held for the accounts of customers in bearer form or registered in   
"street name." Such payments will be the responsibility of such Participants.   

If a Depository for a series of Senior Debt Securities is at any time       
unwilling, unable or ineligible to continue as depository and a successor       
depository is not appointed by the Company within 90 days, the Company will     
issue individual Senior Debt Securities of such series in exchange for the      
Global Security representing such series of Senior Debt Securities. In          
addition, the Company may, at any time and in its sole discretion, subject to   
any limitations described in the Prospectus Supplement relating to such Senior  
Debt Securities, determine not to have any Senior Debt Securities of such       
series represented by one or more Global Securities and, in such event, will    
issue individual Senior Debt Securities of such series in exchange for the      
Global Security or Securities representing such series of Senior Debt           
Securities. Individual Senior Debt Securities of such series so issued will be  
issued in denominations, unless otherwise specified by the Company, of $1,000   
and integral multiples thereof.                                                 

LIMITATIONS ON ISSUANCE OF BEARER SECURITIES                                    

In compliance with United States federal tax laws and regulations, Bearer   
Securities may not be offered, sold, resold or delivered in connection with     
their original issuance in the United States or to United States persons (each  
as defined below) other than to a Qualifying Branch of a United States          
Financial Institution (as defined below), and any underwriters, agents and      
dealers participating in the offering of Senior Debt Securities must agree      
that they will not offer any Bearer Securities for sale or resale in the        
United States or to United States persons (other than a Qualifying Branch of a  
United States Financial Institution) nor deliver Bearer Securities within the   
United States. In addition, any such underwriters, agents and dealers must      
agree to send confirmations to each purchaser of a Bearer Security confirming   
that such purchaser represents that it is not a United States person or is a    
Qualifying Branch of a United States Financial Institution and, if such person  
is a dealer, that it will send similar confirmations to purchasers from it.     
The term "Qualifying Foreign Branch of a United States Financial Institution"   
means a branch located outside the United States of a United States securities  
clearing organization, bank or other financial institution listed under         
Treasury Regulation Section 1.165-12(c)(1)(v) that agrees to comply with the    
requirements of Section 165(j)(3)(A), (B) or (C) of the Code and the            
regulations thereunder.                                                         

Bearer Securities and any coupons appertaining thereto will bear a legend   
substantially to the following effect: "Any United States person who holds      
this obligation will be subject to limitations under the United States income   
tax laws, including the limitations provided in Sections 165(j) and 1287(a) of  
the Internal Revenue Code." Under Sections 165(j) and 1287(a) of the Code,      
holders that are United States persons, with certain exceptions, will not be    
entitled to deduct any loss on Bearer Securities and must treat as ordinary     
income any gain realized on the sale or other disposition (including the        
receipt of principal) of Bearer Securities.                                     

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The term "United States person" means a citizen or resident of the United   
States, a corporation, partnership or other entity created or organized in or   
under the laws of the United States or of any political subdivision thereof,    
an estate or, for taxable years beginning before January 1, 1997, a trust the   
income of which is subject to United States federal income taxation regardless  
of its source or, for taxable years beginning after December 31, 1996, a trust  
if a U.S. court is able to exercise primary supervision over the                
administration of the trust and one or more U.S. fiduciaries have the           
authority to control all substantial decisions of the trust, and the term       
"United States" means the United States of America (including the states and    
the District of Columbia), its territories, its possessions and other areas     
subject to its jurisdiction (including the Commonwealth of Puerto Rico).        

DEFEASANCE                                                                      

The Senior Indenture provides that the Company will be discharged from any  
and all obligations in respect of the Senior Debt Securities of any series      
(except for certain obligations to register the transfer or exchange of Senior  
Debt Securities of such series, to replace stolen, lost or mutilated Senior     
Debt Securities of such series, to maintain paying agencies and to hold monies  
for payment in trust) upon the deposit with the Trustee for such series of      
Senior Debt Securities in trust of money and/or U.S. Government Obligations     
(as defined below) which through the payment of interest and principal in       
respect thereof in accordance with their terms will provide money in an amount  
sufficient to pay the principal of and each installment of interest, if any,    
on the Senior Debt Securities of such series on the maturity of such payments   
in accordance with the terms of the Senior Indenture and the Senior Debt        
Securities of such series. Such a trust may only be established if, among       
other things, the Company has delivered to such Trustee an Opinion of Counsel   
(who may be counsel for the Company) to the effect that (i) holders of the      
Senior Debt Securities of such series will not recognize income, gain or loss   
for federal income tax purposes as a result of such deposit, defeasance and     
discharge and will be subject to federal income tax on the same amounts and in  
the same manner and at the same times, as would have been the case if such      
deposit, defeasance and discharge had not occurred, and (ii) the Senior Debt    
Securities of such series, if then listed on The New York Stock Exchange, will  
not be delisted as a result of such deposit, defeasance and discharge.          

The Senior Indenture provides that, if applicable, the Company may omit to  
comply with any additional restrictive covenants imposed on the Company in      
connection with the establishment of any series of Senior Debt Securities and   
that clause (d) under "Events of Default" with respect to such restrictive      
covenants and clause (e) under "Events of Default" shall not be deemed to be an 
Event of Default under the Senior Indenture and the Senior Debt Securities of   
any series, upon the deposit with the Trustee under the Senior Indenture, in    
trust of money and/or U.S. Government Obligations which through the payment of  
interest and principal in respect thereof in accordance with their terms will   
provide money in an amount sufficient to pay the principal of, and each         
installment of interest, if any, on the Senior Debt Securities of such series on
the maturity of such payments in accordance with the terms of the Senior        
Indenture and the Senior Debt Securities of such series. The obligations of the 
Company under the Senior Indenture and Senior Debt Securities of such series    
other than with respect to the covenants referred to above and the Events of    
Default other than the Events of Default referred to above shall remain in full 
force and effect. Such a trust may only be established if, among other things,  
the Company has delivered to the Trustee an Opinion of Counsel (who may be      
counsel for the Company) to the effect that (i) the holders of the Senior Debt  
Securities of such series will not recognize income, gain or loss for federal   
income tax purposes as a result of such deposit and defeasance of certain       
covenants and Events of Default and will be subject to federal income tax on the
same amounts and in the same manner and at the same times, as would have been   
the case if such deposit and defeasance had not occurred, and (ii) the Senior   
Debt Securities of such series, if then listed on The New York Stock Exchange,  
will not be delisted as a result of such deposit and defeasance.                

In the event the Company exercises its option to omit compliance with       
certain covenants of the Senior Indenture with respect to the Senior Debt       
Securities of any series as described above and the Senior Debt Securities of   
such series are declared due and payable because of the occurrence of any       
Event of Default other                                                          

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than an Event of Default described in clauses (d) or (e) under "Events of       
Default," the amount of money and U.S. Government Obligations on deposit with   
the Trustee will be sufficient to pay amounts due on the Senior Debt            
Securities of such series at the time of their stated maturity but may not be   
sufficient to pay amounts due on the Senior Debt Securities of such series at   
the time of the acceleration resulting from such Event of Default. However,     
the Company will remain liable for such payments.                               

The term "U.S. Government Obligation" means direct noncallable obligations  
of, or noncallable obligations guaranteed by, the United States or an agency    
thereof for the payment of which guarantee or obligation, the full faith and    
credit of the United States is pledged.                                         

MODIFICATION OF THE SENIOR INDENTURE                                            

The Senior Indenture contains provisions permitting the Company and the     
Trustee, with the consent of the holders of a majority of the principal amount  
of the Senior Debt Securities of each series then outstanding, to execute       
supplemental indentures adding any provisions to or changing or eliminating     
any of the provisions of the Senior Indenture or modifying the rights of the    
holders of the Senior Debt Securities of such series, except that no such       
supplemental indenture may, among other things, (i) extend the final maturity   
of any Senior Debt Securities, or reduce the rate or extend the time of         
payment of interest thereon, or reduce the principal amount thereof, impair     
the right to institute suit for payment thereof or reduce any amount payable    
upon any redemption thereof without the consent of the holder of the Senior     
Debt Security so affected, or (ii) reduce the aforesaid percentage of Senior    
Debt Securities, the consent of the holders of which is required for any such   
supplemental indenture, without the consent of the holders of all outstanding   
Senior Debt Securities. The Board of Directors of the Company does not have     
the power to waive any of the covenants of the Senior Indenture including       
those relating to consolidation, merger or sale of assets.                      

EVENTS OF DEFAULT                                                               

An Event of Default with respect to any series of Senior Debt Securities is 
defined in the Senior Indenture as being: (a) default by the Company for 30     
days in the payment of any installment of interest on the Senior Debt           
Securities of such series; (b) default by the Company in the payment of any     
principal on the Senior Debt Securities of such series; (c) default by the      
Company in the payment of any sinking fund installment with respect to such     
series of Senior Debt Securities; (d) default by the Company in the             
performance of any of the agreements in the Indenture contained therein for     
the benefit of the Senior Debt Securities of such series which shall not have   
been remedied within a period of 60 days after receipt of written notice by     
the Company from the Trustee for such series of Senior Debt Securities or by    
the Company and such Trustee from the holders of not less than 25% in           
principal amount of the Senior Debt Securities of such series then              
outstanding; (e) with respect to any series of Senior Debt Securities (unless   
otherwise specified in the accompanying Prospectus Supplement), the             
acceleration, or failure to pay at maturity, of any indebtedness for money      
borrowed of the Company exceeding $20,000,000 in principal amount, which        
acceleration is not rescinded or annulled or indebtedness paid within 15 days   
after the date on which written notice thereof shall have first been given to   
the Company as provided in the Senior Indenture; (f) certain events of          
bankruptcy, insolvency or reorganization of the Company; or (g) any other       
Event of Default established in accordance with the Senior Indenture with       
respect to any series of Senior Debt Securities. No Event of Default (other     
than an Event of Default under clause (f)) described above with respect to a    
particular series of Senior Debt Securities necessarily constitutes an Event    
of Default with respect to any other series of Senior Debt Securities.          

The Senior Indenture provides that if an Event of Default with respect to   
any series of Senior Debt Securities shall have occurred and be continuing,     
either the Trustee with respect to the Senior Debt Securities of that series    
or the holders of at least 25% in aggregate principal amount of Senior Debt     
Securities of that series then outstanding may declare the principal amount     
(or, if the Senior Debt Securities of that series were sold at an original      
issue discount, such portion of the principal amount as may be specified in     
the terms of that series) of all the Senior Debt Securities of that series and  
interest, if any, accrued thereon to be due and payable immediately, but upon   
certain conditions such declaration may be annulled and past defaults (except,  
unless                                                                          

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theretofore cured, a default in payment of principal of or interest on Senior   
Debt Securities of that series) may be waived by the holders of a majority in   
principal amount of the Senior Debt Securities of that series then              
outstanding.                                                                    

The Senior Indenture contains a provision entitling the Trustee with respect
to any series of Senior Debt Securities, subject to the duty of the Trustee     
during default to act with the required standard of care, to be indemnified by  
the holders of Senior Debt Securities of such series before proceeding to       
exercise any right or power under the Senior Indenture at the request of the    
holders of such Senior Debt Securities. The Senior Indenture also provides      
that the holders of a majority in principal amount of the outstanding Senior    
Debt Securities of any series may direct the time, method and place of          
conducting any proceeding for any remedy available to the Trustee for such      
series of Senior Debt Securities, or exercising any trust or power conferred    
on such Trustee, with respect to the Senior Debt Securities of such series.     
The Senior Indenture contains a covenant that the Company will file annually    
with the Trustee a certificate as to the absence of any default or specifying   
any default that exists.                                                        

No holder of any Senior Debt Security of any series will have any right to  
institute any proceeding with respect to the Senior Indenture or for any        
remedy thereunder, unless such holder shall have previously given the Trustee   
for such series of Senior Debt Securities written notice of an Event of         
Default with respect to Senior Debt Securities of that series and unless also   
the holders of at least 25% in aggregate principal amount of the outstanding    
Senior Debt Securities of that series shall have made written request, and      
offered reasonable indemnity, to such Trustee to institute such proceeding as   
trustee, and such Trustee shall not have received from the holders of a         
majority in aggregate principal amount of the outstanding Senior Debt           
Securities of that series a direction inconsistent with such request and shall  
have failed to institute such proceeding within 60 days. However, any right of  
a holder of any Senior Debt Security to receive payment of the principal of     
and any interest on such Senior Debt Security on or after the due dates         
expressed in such Senior Debt Security and to institute suit for the            
enforcement of any such payment on or after such dates shall not be impaired    
or affected without the consent of such holder.                                 

CONSOLIDATION, MERGER AND SALE OF ASSETS                                        

The Company covenants that it will not merge or consolidate with any other  
corporation or sell or convey all or substantially all of its assets to any     
Person, unless (i) either the Company shall be the continuing corporation, or   
the successor corporation or the Person which acquires by sale or conveyance    
substantially all of the assets of the Company (if other than the Company)      
shall be a corporation organized under the laws of the United States or any     
state thereof and shall expressly assume the due and punctual payment of the    
principal of and interest on all the Senior Debt Securities, according to       
their tenor, and the due and punctual performance and observance of all of the  
covenants and conditions of the Senior Indenture to be performed or observed    
by the Company, by supplemental indenture satisfactory to the Trustee,          
executed and delivered to the Trustee by such corporation, and (ii) the         
Company or such successor corporation, as the case may be, shall not,           
immediately after such merger or consolidation, or such sale or conveyance, be  
in default in the performance of any such covenants or condition.               

Other than the covenants described above, or as set forth in any            
accompanying Prospectus Supplement, the Senior Indenture and the Senior Debt    
Securities do not contain any covenants or other provisions designed to afford  
holders of the Senior Debt Securities protection in the event of a takeover,    
recapitalization or highly leveraged transaction involving the Company.         

NO PERSONAL LIABILITY                                                           

No past, present or future director, officer, employee or stockholder, as   
such, of the Company or any successor thereof shall have any liability for any  
obligations of the Company under the Senior Debt Securities or the Senior       
Indenture or for any claim based on, in respect of, or by reason of, such       
obligations or their creation. Each holder of Debt Securities by accepting      
such Senior Debt Security waives and releases all such liability. The waiver    
and release are part of the consideration for the issue of the Senior Debt      
Securities.                                                                     

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THE TRUSTEE                                                                     

The Trustee in its individual or any other capacity may become the owner or 
pledgee of Senior Debt Securities and may otherwise deal with the Company or    
its Affiliates with the same rights it would have if it were not the Trustee    
provided it complies with the terms of the Senior Indenture.                    

DESCRIPTION OF SUBORDINATED DEBT SECURITIES 

The Subordinated Debt Securities will be issued under an Indenture (the     
"Subordinated Indenture"), between the Company and The First National Bank of   
Chicago, a national banking association, as trustee (referred to herein under   
"Description of Subordinated Debt Securities" as the "Trustee"), a copy of the  
form of which is filed as an exhibit to the Registration Statement. The         
Company believes that the following summary of certain provisions of the        
Subordinated Indenture is a complete discussion of all material terms           
necessary to understand the Subordinated Indenture. Capitalized terms not       
otherwise defined under the heading "Description of Subordinated Debt           
Securities" have the meaning given to them in the Indenture. As used in this    
section "Description of Subordinated Debt Securities," unless the context       
indicates otherwise, the term "Company" means CNA Financial Corporation and     
does not include any of its subsidiaries.                                       

GENERAL                                                                         

The Subordinated Debt Securities will rank equally with all other unsecured 
and subordinated indebtedness for borrowed money of the Company. As of June     
30, 1997, approximately $1,724.4 million aggregate principal amount of          
indebtedness for borrowed money of the Company would rank senior to the         
Subordinated Debt Securities. As of June 30, 1997, the Company had $247.1       
million in aggregate principal amount of existing indebtedness for borrowed     
money that would rank pari passu with the Subordinated Debt Securities. The     
Subordinated Indenture does not limit the amount of debt, either secured or     
unsecured, that may be issued by the Company which would be senior to the       
Subordinated Debt Securities or that may be issued under the Subordinated       
Indenture or otherwise. The Subordinated Debt Securities may be issued in one   
or more series with the same or various maturities and may be sold at par, a    
premium or an original issue discount. Subordinated Debt Securities sold at an  
original issue discount may bear no interest or interest at a rate that is      
below market rates.                                                             

Because the Company is a holding company, the right of the Company, and     
hence the rights of creditors and shareholders of the Company, to participate   
in any distribution of assets of any subsidiary upon its liquidation or         
reorganization or otherwise is accordingly subject to prior claims of           
creditors of the subsidiary and (in the case of an insurance subsidiary) its    
policyholders, except to the extent that claims of the Company itself as a      
creditor of the subsidiary may be reorganized. The subsidiaries are separate    
and distinct legal entities and have no obligation, contingent or otherwise,    
to pay any amounts due pursuant to the Subordinated Debt Securities or to make  
any funds available therefor, whether by dividends, loans or other payments.    
The payment of dividends or the making of loans and advances to the Company by  
its subsidiaries may be subject to statutory or regulatory restrictions, are    
contingent upon the earnings of those subsidiaries and are subject to           
insurance regulation and various business considerations.                       

Reference is made to the Prospectus Supplement for the following terms of   
the offered Subordinated Debt Securities (to the extent such terms are          
applicable to such Subordinated Debt Securities): (i) the title of such         
Subordinated Debt Securities or the particular series thereof; (ii) any limit   
on the aggregate principal amount of such Subordinated Debt Securities; (iii)   
whether such Subordinated Debt Securities are to be issuable as Registered      
Securities or Bearer Securities or both, whether any of such Subordinated Debt  
Securities are to be issuable initially in temporary global form and whether    
any of such Subordinated Debt Securities are to be issuable in permanent        
global form; (iv) the price or prices (generally expressed as a percentage of   
the aggregate principal amount thereof) at which such Subordinated Debt         
Securities will be issued; (v) the date or dates on which such Subordinated     
Debt Securities will mature; (vi) the rate or rates per annum, or the formula   
by which such rate or rates shall be determined, at which such Subordinated     
Debt Securities will bear interest, if any, the                                 

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date from which any such interest will accrue and the circumstances, if any,    
under which such interest rate or interest rate formula may be reset at the     
option of the Company; (vii) the Interest Payment Dates on which any such       
interest on such Subordinated Debt Securities will be payable, the Regular      
Record Date for any interest payable on such Subordinated Debt Securities that  
are Registered Securities on any Interest Payment Date, and the extent to       
which, or the manner in which any interest payable on a Global Security on an   
Interest Payment Date will be paid if other than in the manner described below  
under "Global Securities;" (viii) the person to whom any Registered Security    
of such series will be payable, if other than the person in whose name such     
Subordinated Debt Security (or one or more predecessor Subordinated Debt        
Securities) is registered at the close of business on the Regular Record Date   
of such interest, and the manner in which, or the person to whom, any interest  
on any Bearer Security of such series will be payable, if otherwise than upon   
presentation and surrender of the coupons thereto; (ix) if other than the       
principal amount of such Subordinated Debt Securities, the portion of the       
principal amount of such Subordinated Debt Securities which shall be payable    
upon declaration of acceleration of the maturity thereof or provable in         
bankruptcy; (x) any mandatory or optional sinking fund or analogous             
provisions; (xi) each office or agency where, subject to the terms of the       
Subordinated Indenture as described below under "Payments and Paying Agents,"   
the principal of and any interest on such Subordinated Debt Securities will be  
payable and each office or agency where, subject to the terms of the            
Subordinated Indenture as described below under "Denominations, Registration    
and Transfer," such Subordinated Debt Securities may be presented for           
registration of transfer or exchange; (xii) the date, if any, after which and   
the price or prices at which such Subordinated Debt Securities may, pursuant    
to any optional or mandatory redemption provisions, be redeemed, in whole or    
in part, and the other detailed terms and provisions of any such optional or    
mandatory redemption provisions; (xiii) the denominations in which such         
Subordinated Debt Securities which are Registered Securities will be issuable,  
if other than denominations of U.S. $1,000 and any integral multiple thereof,   
and the denomination in which such Subordinated Debt Securities which are       
Bearer Securities will be issuable, if other than denominations of U.S.         
$5,000; (xiv) the currency or currencies of payment of principal of and any     
premium and interest on such Subordinated Debt Securities; (xv) any index used  
to determine the amount of payments of principal of and any interest on such    
Subordinated Debt Securities; (xvi) the application, if any, of any             
restrictive covenants or events of default that are in addition to or           
different from those described herein; (xvii) the form of such Subordinated     
Debt Security; and (xviii) any other terms and provisions of such Subordinated  
Debt Securities not inconsistent with the terms and provisions of the           
Subordinated Indenture. Any such Prospectus Supplement will also describe any   
special provisions for the payment of additional amounts with respect to such   
Subordinated Debt Securities. Subordinated Debt Securities of any series may    
be issued in one or more tranches as described in the applicable Prospectus     
Supplement.                                                                     

If the purchase price of any of the offered Subordinated Debt Securities is 
denominated in a foreign currency or currencies or foreign currency unit or     
units or if the principal of and any premium and interest on any series of      
Subordinated Debt Securities is payable in a foreign currency or currencies or  
foreign currency unit or units, the restrictions, elections, general tax        
considerations, specific terms and other information with respect to such       
issue of Subordinated Debt Securities and such foreign currency or currencies   
or foreign currency unit or units will be set forth in the applicable           
Prospectus Supplement.                                                          

SUBORDINATION                                                                   

Indebtedness evidenced by the Subordinated Debt Securities will be          
subordinated in right of payment, as set forth in the Subordinated Indenture,   
to the prior payment in full of all existing and future Senior Indebtedness of  
the Company. Senior Indebtedness is defined in the Subordinated Indenture as    
the principal of and interest on (including any interest that accrues after or  
would have accrued but for the filing of a petition initiating any proceeding   
pursuant to any Bankruptcy Law, regardless of whether such interest is allowed  
or permitted to the holder of such Debt against the bankruptcy or any other     
insolvency estate of the Company in such proceeding) and other amounts due on   
or in connection with any Debt incurred, assumed or guaranteed by the Company,  
whether outstanding on the date of the Subordinated Indenture or thereafter     
incurred, assumed or guaranteed, and all renewals, extensions and refundings    
of any such Debt. Amounts outstanding under any Senior Debt Securities will be  
included in Senior Indebtedness. Excluded from the definition of Senior         
Indebtedness are the                                                            

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following: (a) any Debt which expressly provides (i) that such Debt shall not   
be senior in right of payment to the Subordinated Debt Securities, or (ii)      
that such Debt shall be subordinated to any other Debt of the Company, unless   
such Debt expressly provides that such Debt shall be senior in right of         
payment to the Subordinated Debt Securities; and (b) any Debt of the Company    
in respect of the Subordinated Debt Securities.                                 

By reason of such subordination, in the event of dissolution, insolvency,   
bankruptcy or other similar proceedings, upon any distribution of assets, (i)   
the holders of Subordinated Debt Securities will be required to pay over their  
share of such distribution to the holders of Senior Indebtedness until such     
Senior Indebtedness is paid in full; and (ii) creditors of the Company who are  
not holders of Subordinated Debt Securities or holders of Senior Indebtedness   
may recover less, ratably, than holders of Senior Indebtedness and may recover  
more, ratably, than the holders of Subordinated Debt Securities.                

In the event that the Subordinated Debt Securities are declared due and     
payable prior to their Stated Maturity by reason of the occurrence of an Event  
of Default, then the Company is obligated to notify promptly holders of Senior  
Indebtedness of such acceleration. The Company may not pay the Subordinated     
Debt Securities until 179 days have passed after such acceleration occurs and   
may thereafter pay the Subordinated Debt Securities if the terms of the         
Subordinated Indenture otherwise permit payment at that time.                   

No payment of the principal, issue price plus accrued original issue        
discount (if any), redemption price, interest, if any, or any other amount      
payable with respect to any Subordinated Debt Security may be made, nor may     
the Company acquire any Subordinated Debt Securities except as set forth in     
the Subordinated Indenture, if any default with respect to Senior Indebtedness  
occurs and is continuing that permits the acceleration of the maturity thereof  
and either such default is the subject of judicial proceedings or the Company   
receives notice of the default, unless (a) 179 days pass after notice of the    
default is given and such default is not then the subject of judicial           
proceedings or the default with respect to the Senior Indebtedness is cured or  
waived and (b) the terms of the Subordinated Indenture otherwise permit the     
payment or acquisition of the Subordinated Debt Securities at that time.        

DENOMINATIONS, REGISTRATION AND TRANSFER                                        

The Subordinated Debt Securities will be issuable as Registered Securities, 
Bearer Securities or both. Subordinated Debt Securities may be issuable in the  
form of one or more Global Securities, as described below under "Global         
Securities." Unless otherwise provided in the applicable Prospectus             
Supplement, Registered Securities denominated in U.S. dollars will be issued    
only in denominations of $1,000 or any integral multiple thereof and Bearer     
Securities denominated in U.S. dollars will be issued only in denominations of  
$5,000 with coupons attached. A Global Security will be issued in a             
denomination equal to the aggregate principal amount of outstanding             
Subordinated Debt Securities represented by such Global Security. The           
Prospectus Supplement relating to Subordinated Debt Securities denominated in   
a foreign or composite currency will specify the denominations thereof.         

In connection with its original issuance, no Bearer Security shall be mailed
or otherwise delivered to any location in the United States (as defined below   
under "Limitations on Issuance of Bearer Security") and a Bearer Security may   
be delivered in connection with its original issuance only if the person        
entitled to receive such Bearer Security furnishes written certification, in    
the form required by the Subordinated Indenture, to the effect that such        
Bearer Security is not being acquired by or on behalf of a United States        
person (as defined below under "Limitations on Issuance of Bearer               
Securities"), or, if a beneficial interest in such Bearer Security is being     
acquired by or on behalf of a United States person, that such United States     
person is a financial institution (as defined in Treasury Regulation Section    
1.165-12(c)(1)(v)) that is purchasing for its own account or for the account    
of a customer and which agrees to comply with the requirements of Section       
165(j)(3)(A), (B) or (C) of the Code, and the regulations thereunder. See       
"Global Securities" and "Limitations on Issuance of Bearer Securities" below.   

Registered Securities of any series will be exchangeable for other          
Registered Securities of the same series and of a like aggregate principal      
amount and tenor of different authorized denominations. In addition, if         
Subordinated Debt Securities of any series are issuable as both Registered      
Securities and as Bearer Securities, at                                         

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the option of the holder upon request confirmed in writing, and subject to the  
terms of the Subordinated Indenture, Bearer Securities (with all unmatured      
coupons, except as provided below, and all matured coupons in default           
attached) of such series will be exchangeable for Registered Securities of the  
same series of any authorized denominations and of a like aggregate principal   
amount and tenor. Unless otherwise indicated in an applicable Prospectus        
Supplement, any Bearer Security surrendered in exchange for a Registered        
Security between a record date and the relevant date for payment of interest    
shall be surrendered without the coupon relating to such date for payment of    
interest attached and interest will not be payable in respect of the            
Registered Security issued in exchange for such Bearer Security, but will be    
payable only to the holder of such coupon when due in accordance with the       
terms of the Subordinated Indenture. Except as provided in an applicable        
Prospectus Supplement, Bearer Securities will not be issued in exchange for     
Registered Securities.                                                          

Subordinated Debt Securities may be presented for exchange as provided      
above, and Registered Securities (other than a Global Security) may be          
presented for registration of transfer (with the form of transfer duly          
executed), at the office of the security registrar designated by the Company    
or at the office of any transfer agent designated by the Company for such       
purpose with respect to any series of Subordinated Debt Securities and          
referred to in an applicable Prospectus Supplement, without service charge and  
upon payment of any taxes and other governmental charges as described in the    
Subordinated Indenture. Such transfer or exchange will be effected upon the     
security registrar or such transfer agent, as the case may be, being satisfied  
with the documents of title and identity of the person making the request. The  
Company has initially appointed the Trustee as the security registrar under     
the Subordinated Indenture. If a Prospectus Supplement refers to any transfer   
agent (in addition to the security registrar) initially designated by the       
Company with respect to any series of Subordinated Debt Securities, the         
Company may at any time rescind the designation of any such transfer agent or   
approve a change in the location through which any such transfer agent acts,    
except that, if Subordinated Debt Securities of a series are issuable only as   
Registered Securities, the Company will be required to maintain a transfer      
agent in each Place of Payment for such series and, if Subordinated Debt        
Securities of a series are issuable as Bearer Securities, the Company will be   
required to maintain (in addition to the security registrar) a transfer agent   
in a Place of Payment for such series located outside the United States. The    
Company may at any time designate additional transfer agents with respect to    
any series of Subordinated Debt Securities.                                     

In the event of any redemption in part, the Company shall not be required to
(i) issue, register the transfer of or exchange Subordinated Debt Securities    
of any series during a period beginning at the opening of business 15 days      
before the day of the mailing of a notice of redemption of Subordinated Debt    
Securities of that series selected to be redeemed and ending at the close of    
business on (a) if Subordinated Debt Securities of the series are issuable      
only as Registered Securities, the day of mailing of the relevant notice of     
redemption, and (b) if Subordinated Debt Securities of the series are issuable  
as Bearer Securities, the day of the first publication of the relevant notice   
of redemption or, if Subordinated Debt Securities of that series are also       
issuable as Registered Securities and there is no publication, the mailing of   
the relevant notice of redemption; (ii) register the transfer of or exchange    
any Registered Security, or portion thereof, called for redemption, except the  
unredeemed portion of any Registered Security being redeemed in part; or (iii)  
exchange any Bearer Security called for redemption, except to exchange such     
Bearer Security for a Registered Security of that series and like tenor which   
is immediately surrendered for redemption.                                      

PAYMENTS AND PAYING AGENTS                                                      

Unless otherwise indicated in an applicable Prospectus Supplement, payment  
of principal of and any interest on Registered Securities (other than a Global  
Security) will be made at the office of such Paying Agent or Paying Agents as   
the Company may designate from time to time, except that, at the option of the  
Company, payment of any interest may be made by check mailed to the address of  
the payee entitled thereto as such address shall appear in the Security         
Register. Unless otherwise indicated in an applicable Prospectus Supplement,    
payment of any installment of interest on Registered Securities will be made    
to the person in whose name such Registered Security is registered at the       
close of business on the Record Date for such interest payment.                 

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Unless otherwise indicated in an applicable Prospectus Supplement, payment  
of principal of and any premium and interest on Bearer Securities will be       
payable (subject to applicable laws and regulations) at the offices of such     
Paying Agent or Paying Agents outside the United States as the Company may      
designate from time to time, except that, at the option of the Company,         
payment of any interest may be made by check or by wire transfer to an account  
maintained by the payee outside the United States. Unless otherwise indicated   
in an applicable Prospectus Supplement, payment of interest on Bearer           
Securities on any Interest Payment Date will be made only against surrender of  
the coupon relating to such Interest Payment Date. No payment with respect to   
any Bearer Security will be made at any office or agency of the Company in the  
United States or by check mailed to any address in the United States or by      
wire transfer to an account maintained in the United States. Payments will not  
be made in respect of Bearer Securities or coupons appertaining thereto         
pursuant to presentation to the Company or its Paying Agents within the United  
States. Notwithstanding the foregoing, payment of principal of and any          
interest on Bearer Securities denominated and payable in U.S. dollars will be   
made at the office of the Company's Paying Agent in the United States if, and   
only if, payment of the full amount thereof in U.S. dollars at all offices or   
agencies outside the United States is illegal or effectively precluded by       
exchange controls or other similar restrictions and the Company has delivered   
to the Trustee and opinion of counsel to that effect.                           

Unless otherwise indicated in an applicable Prospectus Supplement, the      
principal office of the Trustee in The City of New York will be designated as   
the Company's sole Paying Agent for payments with respect to Subordinated Debt  
Securities which are issuable solely as Registered Securities. Any Paying       
Agent outside the United States and any other Paying Agent in the United        
States initially designated by the Company for the Subordinated Debt            
Securities will be named in the applicable Prospectus Supplement. The Company   
may at any time designate additional Paying Agents or rescind the designation   
of any Paying Agent or approve a change in the office through which any Paying  
Agent acts, except that, if Subordinated Debt Securities of a series are        
issuable only as Registered Securities, the Company will be required to         
maintain a Paying Agent in each Place of Payment for such series and, if        
Subordinated Debt Securities of a series are issuable as Bearer Securities,     
the Company will be required to maintain (i) a Paying Agent in each Place of    
Payment for such series in the United States for payments with respect to any   
Registered Securities of such series (and for payments with respect to Bearer   
Securities of such series in the circumstances described above, but not         
otherwise), (ii) a Paying Agent in each Place of Payment located outside the    
United States where Subordinated Debt Securities of such series and any         
coupons appertaining thereto may be presented and surrendered for payment;      
provided that if the Subordinated Debt Securities of such series are listed on  
The International Stock Exchange, London or the Luxembourg Stock Exchange or    
any other stock exchange located outside the United States and such stock       
exchange shall so require, the Company will maintain a Paying Agent in London   
or Luxembourg City or any other required city located outside the United        
States, as the case may be, for Subordinated Debt Securities of such series,    
and (iii) a Paying Agent in each Place of Payment located outside the United    
States where (subject to applicable laws and regulations) Registered            
Securities of such series may be surrendered for registration of transfer or    
exchange and where notices and demands to or upon the Company may be served     

All monies paid by the Company to a Paying Agent for the payment of         
principal of and any interest on any Subordinated Debt Security that remains    
unclaimed at the end of two years after such principal, premium or interest     
shall have become due and payable will be repaid to the Company and thereafter  
the holder of such Subordinated Debt Security or any coupon appertaining        
thereto will look only to the Company for payment thereof.                      

GLOBAL SECURITIES                                                               

The Subordinated Debt Securities of a series may be issued in whole or in   
part in the form of one or more Global Securities that will be deposited with,  
or on behalf of, a depository (the "Depository") identified in the Prospectus   
Supplement relating to such series. Global Securities may be issued only in     
fully registered form and may be issued in either temporary or permanent form.  
Unless and until it is exchanged in whole or in part for the individual         
Subordinated Debt Securities represented thereby, a Global Security may not be  
transferred except                                                              

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as a whole by the Depository for such Global Security to a nominee of such      
Depository or by a nominee of such Depository to such Depository or another     
nominee of such Depository or by the Depository or any nominee of such          
Depository to a successor Depository or any nominee of such successor.          

The specific terms of the depository arrangement with respect to a series of
Subordinated Debt Securities will be described in the Prospectus Supplement     
relating to such series. The Company anticipates that the following provisions  
will generally apply to depository arrangements.                                

Upon the issuance of a Global Security, the Depository for such Global      
Security or its nominee will credit on its book-entry registration and          
transfer system the respective principal amounts of the individual              
Subordinated Debt Securities represented by such Global Security to the         
accounts of persons that have accounts with such Depository ("Participants").   
Such accounts shall be designated by the underwriters, dealers or agents with   
respect to such Subordinated Debt Securities or by the Company if such          
Subordinated Debt Securities are offered and sold directly by the Company.      
Ownership of beneficial interests in a Global Security will be limited to       
Participants or persons that may hold interest through Participants. Ownership  
of beneficial interests in such Global Security will be shown on, and the       
transfer of that ownership will be effected only through, records maintained    
by the applicable Depository or its nominee (with respect to interests of       
Participants) and records of Participants (with respect to interests of person  
who hold through Participants). The laws of some states require that certain    
purchasers of securities take physical delivery of such securities in           
definitive form. Such limits and such laws may impair the ability to own,       
pledge or transfer beneficial interest in a Global Security.                    

So long as the Depository for a Global Security or its nominee is the       
registered owner of such Global Security, such Depository or such nominee, as   
the case may be, will be considered the sole owner or holder of the             
Subordinated Debt Securities represented by such Global Security for all        
purposes under the Subordinated Indenture. Except as provided below, owners of  
beneficial interests in a Global Security will not be entitled to have any of   
the individual Subordinated Debt Securities of the series represented by such   
Global Security registered in their names, will not receive or be entitled to   
receive physical delivery of any such Subordinated Debt Securities of such      
series in definitive form and will not be considered the owners or holders      
thereof under the Subordinated Indenture.                                       

Payments of principal of and any premium and any interest on individual     
Subordinated Debt Securities represented by a Global Security registered in     
the name of a Depository or its nominee will be made to the Depository or its   
nominee, as the case may be, as the registered owner of the Global Security     
representing such Subordinated Debt Securities. None of the Company, the        
Trustee, any Paying Agent or the Security Registrar for such Subordinated Debt  
Securities will have any responsibility or liability for any aspect of the      
records relating to or payments made on account of beneficial ownership         
interest in Global Security for such Subordinated Debt Securities or for        
maintaining, supervising or reviewing any records relating to such beneficial   
ownership interests.                                                            

The Company expects that the Depository for a series of Subordinated Debt   
Securities or its nominee, upon receipt of any payment of principal, premium    
or interest in respect of a permanent Global Security representing any of such  
Subordinated Debt Securities, immediately will credit Participants' accounts    
with payments in amounts proportionate to their respective beneficial           
interests in the principal amount of such Global Security for such              
Subordinated Debt Securities as shown on the records of such Depository or its  
nominee. The Company also expects that payments by Participants to owners of    
beneficial interests in such Global Security held through such Participants     
will be governed by standing instructions and customary practices, as is now    
the case with securities held for the accounts of customers in bearer form or   
registered in "street name." Such payments will be the responsibility of such   
Participants.                                                                   

If a Depository for a series of Subordinated Debt Securities is at any time 
unwilling, unable or ineligible to continue as depository and a successor       
depository is not appointed by the Company within 90 days, the Company will     
issue individual Subordinated Debt Securities of such series in exchange for    
the Global Security representing                                                

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such series of Subordinated Debt Securities. In addition, the Company may, at   
any time and in its sole discretion, subject to any limitations described in    
the Prospectus Supplement relating to such Subordinated Debt Securities,        
determine not to have any Subordinated Debt Securities of such series           
represented by one or more Global Securities and, in such event, will issue     
individual Subordinated Debt Securities of such series in exchange for the      
Global Security or Securities representing such series of Subordinated Debt     
Securities. Individual Subordinated Debt Securities of such series so issued    
will be issued in denominations, unless otherwise specified by the Company, of  
$1,000 and integral multiples thereof.                                          

LIMITATIONS ON ISSUANCE OF BEARER SECURITIES                                    

In compliance with United States federal tax laws and regulations, Bearer   
Securities may not be offered, sold, resold or delivered in connection with     
their original issuance in the United States or to United States persons (each  
as defined below) other than to a Qualifying Branch of a United States          
Financial Institution (as defined below), and any underwriters, agents and      
dealers participating in the offering of Subordinated Debt Securities must      
agree that they will not offer any Bearer Securities for sale or resale in the  
United States or to United States persons (other than a Qualifying Branch of a  
United States Financial Institution) nor deliver Bearer Securities within the   
United States. In addition, any such underwriters, agents and dealers must      
agree to send confirmations to each purchaser of a Bearer Security confirming   
that such purchaser represents that it is not a United States person or is a    
Qualifying Branch of a United States Financial Institution and, if such person  
is a dealer, that it will send similar confirmations to purchasers from it.     
The term "Qualifying Foreign Branch of a United States Financial Institution"   
means a branch located outside the United States of a United States securities  
clearing organization, bank or other financial institution listed under         
Treasury Regulation Section 1.165-12(c)(1)(v) that agrees to comply with the    
requirements of Section 165(j)(3)(A), (B) or (C) of the Code and the            
regulations thereunder.                                                         

Bearer Securities and any coupons appertaining thereto will bear a legend   
substantially to the following effect: "Any United States person who holds      
this obligation will be subject to limitations under the United States income   
tax laws, including the limitations provided in Sections 165(j) and 1287(a) of  
the Internal Revenue Code." Under Sections 165(j) and 1287(a) of the Code,      
holders that are United States persons, with certain exceptions, will not be    
entitled to deduct any loss on Bearer Securities and must treat as ordinary     
income any gain realized on the sale or other disposition (including the        
receipt of principal) of Bearer Securities.                                     

The term "United States person" means a citizen or resident of the United   
States, a corporation, partnership or other entity created or organized in or   
under the laws of the United States or of any political subdivision thereof,    
an estate or, for taxable years beginning before January 1, 1997, a trust the   
income of which is subject to United States federal income taxation regardless  
of its source or, for taxable years beginning after December 31, 1996, a trust  
if a U.S. court is able to exercise primary supervision over the                
administration of the trust and one or more U.S. fiduciaries have the           
authority to control all substantial decisions of the trust, and the term       
"United States" means the United States of America (including the states and    
the District of Columbia), its territories, its possessions and other areas     
subject to its jurisdiction (including the Commonwealth of Puerto Rico).        

DEFEASANCE                                                                      

The Subordinated Indenture provides that the Company will be discharged from
any and all obligations in respect of the Subordinated Debt Securities of any   
series (except for certain obligations to register the transfer or exchange of  
Subordinated Debt Securities of such series, to replace stolen, lost or         
mutilated Subordinated Debt Securities of such series, to maintain paying       
agencies and to hold monies for payment in trust) upon the deposit with the     
Trustee for such series of Subordinated Debt Securities in trust of money       
and/or U.S. Government Obligations (as defined below) which through the         
payment of interest and principal in respect thereof in accordance with their   
terms will provide money in an amount sufficient to pay the principal of and    
each installment of interest, if any, on the Subordinated Debt Securities of    
such series on the maturity of such payments in accordance with the terms of    
the Indenture and the Subordinated Debt Securities of such series. Such a       
trust may only be established if, among other things, the Company has           
delivered to such Trustee an Opinion of Counsel (who may be counsel for the     
Company) of the effect that (i) holders of the Subordinated Debt Securities of  
such series will not recognize income, gain or loss for federal income tax      
purposes as a result                                                            

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of such deposit, defeasance and discharge and will be subject to federal        
income tax on the same amounts and in the same manner and at the same times,    
as would has been the case if such deposit, defeasance and discharge had not    
occurred, and (ii) the Subordinated Debt Securities of such series, if then     
listed on The New York Stock Exchange, will not be delisted as a result of      
such deposit, defeasance and discharge.                                         

The Subordinated Indenture provides that, if applicable, the Company may    
omit to comply with any additional restrictive covenants imposed on the         
Company in connection with the establishment of any series of Subordinated      
Debt Securities and that clause (d) under "Events of Default" with respect to   
such restrictive covenants and clause (e) under "Events of Default" shall not   
be deemed to be an Event of Default under the Subordinated Indenture and the    
Subordinated Debt Securities of any series, upon the deposit with the Trustee   
under the Subordinated Indenture, in trust of money and/or U.S. Government      
Obligations which through the payment of interest and principal in respect      
thereof in accordance with their terms will provide money in an amount          
sufficient to pay the principal of, and each installment of interest, if any,   
on the Subordinated Debt Securities of such series on the maturity of such      
payments in accordance with the terms of the Subordinated Indenture and the     
Subordinated Debt Securities of such series. The obligations of the Company     
under the Subordinated Indenture and the Subordinated Debt Securities of such   
series other than with respect to the covenants referred to above and the       
Events of Default other than the Events of Default referred to above shall      
remain in full force and effect. Such a trust may only be established if,       
among other things, the Company has delivered to the Trustee an Opinion of      
Counsel (who may be counsel for the Company) to the effect that (i) the         
holders of the Subordinated Debt Securities of such series will not recognize   
income, gain or loss for federal income tax purposes as a result of such        
deposit and defeasance of certain covenants and Events of Default and will be   
subject to federal income tax on the same amounts and in the same manner and    
at the same times, as would have been the case if such deposit and defeasance   
had not occurred, and (ii) the Subordinated Debt Securities of such series, if  
then listed on The New York Stock Exchange, will not be delisted as a result    
of such deposit and defeasance.                                                 

In the event the Company exercises its option to omit compliance with       
certain covenants of the Subordinated Indenture with respect to the             
Subordinated Debt Securities of any series as described above and the           
Subordinated Debt Securities of such series are declared due and payable        
because of the occurrence of any Event of Default other than an Event of        
Default described in clauses (d) or (e) under "Events of Default," the amount   
of money and U.S. Government Obligations on deposit with the Trustee will be    
sufficient to pay amounts due on the Subordinated Debt Securities of such       
series at the time of their stated maturity but may not be sufficient to pay    
amounts due on the Subordinated Debt Securities of such series at the time of   
the acceleration resulting from such Event of Default. However, the Company     
will remain liable for such payments.                                           

The term "U.S. Government Obligation" means direct noncallable obligations  
of, or noncallable obligations guaranteed by, the United States or an agency    
thereof for the payment of which guarantee or obligation, the full faith and    
credit of the United States is pledged.                                         

MODIFICATION OF THE SUBORDINATED INDENTURE                                      

The Subordinated Indenture contains provisions permitting the Company and   
the Trustee, with the consent of the holders of a majority of the principal     
amount of the Subordinated Debt Securities of each series then outstanding, to  
execute supplemental indentures adding any provisions to or changing or         
eliminating any of the provisions of the Subordinated Indenture or modifying    
the rights of the holders of the Subordinated Debt Securities of such series,   
except that no such supplemental indenture may, among other things, (i) extend  
the final maturity of any Subordinated Debt Securities, or reduce the rate or   
extend the time of payment of interest thereon, or reduce the principal amount  
thereof, impair the right to institute suit for payment thereof or reduce any   
amount payable upon any redemption thereof without the consent of the holder    
of the Subordinated Debt Security so affected, or (ii) reduce the aforesaid     
percentage of Subordinated Debt Securities, the consent of the holders of       
which is required for any such supplemental indenture, without the consent of   
the holders of all outstanding Subordinated Debt Securities. The Board of       
Directors of the Company does not have the power to waive any of the covenants  
of the Subordinated Indenture including those relating to consolidation,        
merger or sale of assets.                                                       

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EVENTS OF DEFAULT                                                               

An Event of Default with respect to any series of Subordinated Debt         
Securities is defined in the Subordinated Indenture as being: (a) default by    
the Company for 30 days in the payment of any installment of interest on the    
Subordinated Debt Securities of such series; (b) default by the Company in the  
payment of any principal on the Subordinated Debt Securities of such series;    
(c) default by the Company in the payment of any sinking fund installment with  
respect to such series of Subordinated Debt Securities; (d) default by the      
Company in the performance of any of the agreements in the Subordinated         
Indenture contained therein for the benefit of the Debt Securities of such      
series which shall not have been remedied within a period of 60 days after      
receipt of written notice by the Company from the Trustee for such series of    
Subordinated Debt Securities or by the Company and such Trustee from the        
holders of not less than 25% in principal amount of the Subordinated Debt       
Securities of such series then outstanding; (e) with respect to any series of   
Subordinated Debt Securities (unless otherwise specified in the accompanying    
Prospectus Supplement), the acceleration, or failure to pay at maturity, of     
any indebtedness for money borrowed of the Company exceeding $20,000,000 in     
principal amount, which acceleration is not rescinded or annulled or            
indebtedness paid within 15 days after the date on which written notice         
thereof shall have first been given to the Company as provided in the           
Subordinated Indenture; (f) certain events of bankruptcy, insolvency or         
reorganization of the Company; or (g) any other Event of Default established    
in accordance with the Subordinated Indenture with respect to any series of     
Subordinated Debt Securities. No Event of Default (other than an Event of       
Default under clause (f)) described above with respect to a particular series   
of Subordinated Debt Securities necessarily constitutes an Event of Default     
with respect to any other series of Subordinated Debt Securities.               

The Subordinated Indenture provides that if an Event of Default with respect
to any series of Subordinated Debt Securities shall have occurred and be        
continuing, either the Trustee with respect to the Subordinated Debt            
Securities of that series or the holders of at least 25% in aggregate           
principal amount of Subordinated Debt Securities of that series then            
outstanding may declare the principal amount (or, if the Subordinated Debt      
Securities of that series were sold at an original issue discount, such         
portion of the principal amount as may be specified in the terms of that        
series) of all the Subordinated Debt Securities of that series and interest,    
if any, accrued thereon to be due and payable immediately, but upon certain     
conditions such declaration may be annulled and past defaults (except, unless   
theretofore cured, a default in payment of principal of or interest on          
Subordinated Debt Securities of that series) may be waived by the holders of a  
majority in principal amount of the Subordinated Debt Securities of that        
series then outstanding.                                                        

The Subordinated Indenture contains a provision entitling the Trustee with  
respect to any series of Subordinated Debt Securities, subject to the duty of   
the Trustee during default to act with the required standard of care, to be     
indemnified by the holders of Subordinated Debt Securities of such series       
before proceeding to exercise any right or power under the Subordinated         
Indenture at the request of the holders of such Subordinated Debt Securities.   
The Subordinated Indenture also provides that the holders of a majority in      
principal amount of the outstanding Subordinated Debt Securities of any series  
may direct the time, method and place of conducting any proceeding for any      
remedy available to the Trustee for such series of Subordinated Debt            
Securities, or exercising any trust or power conferred on such Trustee, with    
respect to the Subordinated Debt Securities of such series. The Subordinated    
Indenture contains a covenant that the Company will file annually with the      
Trustee a certificate as to the absence of any default or specifying any        
default that exists.                                                            

No holder of any Subordinated Debt Security of any series will have any     
right to institute any proceeding with respect to the Subordinated Indenture    
or for any remedy thereunder, unless such holder shall have previously given    
the Trustee for such series of Subordinated Debt Securities written notice of   
an Event of Default with respect to Subordinated Debt Securities of that        
series and unless also the holders of at least 25% in aggregate principal       
amount of the outstanding Subordinated Debt Securities of that series shall     
have made written request, and offered reasonable indemnity, to such Trustee    
to institute such proceeding as trustee, and such Trustee shall not have        
received from the holders of a majority in aggregate principal amount of the    
outstanding Subordinated Debt Securities of that series a direction             
inconsistent with such request and shall have failed to institute such          
proceeding within 60 days. However, any right of a holder of any Subordinated   
Debt Security to receive payment                                                

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of the principal of and any interest on such Subordinated Debt Security on or   
after the due dates expressed in such Subordinated Debt Security and to         
institute suit for the enforcement of any such payment on or after such dates   
shall not be impaired or affected without the consent of such holder.           

CONSOLIDATION, MERGER AND SALE OF ASSETS                                        

The Company covenants that it will not merge or consolidate with any other  
corporation or sell or convey all or substantially all of its assets to any     
Person, unless (i) either the Company shall be the continuing corporation, or   
the successor corporation or the Person which acquires by sale or conveyance    
substantially all of the assets of the Company (if other than the Company)      
shall be a corporation organized under the laws of the United States or any     
state thereof and shall expressly assume the due and punctual payment of the    
principal of and interest on all the Subordinated Debt Securities, according    
to their tenor, and the due and punctual performance and observance of all of   
the covenants and conditions of the Subordinated Indenture to be performed or   
observed by the Company, by supplemental indenture satisfactory to the          
Trustee, executed and delivered to the Trustee by such corporation, and (ii)    
the Company or such successor corporation, as the case may be, shall not,       
immediately after such merger or consolidation, or such sale or conveyance, be  
in default in the performance of any such covenants or condition.               

Other than the covenants described above, or as set forth in any            
accompanying Prospectus Supplement, the Subordinated Indenture and the          
Subordinated Debt Securities do not contain any covenants or other provisions   
designed to afford holders of the Subordinated Debt Securities protection in    
the event of a takeover, recapitalization or highly leveraged transaction       
involving the Company.                                                          

NO PERSONAL LIABILITY                                                           

No past, present or future director, officer, employee or stockholder, as   
such, of the Company or any successor thereof shall have any liability for any  
obligations of the Company under the Subordinated Debt Securities or the        
Subordinated Indenture or for any claim based on, in respect of, or by reason   
of, such obligations or their creation. Each holder of Debt Securities by       
accepting such Subordinated Debt Security waives and releases all such          
liability. The waiver and release are part of the consideration for the issue   
of the Debt Securities.                                                         

THE TRUSTEE                                                                     

The Trustee in its individual or any other capacity may become the owner or 
pledgee of Subordinated Debt Securities and may otherwise deal with the         
Company or its Affiliates with the same rights it would have if it were not     
the Trustee provided it complies with the terms of the Subordinated Indenture.  

DESCRIPTION OF PREFERRED STOCK  

The Company is authorized to issue up to 12,500,000 shares of Preferred     
Stock, without par value, in one or more series. All shares of Preferred        
Stock, irrespective of series, constitute one and the same class. The           
following description of the terms of the Preferred Stock sets forth certain    
general terms and provisions of the Preferred Stock. Certain terms of any       
series of Preferred Stock offered by the Prospectus Supplement will be          
described in the Prospectus Supplement relating to such series of Preferred     
Stock. If so indicated in the Prospectus Supplement, the terms of any such      
series may differ from the terms set forth below. The Company has outstanding   
750 shares each of Money Market Cumulative PreferredTM Stock, Series E and      
Series F with a liquidation preference of $100,000 per share.                   

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GENERAL                                                                         

The Board of Directors is authorized to establish and designate series and  
to fix the number of shares and the relative rights, preferences and            
limitations of the respective series of Preferred Stock including: (1) the      
designation and number of shares comprising such series, which may be           
increased or decreased from time to time by the Board of Directors; (2) the     
dividend rate or rates on the shares of such series and the relation which      
such dividends bear to the dividends payable on any other class or classes or   
of any other series of capital stock, the terms and conditions upon which and   
the periods in respect of which dividends shall be payable, whether and upon    
what conditions such dividends shall be cumulative and, if cumulative the       
dates from which dividends shall accumulate; (3) whether the shares of such     
series shall be redeemable, the limitations and restrictions with respect to    
such redemption, the time or times when, the price or prices at which and the   
manner in which such shares shall be redeemable, including the manner of        
selecting shares of such series for redemption if less than all shares are to   
be redeemed; (4) the rights to which the holders of shares of such series       
shall be entitled, and the preferences, if any, over any other series (or of    
any other series over such series), upon the voluntary or involuntary           
liquidation, dissolution, distribution of assets or winding-up of the Company,  
which rights may vary depending on whether such liquidation, dissolution,       
distribution or winding-up is voluntary or involuntary, and, if voluntary, may  
vary at different dates; (5) whether the shares of such series shall be         
subject to the operation of a purchase, retirement or sinking fund, and, if     
so, whether and upon what conditions such purchase, retirement or sinking fund  
shall be cumulative or noncumulative, the extent to which and the manner in     
which such fund shall be applied to the purchase or redemption of the shares    
of such series for retirement or to other corporate purposes and the terms and  
provisions relative to the operation thereof; (6) whether the shares of such    
series shall be convertible into or exchangeable for shares of any other class  
or classes or of any other series of any class or classes of capital stock of   
the Company, and, if so convertible or exchangeable, the price or prices or     
the rate or rates of conversion or exchange and the method, if any, of          
adjusting the same, and any other terms and conditions of such conversion or    
exchange; (7) the voting powers, full and/or limited, if any, of the shares of  
such series; and whether and under what conditions the shares of such series    
(alone or together with the shares of one or more other series having similar   
provisions) shall be entitled to vote separately as a single class, for the     
election of one or more additional directors of the Company in case of          
dividend arrearages or other specified events, or upon other matters; (8)       
whether the issuance of any additional shares of such series, or of any shares  
of any other series, shall be subject to restrictions as to issuance, or as to  
the powers, preferences or rights of any such other series; and (9) any other   
preferences, privileges and powers, and relative, participating, optional or    
other special rights, and qualifications, limitations or restrictions of such   
series, as the Board of Directors may deem advisable. Unless otherwise          
specifically set forth in the Prospectus Supplement relating to a series of     
Preferred Stock, all shares of Preferred Stock shall be equal rank, preference  
and priority as to dividends; when the stated dividends are not paid in full,   
the shares of all series of the Preferred Stock shall share ratably in any      
payment thereof; and upon liquidation, dissolution or winding up, if assets     
are insufficient to pay in full all Preferred Stock, then such assets shall be  
distributed among the holders ratably.                                          

Because the Company is a holding company, the right of the Company, and     
hence the rights of creditors and shareholders of the Company, to participate   
in any distribution of assets of any subsidiary upon its liquidation or         
reorganization or otherwise is accordingly subject to prior claims of           
creditors of the subsidiary and (in the case of an insurance subsidiary) its    
policyholders, except to the extent that claims of the Company itself as a      
creditor of the subsidiary may be recognized. The subsidiaries are separate     
and distinct legal entities and have no obligation, contingent or otherwise,    
to pay dividends on the Preferred Stock or to make any funds available          
therefor, whether by dividends, loans or other payments. The payment of         
dividends or the making of loans and advances to the Company by its             
subsidiaries may be subject to statutory or regulatory restrictions, are        
contingent upon the earnings of those subsidiaries and are subject to           
insurance regulation and various business considerations.                       

The description of certain provisions of the Preferred Stock set forth below
does not purport to be complete and is subject to and qualified in its          
entirety by reference to the Restated Certificate of Incorporation and the      
Certificate of Designations that relates to a particular series of Preferred    
Stock which will be filed with the Commission at or prior to the time of the    
sale of the related Preferred Stock.                                            

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DIVIDEND RIGHTS                                                                 

Except as may be set forth in the Prospectus Supplement relating to a series
of Preferred Stock, the holders of Preferred Stock shall be entitled to         
receive, but only when and as declared by the Board of Directors out of funds   
legally available for that purpose, cash dividends at the rates and on the      
dates set forth in the Prospectus Supplement relating to a particular series    
of Preferred Stock. Such rate may be fixed or variable. Each such dividend      
will be payable to the holders of record as they appear on the stock books of   
the Company on such record dates as will be fixed by the Board of Directors of  
the Company or a duly authorized committee thereof. Dividends payable on the    
Preferred Stock for any period less than a full dividend period (being the      
period between such dividend payment dates) will be computed on the bases of    
the actual number of days elapsed over a 360 day year and for a period of a     
full dividend period, will be computed on the basis of a 360 day year           
consisting of twelve 30 day months. Except as may be set forth in the           
Prospectus Supplement relating to a series of Preferred Stock, such dividends   
shall be payable from, and shall be cumulative from, the date of original       
issue of each share, so that if in any dividend period dividends at the rate    
or rates as described in the Prospectus Supplement relating to such series of   
Preferred Stock shall not have been declared and paid or set apart for payment  
on all outstanding shares of Preferred Stock for such dividend period and all   
preceding dividend periods from and after the first day from which dividends    
are cumulative, then the aggregate deficiency shall be declared and fully paid  
or set apart for payment, but without interest, before any dividends shall be   
declared or paid or set apart for payment on the Common Stock by the Company.   
After payment in full of all dividend arrearages on the Preferred Stock,        
dividends on the Common Stock may be declared and paid out of funds legally     
available for that purpose as the Board of Directors may determine.             

REDEMPTION                                                                      

The Company will have such rights, if any, to redeem shares of Preferred    
Stock, and the holders of Preferred Stock will have such rights, if any, to     
cause the Company to redeem shares of Preferred Stock, as may be set forth in   
the Prospectus Supplement relating to a series of Preferred Stock.              

CONVERSION OR EXCHANGE                                                          

The holders of Preferred Stock will have such rights, if any, to convert    
such shares into or to exchange such shares for, shares of any other class or   
classes, or of any other series of any class, of the capital stock of the       
Company and/or other property or cash, as may be set forth in the Prospectus    
Supplement relating to a series of Preferred Stock.                             

VOTING RIGHTS                                                                   

The holders of Preferred Stock will have such voting rights, if any, as may 
be set forth in the Prospectus Supplement relating to a series of Preferred     
Stock. Unless and except to the extent required by law or provided by the       
Board of Directors, holders of Preferred Stock shall have no voting power with  
respect to any matter. In no event shall the Preferred Stock be entitled to     
more than one vote per share in respect of each share of stock.                 

The holders of the outstanding shares of a series of Preferred Stock shall  
be entitled to vote as a class upon a proposed amendment, whether or not        
entitled to vote thereon by the Restated Certificate of Incorporation if the    
amendment would increase or decrease the aggregate number of authorized shares  
of such series of Preferred Stock, increase or decrease the par value of the    
shares of such series of Preferred Stock, or alter or change the powers,        
preferences, or special rights of the shares of such series of Preferred Stock  
so as to affect them adversely. If any proposed amendment would alter or        
change the powers, preferences, or special rights of oneor more series of       
Preferred Stock so as to affect them adversely, but shall not so affect the     
entire series, then only the shares of the series so affected by the amendment  
shall be considered a separate series for purposes of this paragraph. The       
number of authorized shares of any such series of Preferred Stock may be        
increased or decreased (but not below the number of shares thereof then         
outstanding) by the affirmative vote of the holders of a majority of the stock  
of the Company entitled to vote irrespective of the previous two sentences, if  
so provided                                                                     

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in the Restated Certificate of Incorporation, in any amendment thereto which    
created such series of Preferred Stock or which was adopted prior to the        
issuance of any shares of any such series of Preferred Stock, or in any         
amendment thereto which was authorized by a resolution or resolutions adopted   
by the affirmative vote of the holders of a majority of such series of          
Preferred Stock. This paragraph reflects legal requirements under current       
Delaware law and is subject to any amendments to such law.                      

The foregoing voting provisions will not apply if, in connection with the   
matters specified, provision is made for the redemption or retirement of all    
outstanding Preferred Stock.                                                    

LIQUIDATION RIGHTS                                                              

Upon any liquidation, dissolution or winding up of the Company, whether     
voluntary or involuntary, holders of Preferred Stock will have such             
preferences and priorities, if any, with respect to distribution of the assets  
of the Company or the proceeds thereof as may be set forth in the Prospectus    
Supplement relating to a series of Preferred Stock.                             

MISCELLANEOUS                                                                   

The transfer agent, dividend disbursing agent and registrar for the         
Preferred Stock issued in connection with the Prospectus will be as set forth   
in the Prospectus Supplement. The holder of Preferred Stock, including any      
Preferred Stock issued in connection with this Prospectus, will not have any    
preemptive rights to purchase or subscribe for any shares of any class or       
other securities of any type of the Company. When issued, the Preferred Stock   
will be fully paid and nonassessable. The Certificate of Designations setting   
forth the provisions of each series of Preferred Stock will become effective    
after the date of this Prospectus but on or before issuance of the related      
series of Preferred Stock.                                                      

PLAN OF DISTRIBUTION  

The Company may sell the Offered Securities: (i) through underwriters or    
dealers; (ii) through agents; (iii) directly to one or more purchasers; or      
(iv) through a combination of any such method of sale. The Prospectus           
Supplement with respect to the Offered Securities will set forth the terms of   
the offering of such Offered Securities, including the name or names of any     
underwriters, dealers or agents, the purchase price of such Offered Securities  
and the proceeds to the Company from such sale, any underwriter discounts and   
other items constituting compensation to underwriters, dealers or agents, any   
initial public offering price, any discounts or concessions allowed or          
reallowed or paid by underwriters or dealers to other dealers and any           
securities exchanges on which such Offered Securities may be listed.            

If underwriters or dealers are used in the sale, the Offered Securities will
be acquired by the underwriters or dealers for their own accounts and may be    
resold from time to time in one or more transactions, including negotiated      
transactions, at a fixed public offering price, which may be changed, or at     
varying prices determined at the time of sale. The Offered Securities may be    
offered to the public either through underwriting syndicates represented by     
one or more managing underwriters or directly by one or more of such firms.     
Unless otherwise set forth in the Prospectus Supplement, the obligations of     
the underwriters to purchase such Offered Securities will be subject to         
certain conditions precedent, and the underwriters will be obligated to         
purchase all of such Offered Securities if any are purchased. Any initial       
public offering price and any discounts or concessions allowed or reallowed or  
paid to dealers may be changed from time to time.                               

If so indicated in the Prospectus Supplement, the Company will authorize    
underwriters, dealers, or agents to solicit offers by certain specified         
institutions to purchase Offered Securities from the Company at the public      
offering price set forth in the Prospectus Supplement pursuant to delayed       
delivery contracts providing for payment and delivery on a specified date in    
the future. Such contracts will be subject only to those conditions set forth   
in the Prospectus Supplement, and the Prospectus Supplement will set forth the  
commission payable for                                                          

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solicitation of such contracts. The underwriters and other persons soliciting   
such contracts will have no responsibility for the validity of any such         
contracts.                                                                      

Underwriters, dealers and agents may be entitled under agreements entered   
into with the Company to indemnification by the Company against certain civil   
liabilities, including liabilities under the Securities Act, or to              
contribution by the Company to payments they may be required to make in         
respect thereof. Underwriters, dealers and agents may be customers of, engage   
in transactions with, or perform services for the Company in the ordinary       
course of business.                                                             

There is currently no market for the Securities. If the Securities are      
traded after the initial issuance, they may trade at a discount from their      
initial offering price, depending upon prevailing interest rates, the market    
for similar securities and other factors. While it is possible that an          
underwriter could inform the Company that it intended to make a market in the   
Securities, such underwriter would not be obligated to do so, and any such      
market making could be discontinued at any time without notice. Therefore, no   
assurance can be given as to whether an active trading market will develop for  
the Securities. Unless otherwise indicated in the applicable Prospectus         
Supplement, the Company does not intend to apply for listing of the Securities  
on any securities exchange or on the National Association of Securities         
Dealers, Inc. automated quotation system.                                       

LEGAL MATTERS 

The validity of the issuance of the Securities and certain other legal      
matters in connection with the securities offered hereby will be passed upon    
for the Company by Donald M. Lowry, Senior Vice President, Secretary and        
General Counsel of the Company and by Mayer, Brown & Platt, Chicago, Illinois.  

EXPERTS 

The consolidated financial statements and the related consolidated financial
statement schedules incorporated by reference in this Prospectus from the       
Company's Annual Report on Form 10-K have been audited by Deloitte & Touche     
LLP, independent auditors, as stated in their reports which have been           
incorporated herein by reference and have been so incorporated in reliance      
upon the reports of such firm given on their authority as experts in            
accounting and auditing.                                                        

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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPO-    
RATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN CONNEC-  
TION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND,  
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON   
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DE-   
LIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HERE- 
UNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT    
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.   
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SO- 
LICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS 
NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT  
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT      
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR    
SOLICITATION.                                                                   

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

TABLE OF CONTENTS 

                                                                [Download Table]

                                                                            Page
                                                                            ----
                             Prospectus Supplement                              

                                                                                
The Company................................................................  S-2
Use of Proceeds............................................................  S-3
Recent Development.........................................................  S-3
Capitalization.............................................................  S-4
Selected Condensed Consolidated Financial Information......................  S-5
Risk Factors...............................................................  S-6
Description of the Notes................................................... S-10
Underwriting............................................................... S-12
Legal Opinions............................................................. S-13
Experts.................................................................... S-13

                                   Prospectus                                   

Available Information......................................................    2
Incorporation of Certain Documents by Reference............................    2
The Company................................................................    3
Use of Proceeds............................................................    3
Description of Senior Debt Securities......................................    3
Description of Subordinated Debt Securities................................   12
Description of Preferred Stock.............................................   21
Plan of Distribution.......................................................   24
Legal Matters..............................................................   25
Experts....................................................................   25

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$500,000,000

CNA FINANCIAL 
CORPORATION 

6.50% NOTES 
DUE APRIL 15, 2005

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

PROSPECTUS SUPPLEMENT 
APRIL 15, 1998

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

LEHMAN BROTHERS 

GOLDMAN, SACHS & CO.

MERRILL LYNCH & CO. 

SALOMON SMITH BARNEY

ABN AMRO INCORPORATED 
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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B2’ Filing		Date		First		Last			Other Filings
		1/15/18		4
		6/30/13		4					10-Q,  13F-HR
		6/1/13		3
		1/15/08		4
		4/15/05		1		39
		10/15/98		1		11
		4/20/98		1		11
Filed on:		4/17/98							8-K
		4/15/98		1		39
		4/7/98		3
		4/1/98		3
		3/31/98		2					10-K,  10-Q
		3/1/98		4
		1/13/98		4
		12/31/97		2		13			10-K,  8-K
		8/22/97		1		14
		8/5/97		15					8-K
		7/31/97		16
		6/30/97		14		25			10-Q
		3/31/97		15					10-K,  10-Q
		1/1/97		22		31
		12/31/96		5		31			10-K,  10-K/A,  5
		3/13/96		8
		12/31/95		5					10-K
		5/10/95		4		16			8-K,  8-K/A
		12/31/94		5		6			10-K
		12/31/93		5					10-K
		10/15/93		10		16
									List all Filings