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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-K
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                        OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Year Ended December 31, 1999          Commission File Number 1-5823
                                 ----------------


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

             DELAWARE                                36-6169860
  (State or other jurisdiction of                 (I.R.S. Employer
   incorporation or organization)                  Identification No.)

            CNA PLAZA
         CHICAGO, ILLINOIS                               60685
  (Address of principal executive offices)             (Zip Code)
                                 (312) 822-5000
              (Registrant's telephone number, including area code)
           SECURITIES REGISTERED PURSUANT TO SECTION 12(B)OF THE ACT:

                                                 NAME OF EACH EXCHANGE ON
     TITLE OF EACH CLASS                              WHICH REGISTERED
     -------------------                          -----------------------
         Common Stock                            New York Stock Exchange
       with a par value                          Chicago Stock Exchange
      of $2.50 per share                             Pacific Exchange


           SECURITIES REGISTERED PURSUANT TO SECTION 12(G)OF THE ACT:
                                      None

                                  ------------
     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
Yes    No....

     As of March 24, 2000,  183,293,131  shares of common stock were outstanding
and the aggregate market value of the common stock of CNA Financial  Corporation
held by non-affiliates was approximately $746 million.

                             DOCUMENTS INCORPORATED
                                  BY REFERENCE:

     Portions  of  the  CNA   Financial   Corporation   1999  Annual  Report  to
Shareholders are incorporated by reference into Parts I and II of this Report.


     Portions of the CNA Financial  Corporation Proxy Statement prepared for the
2000  annual  meeting  of   shareholders,   pursuant  to  Regulation   14A,  are
incorporated by reference into Part III of this Report.
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<PAGE>
                            CNA FINANCIAL CORPORATION

                           ANNUAL REPORT ON FORM 10-K

                      FOR THE YEAR ENDED DECEMBER 31, 1999

Item                                                                   Page
Number                                PART I                           Number
 1.    Business........................................................  3

 2.    Properties...................................................... 10

 3.    Legal Proceedings............................................... 11

 4.    Submission of Matters to a Vote of Security Holders............. 11

       Executive Officers of the Registrant............................ 12

                                     PART II

 5.    Market for the Registrant's Common Stock and
          Related Stockholder Matters.................................. 13

 6.    Selected Financial Data......................................... 13

 7.    Management's Discussion and Analysis of Financial Condition and
          Results of Operations........................................ 13

7A.   Quantitative and Qualitative Disclosures about Market Risk....... 13

 8.    Financial Statements and Supplementary Data..................... 13

 9.    Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure....................... 13

                                    PART III

10.   Directors and Executive Officers of the Registrant............... 14

11.   Executive Compensation........................................... 14

12.   Security Ownership of Certain Beneficial Owners and Management... 14

13.   Certain Relationships and Related Transactions................... 14

                                     PART IV

14.   Financial Statements, Schedules, Exhibits and Reports on
      Form 8-K......................................................... 15

                                        2
<PAGE>
                                     PART I

ITEM 1.  BUSINESS

CNA Financial  Corporation (CNAF or the Company) was incorporated in 1967 and is
an  insurance   holding   company   whose   primary   subsidiaries   consist  of
property/casualty  and  life  insurance  companies.  Collectively  CNAF  and its
subsidiaries  are  referred  to  as  CNA.  CNA's   property/casualty   insurance
operations are conducted by  Continental  Casualty  Company (CCC),  incorporated
1897, and its affiliates, and The Continental Insurance Company (CIC), organized
1853, and its affiliates. Life insurance operations are conducted by Continental
Assurance Company (CAC),  incorporated 1911, and its life insurance  affiliates.
CIC became an affiliate of the Company in 1995 as a result of the acquisition of
The Continental Corporation (Continental). The principal business of Continental
is the ownership of a group of property and casualty  insurance  companies.  CNA
serves businesses and individuals with a broad range of insurance and other risk
management  products  and  services.  Insurance  products  include  property and
casualty coverages;  life, accident and health insurance;  and pensions products
and  annuities.  CNA services  include risk  management,  information  services,
healthcare  management  and claims  administration.  CNA  products  are marketed
through  agents,  brokers,  managing  general  agents  and direct  sales.  CNA's
principal market is the United States.

CNA conducts its  operations  through seven  operating  segments:  Agency Market
Operations,  Specialty Operations,  CNA Re, Global Operations,  Risk Management,
Group Operations and Life Operations.  Discussions of each segment including the
products offered, the customers served and the distribution channels used is set
forth in the  Management's  Discussion  and Analysis  section of the 1999 Annual
Report to Shareholders, incorporated by reference in Item 7, herein.

     On March 20, 2000 CCC proposed to CNA Surety  Corporation (CNA Surety) that
CCC make a cash  tender  offer at $13.00  per share for all shares of CNA Surety
common stock not already owned by CCC and its affiliates. CCC and its affiliates
owned  approximately  63 percent of the outstanding  shares of CNA Surety common
stock on March 20,  2000.  CCC  intends  to  condition  the  tender  offer  upon
receiving  enough shares so that its ownership  reaches at least 90 percent.  If
this  ownership  threshold  is achieved,  CCC would then  acquire the  remaining
outstanding  shares of CNA Surety  common  stock not  tendered  to CCC through a
statutory  "short-form"  merger process.  Stockholders  who do not tender their
shares to CCC during the tender  offer  would also  receive  $13.00 per share in
cash for their stock in the short-form merger.


COMPETITION

     Due to  market  pressures,  the  insurance  environment  remains  intensely
competitive.  CNA  competes  with a large  number of stock and mutual  insurance
companies  and  other  entities  for  both  producers  and  customers,  and must
continuously allocate resources to refine and improve its insurance products and
services.

There are approximately 3,400 individual  companies that sell  property/casualty
insurance  in  the  United   States.   CNAF's   consolidated   property/casualty
subsidiaries ranked as the 5th largest property/casualty  insurance organization
based upon 1998 statutory net written premiums.

There are  approximately  1,500  companies  selling life insurance in the United
States.  CAC is ranked as the 35th largest life insurance  organization based on
1998 consolidated statutory premium volume.


DIVIDENDS BY INSURANCE SUBSIDIARIES

     The payment of  dividends  to CNAF by its  insurance  subsidiaries  without
prior approval of the affiliates'  domiciliary state insurance  commissioners is
limited by  formula.  This  formula  varies by state.  The  formula  used by the
majority of the states  provides that 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 is available to be paid
as a dividend to the parent company.  Some states,  however,  have an additional
stipulation  that dividends  cannot exceed prior year's surplus.  Based upon the
formulae  applied  by the  respective  domiciliary  states of  CNAF's

                                       3
<PAGE>
insurance  subsidiaries,  approximately $887 million in dividends can be paid to
CNAF by  those  subsidiaries  in  2000  without  prior  approval.  However,  all
dividends  must be reported to the  domiciliary  insurance  department  prior to
declaration and payment.


REGULATION

     The insurance industry is subject to comprehensive and detailed  regulation
and  supervision  throughout  the  United  States.  Each  state has  established
supervisory  agencies  with broad  administrative  powers  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,   and  regulating  solvency  and  the  type  and  amount  of
investments  permitted.  Such  regulatory  powers  also  extend to premium  rate
regulations  which require that rates not be  excessive,  inadequate or unfairly
discriminatory. In addition to regulation of dividends by insurance subsidiaries
discussed above, intercompany transfers of assets may be subject to prior notice
or  approval by the state  insurance  regulator,  depending  on the size of such
transfers  and payments in relation to the  financial  position of the insurance
affiliates making the transfer.

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

Reform of the U.S. tort  liability  system is another issue facing the insurance
industry. Although federal standards would create more uniform laws, tort reform
supporters  still look  primarily to the states for passage of reform  measures.
Over the last  decade,  many states  have  passed some type of reform,  but more
recently,  a number of state courts have modified or overturned  these  reforms.
Additionally,  new  causes of action and  theories  of  damages  continue  to be
proposed in state court actions or by legislatures.  Continued  unpredictability
in the law means  that  insurance  underwriting  and  rating is  expected  to be
difficult  in  commercial  lines,  professional  liability  and  some  specialty
coverages.

Although  the federal  government  and its  regulatory  agencies do not directly
regulate  the  business  of  insurance,   federal   legislative  and  regulatory
initiatives  can  impact the  insurance  business  in a variety  of ways.  These
initiatives and legislation include tort reform proposals; proposals to overhaul
the Superfund hazardous waste removal and liability statute;  financial services
modernization  legislation,  which includes  provisions to remove  barriers that
prevent banks from engaging in the insurance business; and various tax proposals
affecting insurance companies.

     In the mid 1990's  the  National  Association  of  Insurance  Commissioners
(NAIC)  adopted risk based capital (RBC)  requirements  for both life  insurance
companies and property/casualty  insurance companies. The requirements are to be
utilized  by  state  insurance  departments  as a  minimum  capital  requirement
identifying  companies that merit further  regulatory  action. The formulae were
not developed to  differentiate  adequately  capitalized  companies that operate
with  capital  levels  higher  than  the  RBC  requirements.  Therefore,  it  is
inappropriate  and inadvisable to use the formulae to rate or rank insurers.  At
December 31, 1999 and 1998,  all of the  Company's  life and property & casualty
companies had adjusted  capital in excess of amounts  requiring  any  regulatory
action.


REINSURANCE

     Information  as to CNA's  reinsurance  activities is set forth in Note G of
the Consolidated Financial Statements of the 1999 Annual Report to Shareholders,
incorporated by reference in Item 8, herein.

                                       4
<PAGE>
EMPLOYEE RELATIONS

As of December 31,  1999,  CNA had  approximately  19,600  full-time  equivalent
employees and has experienced  satisfactory  labor relations.  CNA has never had
work stoppages due to labor disputes.

     CNA has comprehensive benefit plans for substantially all of its employees,
including  retirement  plans,  savings plans,  disability  programs,  group life
programs  and  group  health  care  programs.  See  Note I of  the  Consolidated
Financial  Statements  of the 1999  Annual  Report to  Shareholders  for further
discussion, incorporated by reference in Item 8, herein.


GOVERNMENT CONTRACTS

     CNA's premium  revenue  include  premiums  under  contracts  involving U.S.
government employees and their dependents. Such premiums were approximately $2.1
billion, $2.0 billion and $2.1 billion in 1999, 1998 and 1997, respectively.

BUSINESS SEGMENTS

     Information  as to CNA's  business  segments  is set forth in Note M of the
Consolidated  Financial  Statements of the 1999 Annual  Report to  Shareholders,
incorporated by reference in Item 8, herein.

     Additional  information as to CNA's  business  segments is set forth in the
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  section of the 1999 Annual Report to  Shareholders,  incorporated by
reference in Item 7, herein.

                                       5
<PAGE>
SUPPLEMENTARY INSURANCE DATA

The following table sets forth supplementary insurance data.

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YEAR ENDED DECEMBER 31                               1999      1998      1997
(In millions of dollars, except ratio information)
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TRADE RATIOS -  GAAP BASIS (A)
  Loss ratio.......................................    87.1%    81.8%     77.1%
  Expense ratio....................................    32.4     33.6      31.3
  Combined ratio (before policyholder dividends)...   119.5    115.4     108.4
  Policyholder dividend ratio......................     0.3      1.1       0.5

TRADE RATIOS - STATUTORY BASIS (A)
  Loss ratio.......................................    87.1%    81.5%     77.5%
  Expense ratio....................................    33.8     32.8      30.7
  Combined ratio (before policyholder dividends)...   120.9    114.3     108.2
  Policyholder dividend ratio......................     0.3      1.0       0.8

GROSS LIFE INSURANCE IN-FORCE
  Group............................................$394,743 $317,720  $239,843
  Life (c).........................................  75,247   76,674    71,755
                                                   -------- --------  --------
                                                   $469,990 $394,394  $311,598
                                                   ======== ========  ========
OTHER DATA - STATUTORY BASIS (B)
   Property/casualty capital and surplus*..........$  8,679 $  7,623  $  7,123
   Life capital and surplus........................   1,222    1,109     1,223
   Written premium  to surplus ratio...............     1.1      1.4       1.4
   Capital and surplus-percent of total
   liabilities.....................................    21.9%    20.5%     22.4%
   Participating policyholders-percent of gross
   life insurance in force.........................     0.5%     0.5%      0.7%
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*Surplus  includes  equity of  property/casualty  companies'  ownership  in life
insurance subsidiaries.

(a)       Trade  ratios  reflect the results of CNA's  property/casualty
          insurance   subsidiaries.   Trade  ratios  are  industry  measures  of
          property/casualty   underwriting   results.  The  loss  ratio  is  the
          percentage of incurred claim and claim adjustment expenses to premiums
          earned. The expense ratio, using amounts determined in accordance with
          statutory   accounting   principles   (GAAP),  is  the  percentage  of
          underwriting   expenses,   including  the   amortization  of  deferred
          acquisition  costs,  to  premiums  earned.  The expense  ratio,  using
          amounts determined in accordance with statutory accounting  practices,
          is the  percentage  of  underwriting  expenses  (with no  deferral  of
          acquisition costs) to premiums written.  The combined ratio is the sum
          of the loss and expense ratios. The policyholder dividend ratio is the
          ratio of dividends incurred to premiums earned.

(b)      Other  data is  determined  in  accordance  with  statutory  accounting
         practices.  Dividends of $570  million,  $410 million and $175 million,
         were  paid  to  CNAF  by CCC in  1999,  1998  and  1997,  respectively.
         Insurance  subsidiaries have received,  or will receive,  reimbursement
         from  CNAF  for  general   management  and   administrative   expenses,
         unallocated  loss adjustment  expenses and investment  expenses of $203
         million,  $189  million  and  $217  million,  in 1999,  1998 and  1997,
         respectively.  Life statutory capital and surplus as a percent of total
         liabilities is determined after excluding Separate Account  liabilities
         and reclassifying the statutorily required Asset Valuation and Interest
         Maintenance Reserves as surplus.

(c)      Lapse ratios for individual life  insurance,  as measured by surrenders
         and  withdrawals as a percentage of average  ordinary life insurance in
         force,   were  10.9%,   14.7%,   and  6.4%  in  1999,  1998  and  1997,
         respectively.

                                       6
<PAGE>
SUPPLEMENTARY INSURANCE DATA--(CONTINUED)

The following table displays the  distribution of gross written premiums for the
CNA's property/casualty operations:
    --------------------------------------------------------------------------
    GROSS WRITTEN PREMIUM                               PERCENT OF TOTAL
    YEAR ENDED DECEMBER 31                         1999        1998     1997
    --------------------------------------------------------------------------
    New York..................................      8.2%        9.5%      9.9%
    California................................      7.1         8.2       8.8
    Texas.....................................      5.7         6.0       6.2
    Florida...................................      4.6         4.6       4.8
    Pennsylvania..............................      4.3         4.7       5.1
    New Jersey................................      3.8         4.4       4.3
    Illinois..................................      3.8         4.5       4.4
    All other states, countries or political       46.5        48.0      48.0
    subdivisions (a)..........................
    Reinsurance assumed.......................     16.0        10.1       8.5
                                               -------------------------------
                                                  100.0%      100.0%    100.0%
    ==========================================================================
    (a) No other  state,  country or political  subdivision  accounts for more
    than 3.0% of gross written premium.

     Approximately  97% of CNA's  premiums are derived  from the United  States.
Premiums from any individual foreign country are not significant.

PROPERTY/CASUALTY CLAIM AND CLAIM ADJUSTMENT EXPENSES

     The following loss reserve  development  table  illustrates the change over
time of reserves established for  property/casualty  claims and claim adjustment
expenses  at  the  end  of  the  preceding   eleven  calendar  years  for  CNA's
property/casualty operations. The first section shows the reserves as originally
reported at the end of the stated year. The second section,  reading down, shows
the  cumulative  amounts paid as of the end of successive  years with respect to
the originally  reported  reserve  liability.  The third section,  reading down,
shows  re-estimates  of the  originally  recorded  reserve as of the end of each
successive  year,  which  is  the  result  of  the  Company's  property/casualty
insurance subsidiaries' expanded awareness of additional facts and circumstances
that  pertain to the  unsettled  claims.  The last  section  compares the latest
re-estimated  reserve  to the  reserve  originally  established,  and  indicates
whether the original  reserve was adequate or  inadequate to cover the estimated
costs of unsettled claims.

                                        7
<PAGE>
          PROPERTY/CASUALTY CLAIM AND CLAIM ADJUSTMENT EXPENSES--(CONTINUED)

     The loss reserve  development  table for  property/casualty  operations  is
cumulative and, therefore,  ending balances should not be added since the amount
at the end of each  calendar  year  includes  activity  for both the current and
prior years.
<TABLE>
<CAPTION>
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SCHEDULE OF
PROPERTY/CASUALTY
LOSS RESERVE
DEVELOPMENT
CALENDAR YEAR ENDED      1989(a)  1990(a) 1991(a)  1992(a)  1993(a) 1994(a)  1995(b) 1996  1997(a) 1998(d)  1999(e)
(In millions of
dollars)
-----------------------------------------------------------------------------------------------------------------------
<S>                      <C>      <C>      <C>      <C>     <C>     <C>     <C>      <C>     <C>     <C>     <C>
Gross reserves
   for unpaid claim
   and claim expenses.   $    --  $16,530  $17,712  $20,034 $20,812 $21,639 $31,044  $29,395 $28,533 $28,317  26,631
Ceded recoverable.....        --    3,440    3,297    2,867   2,491   2,705   6,089    5,660   5,326   5,424   6,273
                         -------  -------  -------  ------- ------- ------- -------  ------- ------- -------  ------
Net reserves for unpaid
   claim
   and claim expenses.   11,267    13,090   14,415   17,167  18,321  18,934  24,955   23,735  23,697  22,893  20,358
                         -------  -------  -------  ------- ------- ------- -------  -------- ------ -------  ------
CUMULATIVE NET PAID AS OF:

One year later........    2,670     3,285    3,411    3,706   3,629   3,656   6,510    5,851  5,954    7,460      --
Two years later.......    4,724     5,623    6,024    6,354   6,143   7,087  10,485    9,796 11,102       --      --
Three years later.....    6,294     7,490    7,946    8,121   8,764   9,195  13,363   13,627     --       --      --
Four years later......    7,534     8,845    9,218   10,241  10,318  10,624  16,407       --     --       --      --
Five years later......    8,485     9,726   10,950   11,461  12,489  12,666      --       --     --       --      --
Six years later.......    9,108    11,207   11,951   12,308  14,249      --      --       --     --       --      --
Seven years later.....   10,393    12,023   12,639   13,947      --      --      --       --     --       --      --
Eight years later.....   11,086    12,592   14,166       --      --      --      --       --     --       --      --
Nine years later......   11,563    14,019       --       --      --      --      --       --     --       --      --
Ten years later.......   12,897        --       --       --      --      --      --       --     --       --      --

NET RESERVES RE-ESTIMATED
AS OF:

End of initial year...   11,267    13,090   14,415   17,167  18,321  18,934  24,955   23,735 23,697   22,893  20,358
One year later........   11,336    12,984   16,032   17,757  18,250  18,922  24,864   23,479 23,508   23,920      --
Two years later.......   11,371    14,693   16,810   17,728  18,125  18,500  24,294   23,140 23,702       --      --
Three years later.....   13,098    15,737   16,944   17,823  17,868  18,008  23,814   23,666     --       --      --
Four years later......   14,118    15,977   17,376   17,765  17,511  17,354  24,679       --     --       --      --
Five years later......   14,396    16,440   17,329   17,560  17,082  19,558      --       --     --       --      --
Six years later.......   14,811    16,430   17,293   17,285  20,066      --      --       --     --       --      --
Seven years later.....   14,810    16,551   17,069   18,974      --      --      --       --     --       --      --
Eight years later.....   14,995    16,487   18,553       --      --      --      --       --     --       --      --
Nine years later......   14,973    17,792       --       --      --      --      --       --     --       --      --
Ten years later.......   16,155        --       --       --      --      --      --       --     --       --      --
                         -------  -------  -------  -------  ------- ------- -------  ------- ------- ------- -------
Total net (deficiency)   (4,888)   (4,702)  (4,138)  (1,807) (1,745)   (624)    276       31   (495)  (1,027)     --
redundancy
---------------------------------------------------------------------------------------------------------------------

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Schedule of
Property/Casualty
Loss Reserve
Development
Calendar Year Ended      1989(a)  1990(a) 1991(a)  1992(a)  1993(a) 1994(a)  1995(b) 1996  1997(c)  1998(d) 1999(e)
(In millions of dollars)
---------------------------------------------------------------------------------------------------------------------
<S>                      <C>      <C>      <C>      <C>     <C>     <C>     <C>       <C>      <C>    <C>     <C>
Reconciliation to gross
re-estimated reserves:
Net reserves
re-estimated..........   16,155    17,792   18,553  18,974   20,666  19,558  24,679   23,666  23,702  23,920      --
Re-estimated ceded
recoverable...........       --       405      667     926    1,095   1,366   7,484    8,334   8,634   9,021      --
                         -------   -------  ------- -------  ------- ------- -------  ------- ------- -------  -------
  Total gross
   re-estimated reserves 16,155    18,197   19,220  19,900   21,161  20,924  32,163   32,000  32,336  32,941      --
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Net (deficiency) redundancy
related to:
Asbestos claims........  (3,496)   (3,365)  (3,321) (1,633)  (1,033)   (999)   (811)    (910)   (806)   (560)     --
Environmental claims...    (978)     (972)    (929)   (886)    (445)   (276)   (197)    (136)   (138)     84      --
                         -------   -------  ------- -------  ------- ------- -------  ------- ------- -------  -------
   Total asbestos and
   environmental         (4,474)   (4,337)  (4,250) (2,519)  (1,478) (1,275) (1,008)  (1,046)   (944)   (476)     --
Other claims...........    (414)     (365)     112     712     (267)    651   1,284    1,077     449    (551)     --
                         -------   -------  ------- -------  ------- ------- -------  ------- ------- -------  -------
Total net (deficiency)
redundancy               (4,888)   (4,702)  (4,138) (1,807)  (1,745)   (624)    276       31    (495) (1,027)     --
                         =======   =======  ======= =======  ======= ======= =======  ======= ======= =======  =======
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(a)  Reflects  reserves  of  CNA's  property/casualty   insurance  subsidiaries,
excluding  Continental  reserves,  which  were  acquired  on May 10,  1995  (the
Acquisition Date).  Accordingly,  the reserve development (net reserves recorded
at the end of the year, as initially estimated,  less net reserves  re-estimated
as of  subsequent  years) does not include  Continental.  In 1995,  CNA recorded
adverse  reserve  development  of  $134  million  related  to  the  reserves  of
Continental, on the Acquisition Date.

(b) Includes  Continental  gross  reserves of $9,713 million and net reserves of
$6,063  million  acquired on the  Acquisition  Date and  subsequent  development
thereon.

(c) Includes net and gross reserves of acquired companies of $57 million and $64
million.

(d)  Includes net and gross  reserves of acquired  companies of $122 million and
$223 million.

(e) Ceded  recoverable  includes  net  reserves  transferred  under  retroactive
reinsurance agreements of $784 million, as of December 31, 1999.

                                       8
<PAGE>


PROPERTY/CASUALTY CLAIM AND CLAIM ADJUSTMENT EXPENSES--(CONTINUED)

     Additional  information  as to  CNA's  property/casualty  claim  and  claim
expense  reserves and reserve  development  is set forth in Notes A and E of the
Consolidated  Financial  Statements of the 1999 Annual  Report to  Shareholders,
incorporated by reference in Item 8, herein.

INVESTMENTS

     Information  as to the Company's  investments is set forth in Notes B and C
of  the  Consolidated   Financial  Statements  of  the  1999  Annual  Report  to
Shareholders, incorporated by reference in Item 8, herein.

     Additional  information as to the Company's investments is set forth in the
Management's  Discussion  and  Analysis  section  of the 1999  Annual  Report to
Shareholders, incorporated by reference in Item 7, herein.

                                       9
<PAGE>
ITEM 2.     PROPERTIES

     CNA  Plaza,  owned by  Continental  Assurance  Company,  serves as the home
office for CNAF and its insurance subsidiaries. An adjacent building (located at
55 E.  Jackson  Blvd.),  jointly  owned  by  Continental  Casualty  Company  and
Continental  Assurance  Company,  is partially  situated on grounds under leases
expiring  in 2058.  Approximately  25% of the  adjacent  building  is  rented to
non-affiliates.  CNAF's  subsidiaries  lease  office  space  in  various  cities
throughout the United States and in other  countries.  The following  table sets
forth certain  information  with respect to the principal office buildings owned
or leased by CNAF's subsidiaries:

      ------------------------------------------------------------------------
                                 AMOUNT OF BUILDING
                                 OWNED AND OCCUPIED OR
                                 LEASED BY CNA OR ITS
      LOCATION                   SUBSIDIARIES              PRINCIPAL USAGE
      ------------------------------------------------------------------------

      CNA Plaza                    1,144,378 sq. ft.*   Principal Executive
      333 S. Wabash                                       Offices of CNAF
      Chicago, Illinois

      180 Maiden Lane              1,115,100*           Property/Casualty
      New York, New York                                 Insurance Offices

      55 E. Jackson Blvd.            440,292*           Principal Executive
      Chicago, Illinois                                  Offices of CNAF

      200 S. Wacker Drive            265,727**          Property/Casualty
      Chicago, Illinois                                  Insurance Offices

      401 Penn Street                254,589*           Leased to tenants
      Reading, Pennsylvania

      100 CNA Drive                  251,363*           Life Insurance Offices
      Nashville, Tennessee

      1111 E. Broad St.              225,470**          Property/Casualty
      Columbus, Ohio                                      Insurance Offices

      40 Wall Street                 199,238**          Property/Casualty
      New York, New York                                  Insurance Offices

      1110 Ward Avenue               186,687*           Property/Casualty
      Honolulu, Hawaii                                    Insurance Offices

      3501 State Highway 66          183,184**          Property/Casualty
      Neptune, New Jersey                                 Insurance Offices

      2405 Lucien Way                178,744**          Property/Casualty
      Maitland, Florida                                   Insurance Offices

      333 Glen Street                164,032**          Property/Casualty
      Glens Falls, New York                               Insurance Offices

      1100 Cornwall Road             147,884**          Property/Casualty
      Monmouth Junction,                                  Insurance Offices
      New Jersey

      600 North Pearl Street         139,151**          Property/Casualty
      Dallas, Texas                                        Insurance Offices

* Represents property owned by CNAF or its subsidiaries.
** Represents property leased by CNAF or its subsidiaries.

                                       10
<PAGE>
ITEM 3.    LEGAL PROCEEDINGS

     Information  as to CNA's  legal  proceedings  is set forth in Note F of the
Consolidated  Financial  Statements  of  1999  Annual  Report  to  Shareholders,
incorporated by reference in Item 8, herein.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

                                       11
<PAGE>
<TABLE>
<CAPTION>
                      EXECUTIVE OFFICERS OF THE REGISTRANT

                            POSITION AND
                            OFFICES HELD            FIRST BECAME
                          WITH REGISTRANT          OFFICER OF CNA
          NAME                               AGE                         PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
<S>                      <C>                 <C>   <C>             <C>
Laurence A. Tisch         Chief Executive    77        *      Co-Chairman   of  the  Board  of  Loews   Corporation.
                          Officer, CNA                        President,  Chief  Executive  Officer and  Director of
                          Financial                           CBS, Inc. until November  1995.  Executive  officer of
                          Corporation                         the Registrant since 1974.

Bernard L. Hengesbaugh    Chairman of the    53      1980     Chairman of the Board and Chief  Executive  Officer of
                          Board and Chief                     CNA Insurance Companies since  February  1999.  Executive
                          Executive Officer,                  Vice  President and Chief Operating  Officer of CNA
                          CNA Insurance                       Insurance Companies from February 1998 until February
                          Companies                           1999. Senior Vice  President  of CNA Insurance Companies
                                                              since November 1990.  Executive officer of the Registrant
                                                              since 1996.

Robert V. Deutsch         Senior Vice        40      1999     Senior Vice President and Chief  Financial  Officer of
                          President and                       CNA  Financial  Corporation  since August  1999.  From
                          Chief Financial                     June  1987  until   August  1999,   Mr.   Deutsch  was
                          Officer, CNA                        Executive Vice  President,  Chief  Financial  Officer,
                          Financial                           Chief  Actuary and  Assistant  Secretary  of Executive
                          Corporation                         Risk Inc.  Executive  Officer of the Registrant since
                                                              1999.

Jonathan D. Kantor        Senior Vice        44      1994     Senior Vice  President,  General Counsel and Secretary
                          President,                          of the Registrant  since 1998.  Senior Vice President,
                          General Counsel                     General   Counsel  and   Secretary  of  CNA  Insurance
                          and Secretary,                      Companies  since  1997.  Prior  thereto,   Group  Vice
                          CNA Financial                       President  of  CNA  Insurance  Companies  since  1994.
                          Corporation                         Executive Officer of the Registrant since 1997.

Thomas F. Taylor          Executive Vice     48      1992     Executive Vice  President,  Underwriting  Policy Group
                          President, CNA                      of CNA  Insurance  Companies  since  June  1999.  From
                          Insurance                           1998 to 1999,  Senior Vice  President of CNA Insurance
                          Companies                           Companies.  From 1992 thru 1998,  President  and Chief
                                                              Operating Officer Financial  Insurance division of CNA
                                                              Insurance   Companies.   Executive   Officer   of  the
                                                              Registrant since 1999.
</TABLE>
Officers  are  elected and hold office  until their  successors  are elected and
qualified, and are subject to removal by the Board of Directors.

*Mr. Tisch is not an officer of CNA.

                                       12
<PAGE>
                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
         STOCKHOLDER MATTERS

     Incorporated  herein by reference from page 76 of the 1999 Annual Report to
Shareholders.

ITEM 6.  SELECTED FINANCIAL DATA

     Incorporated  herein by reference  from page 1 of the 1999 Annual Report to
Shareholders.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     Incorporated  herein by  reference  from  pages 13  through  41 of the 1999
Annual Report to Shareholders.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Incorporated  herein by  reference  from  pages 35  through  37 of the 1999
Annual Report to Shareholders.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Consolidated Balance Sheets - December 31, 1999 and 1998

     Consolidated Statements of Operations - Year Ended December 3l, 1999, 1998
     and 1997

     Consolidated Statements of Stockholders' Equity - December 31, 1999, 1998
     and 1997

     Consolidated  Statements of Cash Flows - Year Ended December 31, 1999, 1998
     and 1997

     Notes to Consolidated Financial Statements

     Independent Auditors' Report


     The above  Consolidated  Financial  Statements,  the  related  Notes to the
     Consolidated  Financial Statements and the Independent Auditors' Report are
     incorporated  herein by  reference  from  pages 42  through  74 of the 1999
     Annual Report to Shareholders.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

   None.

                                       13
<PAGE>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information  required in Part III has been omitted as the Registrant  intends to
file a definitive proxy statement pursuant to Regulation 14A with the Securities
and  Exchange  Commission  not later than 120 days after the close of its fiscal
year.

ITEM 11. EXECUTIVE COMPENSATION

Information  required in Part III has been omitted as the Registrant  intends to
file a definitive proxy statement pursuant to Regulation 14A with the Securities
and  Exchange  Commission  not later than 120 days after the close of its fiscal
year.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information  required in Part III has been omitted as the Registrant  intends to
file a definitive proxy statement pursuant to Regulation 14A with the Securities
and  Exchange  Commission  not later than 120 days after the close of its fiscal
year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information  required in Part III has been omitted as the Registrant  intends to
file a definitive proxy statement pursuant to Regulation 14A with the Securities
and  Exchange  Commission  not later than 120 days after the close of its fiscal
year.

                                       14
<PAGE>
                                     PART IV
ITEM 14. FINANCIAL STATEMENTS, SCHEDULES, EXHIBITS AND REPORTS ON FORM 8-K

                                                                         Page
(a)  1.  FINANCIAL STATEMENTS:                                          Number
                                                                        ------

         A separate index to the Consolidated Financial Statements
         is presented in Part II, Item 8.................................  13

(a)  2.  FINANCIAL STATEMENT SCHEDULES:

         Schedule I         Summary of Investments.......................  18

         Schedule II        Condensed Financial Information
                            (Parent Company).............................  19

         Schedule III       Supplementary Insurance Information..........  23

         Schedule IV        Reinsurance..................................  24

         Schedule V         Valuation and Qualifying Accounts............  24

         Schedule VI        Supplementary Information Concerning
                               Property/Casualty Insurance Operations....  25

         Independent Auditors' Report....................................  26

(a)  3.  EXHIBITS:

                                     Exhibit
                          Description of Exhibit Number
                          -----------------------------

    (3)  Articles of incorporation and by-laws:
         Certificate of Incorporation of CNA Financial Corporation,
         as amended May 20, 1999 ........................................  3.1*

         By-Laws of CNA Financial Corporation, as amended
         February 10, 1999 (Exhibit 3.2 to 1998 Form 10-K incorporated
         herein by reference.)...........................................  3.2

    (4)   Instruments defining the rights of security holders, including
          indentures:
          CNA Financial Corporation hereby agrees to furnish to the
          Commission upon request copies of instruments with respect to
          long-term debt, pursuant to Item 601(b) (4) (iii) of
          Regulation S-K.................................................   --

   (10)   Material contracts:

          Federal Income Tax Allocation Agreement dated February 29, 1980
          between CNA Financial Corporation and Loews Corporation
          (Exhibit 10.2 to 1987 Form 10-K incorporated herein by
          reference.).................................................... 10.1

                                       15
<PAGE>
                                     PART IV
    ITEM 14. FINANCIAL STATEMENTS, SCHEDULES, EXHIBITS AND REPORTS ON FORM 8-K
                               (CONTINUED)

                                                                        Exhibit
                          Description of Exhibit                         Number
                          -----------------------------                 -------

   (10)   Material contracts (continued):

          Continuing Services Agreement between CNA Financial Corporation
          and Edward J. Noha, dated February 27, 1991 (Exhibit 6.0 to 1991
          Form 8-K, filed March 18, 1991, incorporated herein by
          reference.)..................................................... 10.2

          CNA Employees' Retirement Benefit Equalization Plan, as amended
          through January 1, 1994 ........................................ 10.3*


          CNA Employees' Supplemental Savings Plan, as amended through
          January 1, 1994................................................. 10.4*

          Agreement between Fibreboard Corporation and Continental Casualty
          Company, dated April 9, 1993 (Exhibit A to 1993 Form 8-K filed
          April 12, 1993 incorporated herein by reference.)............... 10.5

          Settlement  Agreement entered into on October 12, 1993 by and
          among Fibreboard  Corporation,  Continental Casualty Company,
          CNA Casualty of  California,  Columbia  Casualty  Company and
          Pacific  Indemnity  Company  together the "Parties"  (Exhibit
          10.1 to September 30, 1993 Form 10-Q  incorporated  herein by
          reference.)..................................................... 10.6

          Continental Casualty Company "CNA" Annual Incentive Bonus Plan
          Provisions (Exhibit 10.1 to 1994 Form 10K incorporated herein
          by reference.).................................................. 10.7

          Employment Agreement between CNA Financial Corporation and
          Philip L. Engel, dated December 31, 1995 (Exhibit 10.3 to 1995
          Form 10-K incorporated herein by reference.).................... 10.8

          Letter extending employment Agreement between CNA Financial
          Corporation and Philip L. Engel, dated February 17, 1999 (Exhibit
          10.17 to 1998 Form 10-K incorporated herein by reference.)...... 10.9

          Continuing Services Agreement between CNA Financial Corporation and
          Dennis H. Chookaszian, dated February 9, 1999 (Exhibit 10.2 to 1998
          Form 10-K incorporated herein by reference.)....................10.10

          Employment Agreement between CNA Financial Corporation and
          Bernard Hengesbaugh, dated February 9, 1999 (Exhibit 10.18 to...10.11

          CNA Financial Corporation 2000 Long-Term Incentive Plan, dated
          August 4, 1999 (Exhibit 4.1 to 1999 Form S-8 filed August 4, 1999,
          incorporated herein by reference.)..............................10.12

                                       16
<PAGE>
                                     PART IV
    ITEM 14. FINANCIAL STATEMENTS, SCHEDULES, EXHIBITS AND REPORTS ON FORM 8-K
                                   (CONTINUED)

                                                                        Exhibit
                          Description of Exhibit                         Number
                          -----------------------------                 -------

   (10)   Material Contracts (continued):

          Employment Agreement between CNA Financial Corporation and
          Robert V. Deutsch, dated August 16, 1999 (Exhibit 10 to
          September 30, 1999 Form 10-Q incorporated herein
          by reference.)..................................................10.13

          Employment Agreement between CNA Financial Corporation and
          Thomas F. Taylor dated November 2, 1999.........................10.14*

   (12)   Computation of Ratio of Earnings to Fixed Charges............... 12.1*

   (13)   1999 Annual Report.............................................. 13.1*

   (21)   Primary Subsidiaries of CNAF.................................... 21.1*

   (23)   Independent Auditors' Consent................................... 23.1*

   (27)   Financial Data Schedule.........................................   27*
          *Filed herewith
                                       17
<PAGE>
                                                                  SCHEDULE I

                            CNA FINANCIAL CORPORATION
                             SUMMARY OF INVESTMENTS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
DECEMBER 31                                                   1999                            1998
                                                  -----------------------------    -----------------------------
                                                   COST OR                           Cost or
                                                  AMORTIZED   FAIR    CARRYING     Amortized    Fair  Carrying
 (In millions of dollars)                           COST      VALUE     VALUE        Cost       Value   Value
----------------------------------------------------------------------------------------------------------------
<S>                                                 <C>       <C>       <C>          <C>      <C>       <C>
Fixed maturities available-for-sale:
Bonds:
       United States government and government
        agencies and authorities-taxable.........   $ 9,777   $ 9,619   $ 9,619      $ 9,507  $ 9,694   $ 9,694
       States, municipalities and political
        subdivisions-tax exempt..................     4,514     4,396     4,396        6,127    6,321     6,321
       Foreign governments and political
        subdivisions.............................     1,472     1,429     1,429        1,543    1,545     1,545
       Public utilities..........................       368       354       354          683      694       694
       Convertibles and bonds with warrants
        attached.................................       135       135       135            1        1         1
       All other corporate.......................    11,619    11,185    11,185       11,614   11,724    11,724
   Redeemable preferred stocks...................        63       130       130           36       94        94
                                                    -------   -------   -------      -------  -------    -------
         Total fixed maturities available-for-sale   27,948    27,248    27,248       29,511   30,073    30,073
                                                    -------   =======   -------      -------  =======    -------
Equity securities available-for-sale:
  Common stocks:
       Banks, trusts and insurance companies....         16        10        10           10        6         6
       Public utilities..........................        14        14        14            -        -         -
     Industrial and other........................       858     3,320     3,320          724    1,659     1,659
  Non-redeemable preferred stocks................       262       266       266          321      305       305
                                                    -------   -------   -------      -------  -------     ------
         Total equity securities available-for-sale $ 1,150   $ 3,610   $ 3,610      $ 1,055  $ 1,970   $ 1,970
                                                    -------   =======   -------      -------  =======     ------
Mortgage loans...................................        44                  44           57                 57
Real estate......................................         3                   3            5                  5
Policy loans.....................................       192                 192          177                177
Other invested assets............................     1,036               1,108          806                858
Short-term investments...........................     3,355               3,355        4,037              4,037
----------------------------------------------------------------------------------------------------------------
           TOTAL INVESTMENTS                        $33,728             $35,560      $35,648            $37,177
================================================================================================================
</TABLE>
                                       18
<PAGE>
                           CNA FINANCIAL CORPORATION               SCHEDULE II
                                (PARENT COMPANY)
                         CONDENSED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FINANCIAL POSITION
-----------------------------------------------------------------------------------------
DECEMBER 31                                                         1999            1998
(In millions of dollars)
-----------------------------------------------------------------------------------------
<S>                                                              <C>             <C>
ASSETS:
Cash...........................................................  $     4         $     -
Investments in subsidiaries....................................   10,604          10,865
Deferred income taxes..........................................      852             995
Notes receivable from affiliates...............................      534             514
Short-term investments.........................................        3               3
Federal income taxes receivable.................................     241             234
Other..........................................................       19               5
                                                                 --------        --------
       Total assets............................................  $12,257         $12,616
                                                                 ========        ========
LIABILITIES:
Debt...........................................................  $ 2,492         $ 2,475
Amounts due to affiliates......................................      798             984
Other..........................................................       29               -
                                                                 --------        --------
       Total liabilities.......................................    3,319           3,459
STOCKHOLDERS' EQUITY:
Accumulated other comprehensive income.........................    1,157             991
Other stockholders' equity.....................................    7,781           8,166
                                                                 --------        --------
       Total stockholders' equity..............................    8,938           9,157
------------------------------------------------------------------------------------------
       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $12,257         $12,616
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31                                            1999      1998    1997
(In millions of dollars)
--------------------------------------------------------------------------------------------
<S>                                                              <C>       <C>       <C>
REVENUES:
Equity in income of subsidiaries before income tax:
   Operating income............................................  $     2   $    (52) $  956
   Realized investment gains...................................      307        695     742
Net investment income..........................................        8         25      12
Realized investment gains (losses).............................        8         (2)     (4)
                                                                 --------  --------- -------
                                                                     325        666   1,706
                                                                 --------  --------- -------
EXPENSES:
Administrative and general.....................................      203        189     217
Interest.......................................................      160        148     131
Other..........................................................        3         --      --
                                                                 --------  --------- -------
                                                                     366        337     348
                                                                 --------  --------- -------
       Income (loss) before income tax and cumulative effect of a
        change in acccounting principle........................      (41)       329   1,358
       Income tax expense (benefit)............................      (88)        47     392
       Cumulative effect of a change in accounting principle,
        net tax of $95.........................................     (177)         -       -
--------------------------------------------------------------------------------------------
       NET INCOME (LOSS)                                         $  (130)  $    282  $  966
============================================================================================
           See accompanying Notes to Condensed Financial Information.
</TABLE>

                                       19
<PAGE>
                                                                     SCHEDULE II
                                                                     (continued)

                            CNA FINANCIAL CORPORATION
                                (PARENT COMPANY)
                         CONDENSED FINANCIAL INFORMATION
<TABLE>
<CAPTION>

STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31                                             1999      1998     1997
(In millions of dollars)
--------------------------------------------------------------------------------------------
<S>                                                              <C>       <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)...........................................  $  (130)  $    282  $  966
   Adjustments to reconcile net income (loss) to net cash flows
   from operating activities:
       Distributions in excess of earnings (undistributed
         earnings) of affiliates...............................      197       (159) (1,523)
       Realized losses (gains).................................       (8)         2       4
       Deferred income taxes...................................       43         47     144
       Changes in:
        Federal income taxes...................................       (7)       (60)     79
        Other, net.............................................      304        143     352
                                                                  -------   -------- -------
         TOTAL ADJUSTMENTS.....................................      529        (27)   (944)
                                                                  -------   -------- -------
         NET CASH FLOWS FROM OPERATING ACTIVITIES..............      399        255      22
                                                                  -------   -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Change in short-term investments............................      --          11     (15)
   Capital contribution to subsidiaries........................    (207)       (257)     --
   Purchase of preferred stock of subsidiaries.................      --        (305)     --
   Other.......................................................       8          --      (4)
                                                                  -------   --------  -------
         NET CASH FLOWS FROM INVESTING ACTIVITIES..............    (199)       (551)    (19)
                                                                  -------   --------  -------
CASH FLOWS FROM FINANCING ACTIVITIES:..........................
   Dividends paid to preferred shareholders....................     (13)         (7)     (6)
   Proceeds from issuance of long-term debt....................     175       1,000      --
   Principal payments on long-term debt........................    (158)       (490)     --
   Issuance (redemption) of cumulative exchangeable
     preferred stock...........................................    (200)        200      --
   Purchase of treasury stock..................................      --        (102)     --
   Loans to subsidiaries.......................................      --        (305)     --
                                                                  ------    --------  -------
         NET CASH FLOWS FROM FINANCING ACTIVITIES..............    (196)        296      (6)
                                                                  ------    --------  -------
         NET CASH FLOWS........................................       4          --      (3)
Cash at beginning of year......................................      --          --
---------------------------------------------------------------------------------------------
         CASH AT END OF YEAR                                      $   4     $    --   $  --
=============================================================================================

Supplemental disclosures of cash flow information:
   Cash paid:
        Interest...............................................    $169     $   129   $ 134
        Federal income taxes...................................     279         143      95
   Non-cash transactions:
        Notes receivable for the issue of stock.................     19          44      --
=============================================================================================
           See accompanying Notes to Condensed Financial Information.
                                       20
</TABLE>
<PAGE>
                                                                  SCHEDULE II
                                                                  (continued)

                            CNA FINANCIAL CORPORATION
                                (PARENT COMPANY)
                         CONDENSED FINANCIAL INFORMATION

                    NOTES TO CONDENSED FINANCIAL INFORMATION


a.       Basis of presentation

         The  condensed  financial  information  of  CNA  Financial  Corporation
         (Parent  Company) should be read in conjunction  with the  Consolidated
         Financial  Statements  and Notes thereto  included in the CNA Financial
         Corporation  1999  Annual  Report  to   Shareholders.   Investments  in
         subsidiaries are accounted for using the equity method of accounting.

         Certain  amounts  applicable to prior years have been  reclassified  to
         conform to classifications followed in 1999.

         In the first  quarter of 1999,  CNA adopted  Statement of Position 97-3
         "Accounting by Insurance and Other  Enterprises  for  Insurance-Related
         Assessments"(SOP  97-3).  SOP 97-3  requires that  insurance  companies
         recognize  liabilities  for   insurance-related   assessments  when  an
         assessment  is probable and will be imposed,  when it can be reasonably
         estimated,  and when the event  obligating the entity to pay an imposed
         or  probable  assessment  has  occurred  on or  before  the date of the
         financial  statements.  Adoption of SOP 97-3  resulted in an  after-tax
         charge of $177 million as a cumulative effect of a change in accounting
         principle.  The pro forma  effect of adoption  on reported  results for
         prior periods is not significant.

b.    Debt

      -------------------------------------------------------------------------
      DECEMBER 31                                              1999     1998
      (In millions of dollars)
      -------------------------------------------------------------------------
         Variable Rate Debt:
             Commercial paper.................................. $  675  $  500
             Credit facility...................................     77     235
         Senior Notes:
             6.25%, due November 15, 2003......................    249     249
             6.50% , due April 15, 2005........................    497     497
             6.75%, due November 15, 2006......................    248     248
             6.45%, due January 15, 2008.......................    149     149
             6.60%, due December 15, 2008......................    199     199
             6.95%, due January 15, 2018.......................    148     148
         7.25%  Debenture, due November 15, 2023...............    247     247
         1.0% Urban Development Action Grant, due May 7, 2019..      3       3
      -------------------------------------------------------------------------
                TOTAL                                           $2,492  $2,475
      =========================================================================

         The Parent Company has a $795 million  revolving  credit  facility (the
         Facility)  that  expires in May 2001.  The amount  available  under the
         Facility  is  reduced by the Parent  Company's  outstanding  commercial
         paper  borrowings.  As of December 31,  1999,  there was $43 million of
         unused borrowing capacity under the Facility.  The interest rate on the
         Facility is equal to the London Interbank Offered Rate (LIBOR), plus 16
         basis points. Additionally,  there is an annual facility fee of 9 basis
         points  on the  entire  facility.  The  average  interest  rate  on the
         borrowings under the Facility, excluding facility fees, at December 31,
         1999 and 1998, was 6.66% and 5.49%, respectively.

          The weighted-average interest rate on commercial paper at December 31,
          1999 was 6.50%  compared to 5.89% at  December  31,  1998.  Generally,
          commercial paper has a weighted-average maturity of 40 days.

                                       21
<PAGE>
                                              SCHEDULE II (continued)

                            CNA FINANCIAL CORPORATION
                                (PARENT COMPANY)
                         CONDENSED FINANCIAL INFORMATION

              NOTES TO CONDENSED FINANCIAL INFORMATION--(CONTINUED)

         To offset the  variable  rate  characteristics  of the Facility and the
         interest rate risk associated with  periodically  reissuing  commercial
         paper,  the Parent  Company is party to interest  rate swap  agreements
         with several banks,  which have an aggregate  notional principal amount
         of $650 million at both December 31, 1999 and 1998, and which terminate
         from May 2000 to December  2000.  These  agreements  require the Parent
         Company  to pay  interest  at a fixed  rate,  averaging  6.07%  at both
         December 31, 1999 and 1998,  in exchange for the receipt of three month
         LIBOR.

         The combined  weighted average cost of borrowings,  including  facility
         fees, of the Facility,  commercial  paper  borrowings and interest rate
         swaps was 6.47% and 6.36% at December 31, 1999 and 1998, respectively.

         On February 15, 2000,  Standard & Poor's  lowered the Parent  Company's
         senior debt  rating  from A- to BBB and  lowered  the Parent  Company's
         preferred  stock rating from BBB to BB+. As a result of these  actions,
         the  facility fee payable on the  aggregate  amount of the Facility was
         increased to 12 1/2 basis points per annum and the interest rate on the
         Facility was increased to LIBOR plus 27 1/2 basis points. Additionally,
         as a result of these actions,  the Parent Company purchased and retired
         approximately  $30 million of its  outstanding  money market  preferred
         stock in February  2000,  and  announced  its  intention to purchase or
         redeem the remaining outstanding shares.

         In 1998,  the Parent  Company issued $1 billion of senior notes under a
         $1 billion Registration Statement on Form S-3 filed with the Securities
         and Exchange  Commission  on August 18, 1997.  This shelf  registration
         incorporated  $250  million  of  securities   remaining  available  for
         issuance  from a prior  shelf  registration.  Since  filing  the  shelf
         registration,  the Parent Company has issued in four separate offerings
         senior notes with an aggregate principal amount of $1 billion.

         On April 15, 1999, the Parent Company retired $100 million of 8.25%
         senior notes.

          On August 2, 1999,  the Parent  Company  repaid its $157 million,  11%
          Secured  Mortgage  Notes,  due June 30, 2013. The gain realized on the
          transaction was not significant.

     c.  Management and administrative expenses

          The Parent Company has reimbursed, or will reimburse, its subsidiaries
          for  the  net  of  general  management  and  administrative  expenses,
          unallocated  loss adjustment  expenses and investment  expense of $203
          million,  $189  million  and  $217  million  in 1999,  1998 and  1997,
          respectively.

     d.  Capital contributions

          In 1999 and 1998, the Parent Company  contributed  approximately  $200
          million  and $257  million to the capital of its  subsidiaries.  There
          were no contributions made by the Parent Company to the capital of its
          subsidiaries in 1997.

                                       22
<PAGE>
<TABLE>
<CAPTION>
                                                                                                    SCHEDULE III

                            CNA FINANCIAL CORPORATION
                       SUPPLEMENTARY INSURANCE INFORMATION
-------------------------------------------------------------------------------------------------------------------
                                        GROSS INSURANCE RESERVES
                                      -----------------------------------------

                                        CLAIM                                                       INSURANCE
                             DEFERRED    AND     FUTURE               POLICY-     NET      NET       CLAIMS AND
                            ACQUISITION  CLAIM   POLICY    UNEARNED   HOLDERS'  PREMIUM   INVESTMENT POLICYHOLDERS'
(In millions of dollars)      COSTS     EXPENSE  BENEFITS   PREMIUMS  FUNDS     REVENUE    INCOME    BENEFITs
-------------------------------------------------------------------------------------------------------------------
<S>                         <C>         <C>      <C>       <C>        <C>      <C>        <C>       <C>
DECEMBER 31, 1999

 Agency Market Operations...$     -     $     -  $     -   $     -    $    -   $  4,799   $   686   $ 4,431
 Specialty Operations.......      -           -        -         -         -      1,001       245       951
 CNA Re.....................      -           -        -         -         -      1,176       161       707
 Global Operations..........      -           -        -         -         -      1,010       132       585
 Risk Management............      -           -        -         -         -        801       154       909
 Group Operations...........      -           -        -         -         -      3,571       130     3,177
 Life Operations............      -           -        -         -         -        936       556       871
 Corporate..................      -           -        -         -         -         35        47       127
 Eliminations...............      -           -        -         -         -        (47)        -       (41)
 Consolidated Operations....  2,436      27,356    5,996     5,103       710          -         -         -
                            ---------------------------------------------------------------------------------------
                            $ 2,436     $27,356  $ 5,996   $ 5,103    $  710    $13,282   $ 2,101   $11,717
                            =======================================================================================
December 31, 1998
 Agency Market Operations...$     -     $     -  $     -   $     -    $    -    $ 5,247   $   744   $ 3,871
 Specialty Operations.......      -           -        -         -         -      1,092       245     1,011
 CNA Re.....................      -           -        -         -         -        944       163       670
 Global Operations..........      -           -        -         -         -        941       110       490
 Risk Management............      -           -        -         -         -        823       144       893
 Group Operations...........      -           -        -         -         -      3,733       133     3,375
 Life Operations............      -           -        -         -         -        823       525       855
 Corporate..................      -           -        -         -         -        (26)       82       103
 Eliminations...............      -           -        -         -         -        (41)        -         -
 Consolidated Operations....  2,422      29,154    5,352     5,039       855          -         -         -
                            ---------------------------------------------------------------------------------------
                            $ 2,422     $29,154  $ 5,352   $ 5,039    $  855    $13,536   $ 2,146   $11,268
                            =======================================================================================
December 31, 1997
 Agency Market Operations...$     -     $     -  $     -   $     -    $    -    $ 5,092   $   787   $ 4,277
 Specialty Operations.......      -           -        -         -         -      1,251       268     1,092
 CNA Re.....................      -           -        -         -         -        898       153       694
 Global Operations..........      -           -        -         -         -        854       117       594
 Risk Management............      -           -        -         -         -        776       158       567
 Group Operations...........      -           -        -         -         -      3,936       117     3,272
 Life Operations............      -           -        -         -         -        797       501       838
 Corporate..................      -           -        -         -         -         20       108        59
 Eliminations...............      -           -        -         -         -          -         -       (22)
 Consolidated Operations....  2,142      29,520    4,782     4,700       789          -         -         -
                            ---------------------------------------------------------------------------------------
                            $ 2,142     $29,520  $ 4,782   $ 4,700    $  789    $13,624   $ 2,209   $11,371
                            =======================================================================================
*Premiums written relates to property/casualty companies only.
</TABLE>
                                       23
<PAGE>
                                                          SCHEDULE III CONTINUED

                            CNA FINANCIAL CORPORATION
                       SUPPLEMENTARY INSURANCE INFORMATION
-----------------------------------------------------------
    INSURANCE    AMORTIZATION
   CLAIMS AND     OF DEFERRED     OTHER
  POLICYHOLDERS'  ACQUISITION   OPERATING    PREMIUMS
    BENEFITS         COSTS       EXPENSES    WRITTEN*
-----------------------------------------------------------

 $ 4,339        $ 1,182        $   347      $ 3,667

     907            187            102          948

     998            290             76        1,275

     578            231            315        1,080

     755             71            417          839

   3,053              2            697          804

   1,122            180             94          337

     196              -            226           37

     (48)             -           (188)           -

       -              -              -            -
------------------------------------------------------
$ 11,900        $ 2,143        $ 2,086      $ 8,987
======================================================

$  4,436        $ 1,239        $   427      $ 5,461

     949            175            171        1,023

     707            252             57          908

     589            224            247          985

     765             98            378          889

   3,171              5            758        1,008

     997            178            104          295

     274              9            166            -

     (41)             -             13            -

       -              -              -            -
----------------------------------------------------
$ 11,847        $ 2,180        $ 2,321      $10,569
====================================================

$  3,871        $ 1,242        $   384      $ 5,085

   1,011            247            149        1,267

     670            247             79        1,091

     490            173            221          812

     785            101            304          706

   3,408              -            680          963

     949            120            147          247

     211              8            149           15

       -              -            (13)           -

       -              -              -            -
----------------------------------------------------
$ 11,395       $  2,138        $ 2,100      $10,186
====================================================
<PAGE>
                                                                   SCHEDULE IV
                            CNA FINANCIAL CORPORATION
                                   REINSURANCE


                                                                    Assumed/
Year Ended December 31       Direct     Assumed     Ceded      Net    Net %
-------------------------------------------------------------------------------
(In millions of dollars)
1999 earned premiums:
  Property/casualty          $ 9,158    $ 1,816     $ 2,199    $ 8,775   20.7%
  Accident and health          3,730        198         397      3,531    5.6
  Life                         1,174        222         420        976   22.7
-------------------------------------------------------------------------------
Total 1999 earned premiums   $14,062    $ 2,236     $ 3,016    $13,282   16.8%
===============================================================================

1998 earned premiums:
  Property/casualty          $ 8,327    $ 1,549     $   897    $ 8,979   17.3%
  Accident and health          3,745        176         256      3,665    4.8
  Life                         1,014        159         281        892   17.8
-------------------------------------------------------------------------------
Total 1998 earned premiums   $13,086    $ 1,884     $ 1,434    $13,536   13.9%
===============================================================================

1997 earned premiums:
  Property/casualty          $ 8,528    $ 1,101     $   612    $ 9,017   12.2%
  Accident and health          3,723        259         280      3,702    7.0
  Life                           908        128         131        905   14.1
-------------------------------------------------------------------------------

Total 1997 earned premiums   $13,159    $ 1,488     $ 1,023    $13,624   10.9%
===============================================================================
<TABLE>
<CAPTION>
                                                                                  SCHEDULE V
                            CNA FINANCIAL CORPORATION
                        VALUATION AND QUALIFYING ACCOUNTS
----------------------------------------------------------------------------------------------
                                      BALANCE                                         BALANCE
                                         AT      CHARGED TO  CHARGED TO                 AT
                                      BEGINNING  COSTS AND     OTHER                  END OF
(In millions of dollars)             OF PERIOD  EXPENSES     AMOUNTS   DEDUCTIONS     PERIOD
----------------------------------------------------------------------------------------------
<S>                                   <C>       <C>          <C>         <C>         <C>
YEAR ENDED DECEMBER 31, 1999
  Deducted from assets:
    Allowance for doubtful accounts:
      Receivables.....................$  328    $   (6)      $   --      $   12      $  310
                                       =====     ======       ======      =====       =====
YEAR ENDED DECEMBER 31, 1998
  Deducted from assets:
    Allowance for doubtful accounts:
      Receivables......................$ 303    $   35      $   --       $   10      $  328
                                        =====    ======      ======       =====       =====
YEAR ENDED DECEMBER 31, 1997
 Deducted from assets:
    Allowance for doubtful accounts:
      Receivables......................$ 277    $   30      $   --       $    4      $  303
                                        =====    ======      ======       =====       =====
----------------------------------------------------------------------------------------------
</TABLE>
                                       24
<PAGE>
<TABLE>
<CAPTION>
                                                                                          SCHEDULE VI

                            CNA FINANCIAL CORPORATION
             SUPPLEMENTARY INFORMATION CONCERNING PROPERTY/CASUALTY
                              INSURANCE OPERATIONS
---------------------------------------------------------------------------------------------------------
                                                                                 CONSOLIDATED PROPERTY/
                                                                                   CASUALTY ENTITIES
                                                                               --------------------------

AS OF AND FOR THE YEAR ENDED DECEMBER 31                                       1999     1998      1997
(In millions of dollars)
---------------------------------------------------------------------------------------------------------
<S>                                                                           <C>      <C>        <C>
Deferred acquisition costs................................................... $ 1,126  $ 1,279    $ 1,162

Reserves for unpaid claims and claim adjustment expenses.....................  26,631   28,317     28,533

Discount deducted from claim and claim adjustment expense reserves above
(based on interest rates ranging from 3.5% to 7.5%)..........................   2,376    2,380      2,409

Unearned premiums............................................................   5,103    5,039      4,700

Earned premiums..............................................................   9,901   10,079      9,927

Net investment income........................................................   1,648    1,731      1,790

Incurred claim and claim adjustment expenses related to current year.........   7,287    7,903      7,942

Incurred claim and claim adjustment expenses related to prior years..........   1,027      263       (256)

Amortization of deferred acquisition costs...................................   2,004    2,042      2,017

Paid claim and claim expenses................................................   9,964    8,745      8,376

Net premiums written.........................................................   8,987   10,569     10,186
---------------------------------------------------------------------------------------------------------
</TABLE>
                                       25
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
CNA Financial Corporation


We  have  audited  the  consolidated   financial  statements  of  CNA  Financial
Corporation (an affiliate of Loews  Corporation) and subsidiaries as of December
31, 1999 and 1998,  and for each of the three years in the period ended December
31, 1999 and have issued our report  thereon  dated  February  23,  2000,  which
report includes an explanatory  paragraph as to certain accounting changes; such
consolidated  financial statements and report are included in the Company's 1999
Annual Report to  Shareholders  and are  incorporated  herein by reference.  Our
audits  also  included  the  financial  statement  schedules  of  CNA  Financial
Corporation  and  subsidiaries  listed  in Item 14.  These  financial  statement
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion  based on our audits.  In our opinion,  such  financial
statement  schedules,  when  considered  in relation  to the basic  consolidated
financial  statements taken as a whole,  present fairly in all material respects
the information set forth therein.


Deloitte & Touche LLP
Chicago, Illinois
February 23, 2000

                                       26
<PAGE>
                                   SIGNATURES

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

                                         CNA Financial Corporation

                                         By     /S/Laurence A. Tisch
                                            ----------------------------
                                                Laurence A. Tisch
                                              Chief Executive Officer
                                           (Principal Executive Officer)

                                         By     /S/Robert V. Deutsch
                                            ----------------------------
                                                Robert V. Deutsch
                                              Senior Vice President and
                                              Chief Financial Officer
                                             (Principal Accounting Officer)

Date:  March 29, 2000

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


             SIGNATURE                             TITLE     |
                                                             |
                                                             |
      /S/Antoinette Cook Bush             Director           |
------------------------------------                         |
       Antoinette Cook Bush                                  |
                                                             |
                                                             |
      /S/Dennis H. Chookaszian            Director           |
------------------------------------                         |
      Dennis H. Chookaszian                                  |
                                                             |
                                                             |
      /S/Ronald L. Gallatin               Director           |       Dated
------------------------------------                         |
        Ronald L. Gallatin                                   |  March 29, 2000
                                                             |
                                                             |
         /S/Robert P. Gwinn               Director           |
------------------------------------                         |
         Robert P. Gwinn                                     |
                                                             |
                                                             |
     /S/Bernard L. Hengesbaugh            Director           |
------------------------------------                         |
      Bernard L. Hengesbaugh                                 |

                                       27
<PAGE>

                             SIGNATURES--(continued)

             SIGNATURE                             TITLE     |
                                                             |
      /S/Walter F. Mondale               Director            |
------------------------------------                         |
         Walter F. Mondale                                   |
                                                             |
                                                             |
      /S/Edward J. Noha              Chairman of the Board   |
------------------------------------                         |
          Edward J. Noha              and Director           |
                                                             |
                                                             |
      /S/Joseph Rosenberg               Director             |
------------------------------------                         |
         Joseph Rosenberg                                    |
                                                             |
                                                             |
      /S/James S. Tisch                 Director             |     Dated
------------------------------------                         |
          James S. Tisch                                     |  March 29, 2000
                                                             |
                                                             |
      /S/Laurence A. Tisch          Chief Executive Officer  |
------------------------------------                         |
         Laurence A. Tisch          and Director             |
                                                             |
                                                             |
      /S/Preston R. Tisch               Director             |
------------------------------------                         |
         Preston R. Tisch                                    |
                                                             |
                                                             |
      /S/Marvin Zonis                 Director               |
------------------------------------                         |
        Marvin Zonis                                         |

                                       28
<PAGE>
                                                               EXHIBIT 12.1

                            CNA FINANCIAL CORPORATION
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31                                           1999     1998       1997       1996       1995
(In millions of dollars, except ratios)
----------------------------------------------------------------------------------------------------------------
<S>                                                           <C>         <C>         <C>       <C>      <C>
Income (loss) before income tax, net of minority interest.....$   (41)    $   329     $1,358    $ 1,345  $ 1,042
Adjustments:
   Interest expense...........................................    202         219        198        200      182
   Interest element of operating lease rental.................     35          47         34         32       47
                                                              -------     -------     ------    -------  -------
Earnings before fixed charges.................................$   196     $   595     $1,590    $ 1,577  $ 1,271
                                                              =======     =======     ======    =======  =======
Fixed charges:
   Interest expense...........................................$   202     $   219     $  198    $   200  $   182
   Interest element of operating lease rental.................     35          47         34         32       47
                                                              -------     -------     ------    -------  -------
Total fixed charges...........................................$   237     $   266     $  232    $   232  $   229
                                                              =======     =======     ======    =======  =======

Ratio of earnings to fixed charges (1)........................    0.8         2.2        6.8        6.8      5.6
----------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  For purposes of computing  this ratio,  earnings  consist of income  before
     income taxes plus fixed charges of  consolidated  companies.  Fixed charges
     consist of interest  and that portion of  operating  lease  rental  expense
     which is deemed to be an interest factor for such rentals.

                                       29
<PAGE>
                                                             EXHIBIT 21.1

                           PRIMARY SUBSIDIARIES OF CNAF

                                                        PLACE OF
COMPANY                                                 INCORPORATION
-------                                                 -------------

American Casualty Company of Reading, Pennsylvania      Pennsylvania

CNA  Casualty of California                             California

CNA Reinsurance Company, Ltd.                           United Kingdom

CNA Surety Corporation                                  Delaware

Columbia Casualty Company                               Illinois

Convida, Inc.                                           Bahamas

Continental Assurance Company                           Illinois

Continental Casualty Company                            Illinois

Continental Insurance Company of New Jersey             New Jersey

Firemen's Insurance Company of Newark, New Jersey       New Jersey

First Insurance Company of Hawaii                       Hawaii

National Fire Insurance Company of Hartford             Connecticut

National-Ben Franklin Insurance Company of Illinois     Illinois

Pacific Insurance Company                               California

RSKCo Claims Services, Inc.                             Illinois

The Buckeye Union Insurance Company                     Ohio

The Continental Insurance Company                       New Hampshire

The Fidelity and Casualty Company of New York           New Hampshire

Transcontinental Insurance Company                      New York

                                       30
<PAGE>
                                                          EXHIBIT 21.1 -
                                                          (continued)

                    PRIMARY SUBSIDIARIES OF CNAF--(continued)

                                                        PLACE OF
COMPANY                                                 INCORPORATION
-------                                                 ------------


Transportation Insurance Company                        Illinois

Valley Forge Insurance Company                          Pennsylvania

Valley Forge Life Insurance Company                     Pennsylvania

Western National Warranty Corporation                   Arizona


All other subsidiaries, when aggregated, are not considered significant.

                                       31
<PAGE>
                                                            EXHIBIT 23.1

                         INDEPENDENT AUDITORS' CONSENT

We consent to the  incorporation  by reference in  Registration  Statement  Nos.
333-69741 and 333-84447 of CNA Financial  Corporation and  subsidiaries on Forms
S-3 and S-8, respectively,  of our reports dated February 23, 2000, appearing in
and  incorporated  by  reference  in the  Annual  Report on the Form 10-K of CNA
Financial Corporation and subsidiaries for the year ended December 31, 1999.

DELOITTE & TOUCHE LLP
Chicago, Illinois
March 29, 2000

                                       32
<PAGE>
CNA FINANCIAL CORPORATION

CNA PLAZA

CHICAGO, ILLINOIS  60685













G-123177-A (99)
<PAGE>