<PAGE>




                                  $549,000,000


                            CNA FINANCIAL CORPORATION

                              5.85% NOTES DUE 2014








                             UNDERWRITING AGREEMENT












December 8, 2004


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                                                                December 8, 2004




Merrill Lynch, Pierce, Fenner & Smith
           Incorporated
     4 World Financial Center
     New York, New York 10080

Morgan Stanley & Co. Incorporated
     1585 Broadway
     New York, New York 10036


Dear Sirs and Mesdames:

         CNA Financial Corporation, a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "UNDERWRITERS") $549,000,000 principal amount of its 5.85% Notes due
December 15, 2014 (the "SECURITIES") to be issued pursuant to the provisions of
an Indenture dated as of March 1, 1991, between the Company and J. P. Morgan
Trust Company, National Association (formerly known as The First National Bank
of Chicago), as Trustee (the "TRUSTEE"), which was supplemented by the first
supplemental indenture dated as of October 15, 1993 (as so supplemented, the
"BASE INDENTURE"), as supplemented by the second supplemental indenture to be
dated as of December 15, 2004 between the Company and the Trustee (the
"SUPPLEMENTAL INDENTURE" and together with the Base Indenture, the "INDENTURE").

         1. Representations and Warranties. The Company represents and warrants
to and agrees with each of the Underwriters that:

                  (a) A registration statement on Form S-3 with respect to
         various securities of the Company (collectively, the "SHELF
         SECURITIES"), has (i) been prepared by the Company in conformity in all
         material respects with the requirements of the Securities Act of 1933,
         as amended (the "SECURITIES ACT"), and the rules and regulations (the
         "RULES AND REGULATIONS") of the Securities and Exchange Commission (the
         "COMMISSION") thereunder, (ii) been filed with the Commission under the
         Securities Act and (iii) become effective under the Securities Act. The
         registration statement includes a prospectus relating to the Shelf
         Securities. In addition, the Company has filed, or will file within the
         applicable time period set forth in the Rules and Regulations, with the
         Commission, a prospectus supplement specifically relating to the
         Securities pursuant to Rule 424 of the Rules and Regulations. The term

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         "REGISTRATION STATEMENT" means the registration statement as amended to
         the date of this Agreement. The term "BASIC PROSPECTUS" means the
         prospectus included in the Registration Statement. The term
         "PROSPECTUS" means the Basic Prospectus together with the prospectus
         supplement (other than a preliminary prospectus supplement)
         specifically relating to the Securities (the "PROSPECTUS SUPPLEMENT"),
         in the form first used to confirm sales of the Securities. The term
         "PRELIMINARY PROSPECTUS" means a preliminary prospectus supplement
         specifically relating to the Securities, together with the Basic
         Prospectus. As used herein, the terms "REGISTRATION STATEMENT", "BASIC
         PROSPECTUS", "PROSPECTUS" and "PRELIMINARY PROSPECTUS" shall include,
         in each case, the material, if any, incorporated or deemed to be
         incorporated by reference therein; "EFFECTIVE TIME" means the date and
         time as of which the Registration Statement, or the most recent
         post-effective amendment thereto, if any, was declared effective by the
         Commission; "EFFECTIVE DATE" means the date of the Effective Time; and
         the terms "SUPPLEMENT", "AMEND" and "AMENDMENT", as used in this
         Agreement with respect to the Registration Statement or the Prospectus,
         shall include all documents subsequently filed by the Company with the
         Commission pursuant to the Securities Exchange Act of 1934, as amended
         (the "EXCHANGE ACT"), that are deemed to be incorporated by reference
         in the Prospectus. If the Company has filed an abbreviated registration
         statement to register additional Securities pursuant to Rule 462(b)
         under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then
         any reference herein to the term "REGISTRATION STATEMENT" shall be
         deemed to include such Rule 462 Registration Statement. The Commission
         has not issued any order preventing or suspending the use of any
         Preliminary Prospectus.

                  (b) As of the date hereof, when the Prospectus is first filed
         pursuant to Rule 424 under the Securities Act, when, prior to the
         Closing Date (as hereinafter defined), any amendment to the
         Registration Statement becomes effective (including the filing of any
         document incorporated by reference in the Registration Statement)
         (unless the term "Basic Prospectus," "Preliminary Prospectus" or
         "Prospectus", as the case may be, refers to a "Basic Prospectus",
         "Preliminary Prospectus" or "Prospectus", as the case may be, which has
         been provided to the Underwriters by the Company for use in connection
         with the offering of the Securities and which differs from the
         prospectus on file at the Commission at the time the Registration
         Statement becomes effective, in which case at the time it is first
         provided to the Underwriters for such use), when any supplement to the
         Prospectus is filed with the Commission and at the Closing Date, (i)
         the Registration Statement, as amended as of any such time, and the
         Prospectus, as amended or supplemented as of any such time, complied
         and will comply in all material respects with the applicable
         requirements of the Securities Act, and the Exchange Act and the


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         respective Rules and Regulations thereunder and (ii) neither the
         Registration Statement, as amended as of any such time, nor the
         Prospectus, as amended or supplemented as of any such time, contained
         or will contain any untrue statement of a material fact or omitted or
         will omit to state any material fact required to be stated therein or
         necessary to make the statements therein not misleading; provided,
         however, that the Company makes no representations or warranties as to
         (i) that part of the Registration Statement which shall constitute the
         Statement of Eligibility (Form T-1) under the Trust Indenture Act of
         1939, as amended (the "TRUST INDENTURE Act"), of the Trustee or (ii)
         the information contained in or omitted from the Registration Statement
         or the Prospectus or any amendment thereof or supplement thereto in
         reliance upon and in conformity with information furnished in writing
         to the Company by or on behalf of any Underwriter through you
         specifically for use in connection with the preparation of the
         Registration Statement and the Prospectus.

                  (c) The documents incorporated by reference in the Prospectus
         pursuant to Item 12 of Form S-3 under the Securities Act, at the date
         hereof and the Closing Date, complied and will comply in all material
         respects with the requirements of the Exchange Act and the Rules and
         Regulations thereunder; and any documents deemed to be incorporated by
         reference in the Prospectus, at the date hereof and the Closing Date,
         complied and will comply in all respects with the requirements of the
         Exchange Act and the Rules and Regulations thereunder.

                  (d) The Company has been duly incorporated, is validly
         existing as a corporation in good standing under the laws of the
         jurisdiction of its incorporation, has the corporate power and
         authority to own its property and to conduct its business as described
         in the Prospectus and is duly qualified to transact business and is in
         good standing in each jurisdiction in which the conduct of its business
         or its ownership or leasing of property requires such qualification,
         except to the extent that the failure to be so qualified or be in good
         standing would not have a material adverse effect on the Company and
         its subsidiaries, taken as a whole.

                  (e) Each subsidiary of the Company set forth on Schedule II
         hereto (each, a "DESIGNATED SUBSIDIARY" and, collectively, the
         "DESIGNATED SUBSIDIARIES") has been duly incorporated, is validly
         existing as a corporation in good standing under the laws of the
         jurisdiction of its incorporation, has the corporate power and
         authority to own its property and to conduct its business as described
         in the Prospectus and is duly qualified to transact business and is in
         good standing in each jurisdiction in which the conduct of its business
         or its ownership or leasing of property requires such qualification,
         except to the extent that the failure to be so qualified or be in good
         standing would not have a material adverse effect on the Company and
         its subsidiaries, taken as a whole; all


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         of the issued shares of capital stock of each Designated Subsidiary
         owned directly or indirectly by the Company have been duly and validly
         authorized and issued, are fully paid and non-assessable and are owned
         directly or indirectly by the Company, free and clear of all liens,
         encumbrances, equities or claims; for purposes of this Agreement,
         Schedule II hereto includes each subsidiary of the Company that is a
         "significant subsidiary" (as such term is defined in Rule 1-02 of
         Regulation S-X promulgated by the Commission).

                  (f) The authorized capital stock of the Company conforms as to
         legal matters in all material respects to the description thereof
         contained in the Prospectus.

                  (g) This Agreement has been duly authorized, executed and
         delivered by the Company.

                  (h) The Indenture has been duly qualified under the Trust
         Indenture Act of 1939, as amended (the "TRUST INDENTURE ACT"), and has
         been duly authorized, executed and delivered by the Company and is a
         valid and binding agreement of the Company, enforceable in accordance
         with its terms, subject to applicable bankruptcy, insolvency or
         similar laws affecting creditors' rights generally and general
         principles of equity. The Base Indenture conforms, and the
         Supplemental Indenture, when executed and delivered, will conform, in
         all material respects to the description thereof in the Registration
         Statement and Prospectus.

                  (i) The Securities have been duly authorized and, when
         executed and authenticated in accordance with the provisions of the
         Indenture and delivered to and paid for by the Underwriters in
         accordance with the terms of this Agreement, will be entitled to the
         benefits of the Indenture and will be valid and binding obligations of
         the Company, enforceable in accordance with their terms, subject to
         applicable bankruptcy, insolvency or similar laws affecting creditors'
         rights generally and general principles of equity. The Securities, when
         issued, authenticated and delivered, will conform in all material
         respects to the description thereof in the Registration Statement and
         Prospectus.

                  (j) The execution and delivery by the Company of, and the
         performance by the Company of its obligations under, this Agreement
         will not contravene any provision of applicable law or the certificate
         of incorporation or by-laws of the Company or any agreement or other
         instrument binding upon the Company or any of its subsidiaries that is
         material to the Company and its subsidiaries, taken as a whole, or any
         judgment, order or decree of any governmental body, agency or court
         having jurisdiction over the Company or any subsidiary, and no
         consent, approval, authorization or order of, or qualification with,
         any


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         governmental body or agency is required for the performance by the
         Company of its obligations under this Agreement, except such as have
         been obtained under the Securities Act and such as may be required by
         the securities or Blue Sky laws of the various states in connection
         with the offer and sale of the Securities.

                  (k) Since the respective dates as of which information is
         given in the Registration Statement and the Prospectus, except as
         otherwise stated therein, (i) there has been no material adverse change
         in the condition (financial or other), earnings, business or properties
         of the Company and its subsidiaries, taken as a whole, whether or not
         arising from transactions in the ordinary course of business, and (ii)
         there have been no transactions entered into by the Company or any of
         its subsidiaries, other than those in the ordinary course of business,
         which are material with respect to the Company and its subsidiaries,
         taken as a whole.

                  (l) There is no action, suit or proceeding before or by any
         court or governmental agency or body, domestic or foreign, now pending,
         or, to the knowledge of the Company, threatened, against or affecting
         the Company or any of its subsidiaries, which is required to be
         disclosed in the Registration Statement or the Prospectus (other than
         as disclosed therein), or which might, singly or in the aggregate,
         materially and adversely affect the properties or assets thereof or
         which is reasonably likely to materially and adversely affect the
         consummation of the transactions contemplated by this Agreement.

                  (m) Each prospectus filed as part of the Registration
         Statement as originally filed or as part of any amendment thereto, or
         filed pursuant to Rule 424 under the Securities Act, complied when so
         filed in all material respects with the Securities Act and the
         applicable rules and regulations of the Commission thereunder.

                  (n) No holders of securities of the Company have rights to the
         registration of such securities under the Registration Statement.

                  (o) The Company is not, and after giving effect to the
         offering and sale of the Securities and the application of the proceeds
         thereof as described in the Prospectus will not be, required to
         register as an "investment company" as such term is defined in the
         Investment Company Act of 1940, as amended.

                  (p) The Company and its subsidiaries possess all licenses,
         certificates, authorities or permits issued by the appropriate
         governmental or regulatory agencies or bodies necessary to own, lease
         and operate their respective properties and to carry on their
         respective businesses as


                                       5
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         presently conducted and which are material to the Company and its
         subsidiaries considered as one enterprise.

                  (q) There are no contracts, agreements or understandings
         between the Company and any person granting such person the right to
         require the Company to file a registration statement under the
         Securities Act with respect to any securities of the Company or to
         require the Company to include such securities with the Securities
         registered pursuant to the Registration Statement.

                  (r) The Company and its Designated Subsidiaries have good and
         marketable title in fee simple to all real property and good and
         marketable title to all personal property owned by them, in each case
         free and clear of all liens, encumbrances and defects except such as
         are described in the Prospectus or would not, singly or in the
         aggregate, have a material adverse effect on the Company and its
         subsidiaries, taken as a whole; and any real property and buildings
         held under lease by the Company and its subsidiaries are held by them
         under valid, subsisting and enforceable leases except such as are
         described in the Prospectus or would not, singly or in the aggregate,
         have a material adverse effect on the Company and its subsidiaries,
         taken as a whole.

                  (s) The Company and its Designated Subsidiaries own or
         possess, or can acquire on reasonable terms, all material patents,
         patent rights, licenses, inventions, copyrights, know-how (including
         trade secrets and other unpatented and/or unpatentable proprietary or
         confidential information, systems or procedures), trademarks, service
         marks and trade names currently employed by them in connection with the
         business now operated by them, except where the failure to so own,
         possess or be able to acquire on reasonable terms would not, singly or
         in the aggregate, have a material adverse effect on the Company and its
         subsidiaries, taken as a whole, and neither the Company nor any of its
         subsidiaries has received any notice of infringement of or conflict
         with asserted rights of others with respect to any of the foregoing
         which, singly or in the aggregate, would have a material adverse effect
         on the Company and its subsidiaries, taken as a whole.

                  (t) No labor dispute with the employees of the Company or any
         of its subsidiaries exists, except as described in the Prospectus, or,
         to the knowledge of the Company, is imminent, except where such
         dispute would not, singly or in the aggregate, have a material adverse
         effect on the Company and its subsidiaries, taken as a whole.

                  (u) Each Designated Subsidiary of the Company that is engaged
         in the business of insurance or reinsurance (each an "INSURANCE
         SUBSIDIARY", collectively the "INSURANCE SUBSIDIARIES") is licensed or


                                       6
<PAGE>


         authorized to conduct an insurance or reinsurance business, as the
         case may be, under the insurance statutes of each jurisdiction in
         which the conduct of its business requires such licensing or
         authorization, except for such jurisdictions in which the failure of
         the Insurance Subsidiary to be so licensed or authorized would not,
         singly or in the aggregate, have a material adverse effect on the
         Company and its subsidiaries, taken as a whole. The Company and the
         Insurance Subsidiaries have made all required filings under applicable
         insurance statutes in each jurisdiction where such filings are
         required, except for such filings the failure of which to make would
         not, singly or in the aggregate, have a material adverse effect on the
         Company and its subsidiaries, taken as a whole. Each of the Insurance
         Subsidiaries has all other necessary authorizations, approvals,
         orders, consents, certificates, permits, registrations and
         qualifications ("AUTHORIZATIONS"), of and from all insurance
         regulatory authorities necessary to conduct their respective existing
         businesses as described in the Prospectus, except where the failure to
         have such Authorizations would not, singly or in the aggregate, have a
         material adverse effect on the Company and its subsidiaries, taken as
         a whole, and no Insurance Subsidiary has received any notification
         from any insurance regulatory authority to the effect that any
         additional Authorizations are needed to be obtained by any Insurance
         Subsidiary in any case where it could reasonably be expected that the
         failure to obtain such additional Authorizations or the limiting of
         the writing of such business would have a material adverse effect on
         the Company and its subsidiaries, taken as a whole, and, except as
         described in the Prospectus, no insurance regulatory authority having
         jurisdiction over any Insurance Subsidiary has issued any order or
         decree impairing, restricting or prohibiting (i) the payment of
         dividends by any Insurance Subsidiary to its parent, other than those
         restrictions applicable to insurance or reinsurance companies under
         such jurisdiction generally or imposed in connection with the
         Reorganization and contemplated in the Prospectus, or (ii) the
         continuation of the business of the Company or any of the Insurance
         Subsidiaries in all material respects as presently conducted, in each
         case except where such orders or decrees would not, singly or in the
         aggregate, have a material adverse effect on the Company and its
         subsidiaries, taken as a whole.

                  (v) Except as described in the Prospectus, (i) all ceded
         reinsurance and retrocessional treaties, contracts, agreements and
         arrangements ("REINSURANCE Contracts") to which the Company or any
         Insurance Subsidiary is a party and as to which any of them reported
         recoverables, premiums due or other amounts in its most recent
         statutory financial statements are in full force and effect, except
         where the failure of such Reinsurance Contracts to be in full force
         and effect would not, singly or in the aggregate, have a material
         adverse effect on the Company and its subsidiaries, taken as a whole,
         and (ii) neither the Company nor any


                                       7
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         Reinsurance Subsidiary has received any notice from any other party to
         any Reinsurance Contract that such other party intends not to perform
         such Reinsurance Contract in any material respect, and the Company has
         no knowledge that any of the other parties to such Reinsurance
         Contracts will be unable to perform its obligations thereunder in any
         material respect, except where (A) the Company or the Insurance
         Subsidiary has established reserves in its financial statements which
         it deems adequate for potential uncollectible reinsurance or (B) such
         nonperformance would not have a material adverse effect on the Company
         and its subsidiaries, taken as a whole.

                  (w)  Except as described in the Prospectus, the Company has no
         knowledge of any threatened or pending downgrading of the Company's or
         any of its subsidiaries' claims-paying ability rating or financial
         strength rating by A.M. Best Company, Inc., Standard & Poor's Rating
         Group, Moody's Investor Service, Inc., Fitch Ratings, Ltd. or any
         other "nationally recognized statistical rating organizations," as
         such term is defined for purposes of Rule 436(g)(2) under the
         Securities Act, which currently has publicly released a rating of the
         claims-paying ability or financial strength of the Company or any
         subsidiary.

                  (x) The Company and each of its Designated Subsidiaries
         maintain a system of internal accounting controls sufficient to
         provide reasonable assurance that (i) transactions are executed in
         accordance with management's general or specific authorizations; (ii)
         transactions are recorded as necessary to permit preparation of
         financial statements in conformity with generally accepted accounting
         principles and to maintain asset accountability; (iii) access to
         assets is permitted only in accordance with management's general or
         specific authorization; and (iv) the recorded accountability for
         assets is compared with the existing assets at reasonable intervals
         and appropriate action is taken with respect to any differences.

                  (y) The statements set forth in the Basic Prospectus under
         the caption "Description of the Debt Securities" and set forth in the
         Prospectus Supplement under the caption "Description of Notes", insofar
         as they purport to constitute a summary of the terms of the Securities,
         in each case insofar as they purport to describe the provisions of the
         laws and documents referred to therein, fairly summarize in all
         material respects the matters described therein.

                  (z) Deloitte & Touche LLP, whose report is included in the
         Prospectus, is an independent certified public accountant with respect
         to the Company and its combined subsidiaries within the meaning of the
         Securities Act and the rules and regulations adopted by the Commission
         thereunder. The financial statements of the Company and its combined
         subsidiaries (including the related notes and supporting schedules)


                                       8
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         included in the Registration Statement and the Prospectus present
         fairly in all material respects the financial condition, results of
         operations and cash flows of the entities purported to be shown
         thereby at the dates and for the periods indicated and have been
         prepared in accordance with United States generally accepted
         accounting principles applied on a consistent basis throughout the
         periods indicated and conform in all material respects with the Rules
         and Regulations under the Securities Act; and the supporting schedules
         included in the Registration Statement present fairly in all materials
         respects the information required to be stated therein.

                  (aa) The statutory financial statements of the Insurance
         Subsidiaries, from which certain ratios and other statistical data
         included or incorporated by reference in the Registration Statement
         have been derived have for each relevant period been prepared in
         conformity with statutory accounting practices required or permitted by
         the insurance laws of their respective states of domicile, and the
         rules and regulations promulgated thereunder, and such statutory
         accounting practices have been applied on a consistent basis throughout
         the periods involved, except as may otherwise be indicated therein or
         in the notes thereto.

         2. Agreements to Sell and Purchase. The Company hereby agrees to sell
to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective principal amounts of Securities set forth in Schedule I
hereto opposite its name at 99.325% of their principal amount plus accrued
interest, if any, from December 15, 2004 to the date of payment and delivery.

         During the period beginning on the date hereof and continuing to and
including the Closing Date, the Company hereby agrees not to offer, sell,
contract to sell or otherwise dispose of any debt securities of the Company or
warrants to purchase or otherwise acquire debt securities of the Company
substantially similar to the Securities (other than the Securities and
commercial paper issued in the ordinary course of business), without your prior
written consent on behalf of the Underwriters.

         3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Securities as soon after the effective date of this Agreement as in your
judgment is advisable. The Company is further advised by you that the Securities
are to be offered to the public initially at 99.925% of their principal amount
(the "PUBLIC OFFERING PRICE") plus accrued interest, if any, from December 15,
2004 to the date of payment and delivery and to certain dealers selected by you
at a price that represents a concession not in excess of 0.35% of their
principal amount, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in


                                       9
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excess of 0.25% of their principal amount, to any Underwriter or to certain
other dealers.

         4. Payment and Delivery. Payment for the Securities shall be made to
the Company in Federal or other funds immediately available in New York City
against delivery of the Securities for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on December 15, 2004, or at such
other time on the same or such other date, not later than December 17, 2004, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "CLOSING DATE." Securities shall be registered in
such names and in such denominations as you shall request in writing not less
than two full business days prior to the Closing Date, with any transfer taxes
payable in connection with the transfer of the Securities to the Underwriters
duly paid.

         5. Conditions to the Underwriters' Obligations. The obligations of the
Underwriters to purchase the Underwriters' Securities shall be subject to the
accuracy of the representations and warranties on the part of the Company
contained herein as of the date hereof, as of the date of the effectiveness of
any amendment to the Registration Statement filed prior to the Closing Date
(including the filing of any document incorporated by reference therein) and as
of the Closing Date, to the accuracy of the statements of the Company made in
any certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:

                  (a) No stop order suspending the effectiveness of the
         Registration Statement, as amended from time to time, shall have been
         issued and no proceedings for that purpose shall have been instituted
         or threatened; and the Prospectus shall have been filed with the
         Commission pursuant to Rule 424 not later than 5:30 p.m., New York City
         time, on the business day following the date hereof.

                  (b)  Subsequent to the execution and delivery of this
         Agreement and prior to the Closing Date:

                           (i) there shall not have occurred any downgrading,
                  nor shall any notice have been given of any intended or
                  potential downgrading or of any review for a possible change
                  that does not indicate the direction of the possible change,
                  in the rating accorded any of the Company's securities or
                  the Company's financial strength or claims paying ability by
                  A.M. Best Company, Inc., Standard & Poor's Rating Group,
                  Moody's Investor Service, Inc., Fitch Ratings, Ltd. or any
                  other "nationally recognized statistical rating organization,"
                  as such term is defined for purposes of Rule 436(g)(2) under
                  the Securities Act; and


                                       10
<PAGE>



                           (ii)there shall not have occurred any change, or any
                  development involving a prospective change, in the condition,
                  financial or otherwise, or in the earnings, business or
                  properties of the Company and its subsidiaries, taken as a
                  whole, from that set forth in the Prospectus (exclusive of
                  any amendments or supplements thereto subsequent to the date
                  of this Agreement) that, in your judgment, is material and
                  adverse and that makes it, in your judgment, impracticable to
                  market the Securities on the terms and in the manner
                  contemplated in the Prospectus.

                  (c) The Underwriters shall have received on the Closing Date a
         certificate, dated the Closing Date and signed by an executive officer
         of the Company, to the effect set forth in Section 5(b)(i) above and
         to the effect that the representations and warranties of the Company
         contained in this Agreement are true and correct as of the Closing
         Date and that the Company has complied with all of the agreements and
         satisfied all of the conditions on its part to be performed or
         satisfied hereunder on or before the Closing Date.

         The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.

                  (d) The Underwriters shall have received on the Closing Date
         an opinion of Jonathan D. Kantor, Executive Vice President, General
         Counsel and Secretary for the Company, dated the Closing Date, to the
         effect that:

                           (i) the Company has been duly incorporated, is
                  validly existing as a corporation in good standing under the
                  laws of the jurisdiction of its incorporation, has the
                  corporate power and authority to own its property and to
                  conduct its business as described in the Prospectus and is
                  duly qualified to transact business and is in good standing
                  in each jurisdiction in which the conduct of its business or
                  its ownership or leasing of property requires such
                  qualification, except to the extent that the failure to be so
                  qualified or be in good standing would not have a material
                  adverse effect on the Company and its subsidiaries, taken as
                  a whole;

                           (ii) each Designated Subsidiary has been duly
                  incorporated and is validly existing as an insurance company
                  (other than The Continental Corporation, which is validly
                  existing as a New York business corporation) and is authorized
                  to transact its appropriate business under the insurance code
                  of its domiciliary state, with full corporate power and
                  authority to own its properties and conduct its business as
                  described in the Final


                                       11
<PAGE>

                  Prospectus, and is duly licensed to do business as a foreign
                  insurer and is authorized to transact its appropriate business
                  under the laws of each jurisdiction which requires such
                  licensure wherein it owns or leases material properties or
                  conducts material business where the failure to be so licensed
                  would materially and adversely affect the business or
                  properties of the Company and its subsidiaries taken as a
                  whole;

                           (iii) all the outstanding shares of capital stock of
                  each Designated Subsidiary have been duly and validly
                  authorized and issued and are fully paid and nonassessable,
                  and, except as otherwise set forth in the Final Prospectus,
                  all outstanding shares of capital stock of the Designated
                  Subsidiaries are owned by the Company either directly or
                  through wholly owned subsidiaries (except for CNA Surety
                  Corporation, of which the Company owns 64%) free and clear of
                  any perfected security interest and, to the knowledge of such
                  counsel, after due inquiry, any other security interests,
                  claims, liens or encumbrances;

                           (iv) this Agreement has been duly authorized,
                  executed and delivered by the Company;

                           (v) the execution and delivery by the Company of, and
                  the performance by the Company of its obligations under, this
                  Agreement will not contravene any provision of applicable law
                  or the certificate of incorporation or by-laws of the Company
                  or, to the best of such counsel's knowledge, any agreement or
                  other instrument binding upon the Company or any of its
                  subsidiaries that is material to the Company and its
                  subsidiaries, taken as a whole, or, to the best of such
                  counsel's knowledge, any judgment, order or decree of any
                  governmental body, agency or court having jurisdiction over
                  the Company or any subsidiary, and no consent, approval,
                  authorization or order of, or qualification with, any
                  governmental body or agency is required for the performance by
                  the Company of its obligations under this Agreement, except
                  such as have been obtained under the Securities Act and such
                  as may be required by the securities or Blue Sky laws of the
                  various states in connection with the offer and sale of the
                  Securities and such other approvals as have been obtained;

                           (vi) there is no pending or, to the best knowledge of
                  such counsel, threatened, action, suit or proceeding before
                  any court or governmental agency, authority or body or any
                  arbitrator involving the Company or any of its subsidiaries,
                  of a character required to be disclosed in the Registration
                  Statement which is not adequately disclosed in the Prospectus,
                  and there is no franchise,


                                       12
<PAGE>



                  contract or other document of a character required to be
                  described in the Registration Statement or Prospectus, or to
                  be filed as an exhibit, which is not described or filed as
                  required; and the statements included or incorporated in the
                  Prospectus describing any legal proceedings or material
                  contracts or agreements relating to the Company or any of its
                  subsidiaries fairly summarize such matters in all material
                  respects;

                           (vii) no holders of securities of the Company have
                  rights to the registration of such securities under the
                  Registration Statement;

                           (viii) the Company is not, and after giving effect to
                  the offering and sale of the Securities and the application of
                  the proceeds thereof as described in the Prospectus will not
                  be, required to register as an "investment company" as such
                  term is defined in the Investment Company Act of 1940, as
                  amended;

                           (ix) the Registration Statement and any amendments
                  thereto have become effective under the Securities Act; to the
                  best knowledge of such counsel, no stop order suspending the
                  effectiveness of the Registration Statement has been issued,
                  no proceedings for that purpose have been instituted or
                  threatened, and the Registration Statement, the Prospectus and
                  each amendment thereof or supplement thereto as of their
                  respective effective or issue dates (other than the financial
                  statements and other financial information contained therein
                  and in the Form T-1, as to which such counsel need express no
                  opinion) complied as to form in all material respects with the
                  applicable requirements of the Securities Act and the Exchange
                  Act and the respective rules and regulations thereunder; and

                           (x) (A) in the opinion of such counsel, (1) each
                  document filed pursuant to the Exchange Act and incorporated
                  by reference in the Registration Statement and the Prospectus
                  (except for the financial statements and financial schedules
                  and other financial data included therein and in the Form T-1,
                  as to which such counsel need not express any opinion) appears
                  on its face to be appropriately responsive in all material
                  respects with the requirements of the Exchange Act and the
                  applicable rules and regulations of the Commission thereunder,
                  and (2) the Registration Statement or the Prospectus (except
                  for the financial statements and financial schedules and other
                  financial data included therein and in the Form T-1, as to
                  which such counsel need not express any opinion) appear on
                  their face to be appropriately responsive in all material
                  respects with the


                                       13
<PAGE>


                  requirements of the Securities Act and the applicable rules
                  and regulations of the Commission thereunder, and (B) nothing
                  has come to the attention of such counsel that causes such
                  counsel to believe that (1) the Registration Statement or the
                  prospectus included therein (except for the financial
                  statements and financial schedules and other financial data
                  included therein and in the Form T-1, as to which such counsel
                  need not express any opinion) at the time the Registration
                  Statement became effective contained an untrue statement of a
                  material fact or omitted to state a material fact required to
                  be stated therein or necessary to make the statements therein
                  not misleading or (2) the Prospectus (except for the financial
                  statements and financial schedules and other financial data
                  included therein and in the Form T-1, as to which such counsel
                  need not express any opinion) as of its date or as of the
                  Closing Date contained or contains an untrue statement of a
                  material fact or omitted or omits to state a material fact
                  necessary in order to make the statements therein, in the
                  light of the circumstances under which they were made, not
                  misleading.

         With respect to Section 5(d)(x) above, Jonathan D. Kantor may state
that his beliefs are based upon his participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
and documents incorporated therein by reference and review and discussion of the
contents thereof, but are without independent check or verification, except as
specified.

                  (e) The Underwriters shall have received on the Closing Date
         an opinion of Mayer, Brown, Rowe & Maw LLP, outside counsel for the
         Company, dated the Closing Date, to the effect that:

                           (i) the Company has been duly incorporated, is
                  validly existing as a corporation in good standing under the
                  laws of the jurisdiction of its incorporation;

                           (ii) the authorized capital stock of the Company
                  conforms as to legal matters in all material respects to the
                  description thereof contained in the Prospectus;

                           (iii) the Securities and the Indenture conform in all
                  material respects to the descriptions thereof contained in the
                  Prospectus;

                           (iv) the Indenture has been duly authorized, executed
                  and delivered, has been duly qualified under the Trust
                  Indenture Act, and constitutes a legal, valid and binding
                  agreement of the Company, enforceable against the Company in
                  accordance with


                                       14
<PAGE>



                  its terms (except that, (A) the enforceability thereof may be
                  subject to bankruptcy, insolvency, reorganization, moratorium
                  or other similar laws, now or hereafter in effect, relating to
                  creditors' rights generally and (B) the remedy of specific
                  performance and injunctive and other forms of equitable relief
                  may be subject to equitable defenses and to the discretion of
                  the court before which any proceeding therefor may be
                  brought);

                           (v) the Securities have been duly authorized and,
                  when executed and authenticated in accordance with the
                  provisions of the Indenture and delivered to and paid for by
                  the Underwriters pursuant to this Agreement will constitute
                  legal, valid and binding obligations of the Company entitled
                  to the benefits of the Indenture (except that, (A) the
                  enforceability thereof may be subject to bankruptcy,
                  insolvency, reorganization, moratorium or other similar laws,
                  now or hereafter in effect, relating to creditors' rights
                  generally and (B) the remedy of specific performance and
                  injunctive and other forms of equitable relief may be subject
                  to equitable defenses and to the discretion of the court
                  before which any proceeding therefor may be brought);

                           (vi)this Agreement has been duly authorized, executed
                  and delivered by the Company;

                           (vii) the execution and delivery by the Company of,
                  and the performance by the Company of its obligations under,
                  this Agreement will not contravene any provision of applicable
                  law or the certificate of incorporation or by-laws of the
                  Company, and no consent, approval, authorization or order of,
                  or qualification with, any governmental body or agency is
                  required for the performance by the Company of its obligations
                  under this Agreement, except such as may be required by the
                  securities or Blue Sky laws of the various states in
                  connection with the offer and sale of the Securities;

                           (viii) the statements relating to legal matters,
                  documents or proceedings included in the Basic Prospectus
                  under the caption "Description of the Debt Securities," and in
                  the Prospectus Supplement under the caption "Description of
                  Notes," in each case fairly summarize in all material respects
                  such matters, documents or proceedings;

                           (ix) the Company is not, and after giving effect to
                  the offering and sale of the Securities and the application of
                  the proceeds thereof as described in the Prospectus will not
                  be,


                                       15
<PAGE>
                   required to register as an "investment company" as such term
                   is defined in the Investment Company Act of 1940, as amended;

                                 (x) the Registration Statement and any
                   amendments thereto have become effective under the Securities
                   Act; to the knowledge of such counsel, no stop order
                   suspending the effectiveness of the Registration Statement,
                   as amended, has been issued, no proceedings for that purpose
                   have been instituted or threatened, and the Registration
                   Statement, the Prospectus and each amendment thereof or
                   supplement thereto as of their respective effective or issue
                   dates (other than the financial statements and other
                   financial information contained therein and in the Form T-1,
                   as to which such counsel need express no opinion) complied as
                   to form in all material respects with the applicable
                   requirements of the Securities Act and the Exchange Act and
                   the respective rules and regulations thereunder; and

                                 (xi)(A) in the opinion of such counsel, the
                   Registration Statement or the Prospectus (except for the
                   financial statements and financial schedules and other
                   financial data included therein and in the Form T-1, as to
                   which such counsel need not express any opinion) appear on
                   their face to be appropriately responsive in all material
                   respects with the requirements of the Securities Act and the
                   applicable rules and regulations of the Commission
                   thereunder, and (B) nothing has come to the attention of such
                   counsel that causes such counsel to believe that (1) the
                   Registration Statement or the prospectus included therein
                   (except for the financial statements and financial schedules
                   and other financial data included therein and in the Form
                   T-1, as to which such counsel need not express any opinion)
                   at the time the Registration Statement became effective
                   contained an untrue statement of a material fact or omitted
                   to state a material fact required to be stated therein or
                   necessary to make the statements therein not misleading or
                   (2) the Prospectus (except for the financial statements and
                   financial schedules and other financial data included
                   therein, as to which such counsel need not express any
                   opinion) as of its date or as of the Closing Date contained
                   or contains an untrue statement of a material fact or omitted
                   or omits to state a material fact necessary in order to make
                   the statements therein, in the light of the circumstances
                   under which they were made, not misleading.

                   With respect to Section 5(e)(xi) above, Mayer, Brown, Rowe &
         Maw LLP may state that their beliefs are based upon their participation
         in the preparation of the Registration Statement and Prospectus and any
         amendments or supplements thereto (other than the documents


                                       16
<PAGE>

         incorporated by reference) and upon review and discussion of the
         contents thereof (including documents incorporated by reference), but
         are without independent check or verification, except as specified.

                  The opinion of Mayer, Brown, Rowe & Maw LLP shall be rendered
         to the Underwriters at the request of the Company and shall so state
         therein.

                      (f) The Underwriters shall have received on the Closing
         Date an opinion of Davis Polk & Wardwell, counsel for the Underwriters,
         dated the Closing Date, in form and substance reasonably satisfactory
         to the Underwriters.

                      (g) The Underwriters shall have received, on each of the
         date hereof and the Closing Date, a letter dated the date hereof or the
         Closing Date, as the case may be, in form and substance satisfactory to
         the Underwriters, from Deloitte & Touche LLP, independent public
         accountants, containing statements and information of the type
         ordinarily included in accountants' "comfort letters" to underwriters
         with respect to the financial statements and certain financial
         information contained in or incorporated by reference into the
         Registration Statement and the Prospectus; provided that the letter
         delivered on the Closing Date shall use a "cut-off date" not earlier
         than the date hereof.

         6. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:

                      (a) To furnish to you, without charge, one conformed copy
         of the Registration Statement (including exhibits thereto) and for
         delivery to each other Underwriter a conformed copy of the Registration
         Statement (without exhibits thereto) and to furnish to you in New York
         City, without charge, prior to 10:00 a.m. New York City time on the
         second business day next succeeding the date of this Agreement and
         during the period mentioned in Section 6(c) below, as many copies of
         the Prospectus and any supplements and amendments thereto or to the
         Registration Statement as you may reasonably request.

                      (b) Until the earlier of (X) the termination of the
         offering of the Securities, and (Y) six months from the date of this
         Agreement, the Company will not file any amendment (other than
         amendments resulting from the filing of the documents incorporated by
         reference pursuant to Item 12 of Form S-3 under the Securities Act) of
         the Registration Statement or supplement (including the Prospectus) to
         the Basic Prospectus unless the Company has furnished you a copy for
         your review prior to filing and will not file any such proposed
         amendment or



                                       17
<PAGE>


         supplement to which you reasonably object in writing. Subject to the
         foregoing sentence, the Company will cause the Prospectus to be filed
         with the Commission pursuant to Rule 424. The Company will promptly
         advise you (A) when the Prospectus shall have been filed with the
         Commission pursuant to Rule 424, (B) when any amendment to the
         Registration Statement relating to the Securities shall have become
         effective, (C) of any request by the Commission for any amendment of
         the Registration Statement or amendment of or supplement to the
         Prospectus or for any additional information, (D) of the issuance by
         the Commission of any stop order suspending the effectiveness of the
         Registration Statement or the institution or threatening of any
         proceeding for that purpose and (E) of the receipt by the Company of
         any notification with respect to the suspension of the qualification of
         the Securities for sale in any jurisdiction or the initiation or
         threatening of any proceeding for such purpose. The Company will use
         its best efforts to prevent the issuance of any such stop order and, if
         issued, to obtain as soon as possible the withdrawal thereof.

                      (c) If, during such period after the first date of the
         public offering of the Securities as in the reasonable opinion of
         counsel for the Underwriters the Prospectus is required by law to be
         delivered in connection with sales by an Underwriter or dealer, any
         event shall occur or condition exist as a result of which it is
         necessary to amend or supplement the Prospectus in order to make the
         statements therein, in the light of the circumstances when the
         Prospectus is delivered to a purchaser, not misleading, or if, in the
         reasonable opinion of counsel for the Underwriters, it is necessary to
         amend or supplement the Prospectus to comply with applicable law,
         forthwith to prepare, file with the Commission and furnish, at its own
         expense, to the Underwriters and to the dealers (whose names and
         addresses you will furnish to the Company) to which Securities may have
         been sold by you on behalf of the Underwriters and to any other dealers
         upon request, either amendments or supplements to the Prospectus so
         that the statements in the Prospectus as so amended or supplemented
         will not, in the light of the circumstances when the Prospectus is
         delivered to a purchaser, be misleading or so that the Prospectus, as
         amended or supplemented, will comply with law.

                      (d) To endeavor to qualify the Securities for offer and
         sale under the securities or Blue Sky laws of such jurisdictions as you
         shall reasonably request; provided, however, the Company shall not be
         obligated to file any general consent to service of process under the
         laws of any such jurisdiction, subject itself to taxation as doing
         business in any such jurisdiction, or qualify to do business as a
         foreign corporation in any such jurisdiction. The Company will pay all
         expenses (including fees and disbursements of counsel) in connection
         with such qualification (such expenses, fees and disbursements not to
         exceed in the aggregate $5,000).


                                       18

<PAGE>
                      (e) To make generally available to the Company's security
         holders and to you as soon as practicable an earning statement covering
         the twelve-month period ending December 31, 2005 that satisfies the
         provisions of Section 11(a) of the Securities Act and the rules and
         regulations of the Commission thereunder.

                      (f) Whether or not the transactions contemplated in this
         Agreement are consummated or this Agreement is terminated, to pay or
         cause to be paid all expenses incident to the performance of its
         obligations under this Agreement, including: (i) the fees,
         disbursements and expenses of the Company's counsel and the Company's
         accountants in connection with the registration and delivery of the
         Securities under the Securities Act and all other fees or expenses in
         connection with the preparation and filing of the Registration
         Statement, any preliminary prospectus, the Prospectus and amendments
         and supplements to any of the foregoing, including all printing costs
         associated therewith, and the mailing and delivering of copies thereof
         to the Underwriters and dealers, in the quantities hereinabove
         specified, (ii) all costs and expenses related to the transfer and
         delivery of the Securities to the Underwriters, including any transfer
         or other taxes payable thereon, (iii) the cost of printing or producing
         any Blue Sky or Legal Investment memorandum in connection with the
         offer and sale of the Securities under state securities laws and all
         expenses in connection with the qualification of the Securities for
         offer and sale under state securities laws as provided in Section 6(d)
         hereof, including filing fees and the reasonable fees and disbursements
         of counsel for the Underwriters in connection with such qualification
         and in connection with the Blue Sky or Legal Investment memorandum (not
         to exceed $5,000), (iv) all filing fees and the reasonable fees and
         disbursements of counsel to the Underwriters incurred in connection
         with the review and qualification of the offering of the Securities by
         the National Association of Securities Dealers, Inc., (v) the cost of
         printing certificates representing the Securities, (vi) the costs and
         charges of any transfer agent, registrar or depositary, (vii) the costs
         and expenses of the Company relating to investor presentations on any
         "road show" undertaken in connection with the marketing of the offering
         of the Securities, including, without limitation, expenses associated
         with the production of road show slides and graphics, fees and expenses
         of any consultants engaged in connection with the road show
         presentations with the prior approval of the Company, travel and
         lodging expenses of the representatives and officers of the Company and
         any such consultants, and the Company's proportionate share of the cost
         of any aircraft chartered in connection with the road show, (viii) the
         expenses associated with printing this Agreement and (ix) all other
         costs and expenses incident to the performance of the obligations of
         the Company hereunder for which provision is not otherwise made in this
         Section. It is understood, however, that except as provided in this


                                       19
<PAGE>


         Section, Section 7 entitled "Indemnity and Contribution", and the last
         paragraph of Section 9 below, the Underwriters will pay all of their
         costs and expenses, including fees and disbursements of their counsel,
         stock transfer taxes payable on resale of any of the Securities by them
         and any advertising expenses connected with any offers they may make.

         7. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter, each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act and each of its officers,
directors, employees, agents and representatives from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein; provided, however, that, in connection with any loss,
claim, damage or liability arising from any untrue statement or omission or
alleged untrue statement or omission contained in any Preliminary Prospectus,
this indemnity agreement shall not inure to the benefit of any Underwriter with
respect to the sale of the Securities to any person by that Underwriter if that
Underwriter failed to send or give a copy of the Prospectus, as the same may be
amended or supplemented, to that person within the time required by the
Securities Act, and the untrue statement or omission or alleged untrue statement
or omission contained in such Preliminary Prospectus was eliminated or corrected
in the final Prospectus.

         (b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto.

         (c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be


                                       20
<PAGE>

sought pursuant to Section 7(a) or 7(b), such person (the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by you, in the case of parties indemnified pursuant to
Section 7(a), and by the Company, in the case of parties indemnified pursuant to
Section 7(b). The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.

         (d) To the extent the indemnification provided for in Section 7(a) or
7(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder,

                                       21
<PAGE>


shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the offering of the
Securities or (ii) if the allocation provided by clause 7(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 7(d)(i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Securities (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Securities. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the respective number of
Securities they have purchased hereunder, and not joint.

         (e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 7(d). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this


                                       22
<PAGE>



Section 7 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.

         (f) The indemnity and contribution provisions contained in this Section
7 and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter, any person controlling any Underwriter or
any affiliate of any Underwriter or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Securities.

         8. Termination. The Underwriters may terminate this Agreement by notice
given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
material disruption in securities settlement, payment or clearance services in
the United States shall have occurred, (iv) any moratorium on commercial banking
activities shall have been declared by Federal or New York State authorities or
(v) there shall have occurred any outbreak or escalation of hostilities, or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and which, singly or together with any other event
specified in this clause (v), makes it, in your judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Securities on the
terms and in the manner contemplated in the Prospectus.

         9. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.

         If, on the Closing Date, any one or more of the Underwriters shall fail
or refuse to purchase Securities that it has or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Securities which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase is not more than one-tenth of the aggregate principal amount of the
Securities to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the principal amount of Securities
set forth opposite their respective names in Schedule I bears to the principal
amount of Securities set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase on such date; provided that in no event shall the
principal amount of Securities that any Underwriter has agreed to purchase
pursuant to this Agreement be increased



                                       23
<PAGE>


pursuant to this Section by an amount in excess of one-ninth of such principal
amount of Securities without the written consent of such Underwriter. If, on the
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Securities and the aggregate principal amount of Securities with respect to
which such default occurs is more than one-tenth of the aggregate principal
amount of Securities to be purchased on such date, and arrangements satisfactory
to you and the Company for the purchase of such Securities are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.

         If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the reasonable fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder.

         10. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

         11. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.

         12. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.



                                       24
<PAGE>



                                        Very truly yours,

                                        CNA FINANCIAL CORPORATION


                                        By:  /s/ Robert M. Mann
                                             -----------------------------------
                                             Name:  Robert M. Mann
                                             Title: Senior Vice President


Accepted as of the date hereof

Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Morgan Stanley & Co. Incorporated

Acting severally on behalf of themselves
      and the several Underwriters named
      in Schedule I hereto.

By:      Merrill Lynch, Pierce, Fenner &
         Smith Incorporated


By:      /s/ Scott G. Primrose
         ---------------------------------------------
         Name:  Scott G. Primrose
         Title: Authorized Signatory


By:      Morgan Stanley & Co. Incorporated


By:      /s/ Michael Fusco
         ---------------------------------------------
         Name:  Michael Fusco
         Title: Executive Director



<PAGE>

                                                                      SCHEDULE I

<TABLE>
<CAPTION>
                                                                                   PRINCIPAL AMOUNT OF
                                                                                     SECURITIES TO BE
                UNDERWRITER                                                             PURCHASED
-------------------------------------------------------                            --------------------
<S>                                                                                <C>
Merrill Lynch, Pierce, Fenner & Smith                                                  $ 219,600,000
                    Incorporated...............................
Morgan Stanley & Co. Incorporated..............................                          219,600,000
Lehman Brothers Inc............................................                           54,900,000
UBS Securities LLC.............................................                           54,900,000
         Total:................................................                        $ 549,000,000
                                                                                       =============
</TABLE>


<PAGE>




                                                                     SCHEDULE II


                         LIST OF DESIGNATED SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                  JURISDICTION OF
          DESIGNATED SUBSIDIARY                                    INCORPORATION
-------------------------------------------------                 ---------------
<S>                                                               <C>
American Casualty Company of Reading, Pennsylvania                  Pennsylvania

CNA Insurance Company (Europe) Ltd.                                 United Kingdom

CNA Surety Corporation                                              Delaware

Continental Assurance Company                                       Illinois

Continental Casualty Company                                        Illinois

Continental Insurance Company of Newark, New Jersey                 New Jersey

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

National Fire Insurance Company of Hartford                         Connecticut

The Buckeye Union Insurance Company                                 Ohio

The Continental Insurance Company                                   South Carolina

The Continental Corporation                                         New York

The Glens Falls Insurance Company                                   Delaware

Transcontinental Insurance Company                                  New York
</TABLE>