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CNA Surety Announces First Quarter 2008 Results CHICAGO, April 25, 2008 -- CNA Surety Corporation (NYSE:SUR) today reported net income for the first quarter of 2008 of $22.9 million, or $0.52 per diluted share, compared to $20.7 million, or $0.47 per diluted share, for the same period in 2007. The increase in net income reflects higher earned premium and higher net investment income, partially offset by higher underwriting costs. "We are pleased with our strong results for the first quarter," said John F. Welch, President and Chief Executive Officer. "Our focus on underwriting control and exposure management, along with ongoing expense management, have us well positioned for continued success during these challenging economic times." For the quarter ended March 31, 2008, gross written premiums decreased 1.5% to $116.6 million compared to $118.4 million for the quarter ended March 31, 2007. Contract surety gross written premiums decreased 1.6% to $72.0 million in the first quarter due to moderation of spending in the non-residential and public construction sectors. Commercial surety gross written premiums decreased 1.8% to $35.6 million in the quarter as continued selective underwriting in the large commercial market resulted in lower premium production. Net written premiums decreased slightly to $108.4 million from the first quarter of 2007 as the decrease in written premium discussed above was largely offset by lower reinsurance costs. For the quarter ended March 31, 2008, the loss, expense, and combined ratios improved to 25.3 percent, 53.9 percent, and 79.2 percent, respectively, compared to 25.4 percent, 54.8 percent, and 80.2 percent, respectively, for the same period in 2007. The current ratios reflect the benefits of higher earned premium and lower reinsurance costs. Net investment income for the quarter ended March 31, 2008 was $11.8 million compared to $10.7 million during the first quarter of 2007 due to an increase in invested assets. The annualized pre-tax yields were 4.6% and 4.7% for the three months ended March 31, 2008 and 2007, respectively. As of March 31, 2008, stockholders’ equity increased by 3% from December 31, 2007, to $688.3 million driven by net income in the current quarter. Book value per share increased to $15.59. Combined statutory surplus totaled $464.0 million at March 31, 2008, resulting in an annualized net written premium to statutory surplus ratio of 0.9 to 1. Business Environment The Company’s business is subject to certain risks and uncertainties associated with the current economic environment and corporate credit conditions. In the past, the Company’s performance has been materially impacted by a significant increase in corporate defaults on a worldwide basis. Because the nature of the business is to insure against non-performance, future results of operations could be negatively impacted by adverse trends in corporate defaults. CNA Surety Corporation is the largest publicly traded surety company in the country. Through its principal subsidiary, Western Surety Company, CNA Surety provides surety and fidelity bonds in all 50 states through a combined network of approximately 36,000 independent agencies. The Company’s Securities and Exchange Commission (“SEC”) filings are available at www.sec.gov or visit us at www.cnasurety.com on the World Wide Web for a direct link to the SEC web site. CNA is a registered service mark, trade name and domain name of CNA Financial Corporation. NOTE: A conference call for investors and the professional investment community will be held at 11:00 a.m. (EDT) on April 25, 2008. On the conference call will be John F. Welch, President and Chief Executive Officer of CNA Surety Corporation and John F. Corcoran, Chief Financial Officer of CNA Surety Corporation. The call may be accessed by dialing 877-741-4245. It will also be broadcast live on the Internet or go to the investor relations pages of the CNA Surety web site for further details. The call is available to the media, but questions will be restricted to investors and the professional investment community. A taped replay of the call will be available beginning at 1:00 p.m. (EDT) on April 25th until 1:00 p.m. (EDT) on May 9, 2008 by dialing 888-203-1112, pass code 3510476, or over the Internet at the foregoing web sites. "Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: The statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, product and policy demand and market response risks, the effect of economic conditions, the impact of significant increases in corporate defaults on a national or global basis, the impact of competitive products, policies and pricing, product and policy development, regulatory changes and conditions including underwriting limitations imposed by the U.S. Department of Treasury, rating agency policies and practices, development of claims and the effect on loss reserves, the performance of reinsurance companies under reinsurance contracts with the Company, the cost and availability of reinsurance contracts on reasonable terms, investment portfolio developments and reaction to market conditions, the results of financing efforts, the actual closing of contemplated transactions and agreements, the effect of the Company’s accounting policies, and other risks detailed in the Company’s Securities and Exchange Commission filings. No assurance can be given that the actual results of operations and financial condition will conform to the forward-looking statements contained herein. # # # -- Chart follows -- CNA
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