CNA Financial Corp., the commercial insurance unit of Loews Corp., restated three years of results and lowered its net worth by $29 million to correct accounting for reinsurance with a former Bermuda-based affiliate. The correction will increase 2004 net income by $5 million, trim net losses in 2003 by $14 million and add $16 million to 2002 net income, the Chicago-based company said today in a statement. CNA said the contracts didn?t transfer risk and should have been treated as financing, not insurance.

Reinsurance accounting has come under scrutiny in a joint investigation by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission, and has led to corrections by companies including American International Group Inc., the world?s largest insurer, and MBIA Inc. CNA is one of at least 11 companies to receive subpoenas. ?It?s a very, very minor restatement,? said Eli Rabinowich, an analyst at Pzena Investment Management in New York, which manages more than $11 billion, including 4.6 million shares of Loews. The correction equals about 0.3 percent of CNA?s net worth, or assets minus liabilities.

The insurer said today that ?it is possible? that an exam by state insurance regulators may require CNA to correct additional reinsurance contracts. CNA said it?s no longer affiliated with the Bermuda-based reinsurer, Accord Re Ltd. Transactions with affiliated offshore entities produced about $1.2 billion of improper accounting at New York-based AIG. ? Bloomberg