Feb. 16 (Bloomberg) ? CNA Financial Corp., the insurance unit of Loews Corp., reported a surprise fourth-quarter loss and said it would restate almost five years of results to correct accounting errors.

The net loss of $217 million, or 92 cents a share, compares with net income of $303 million, or $1.11, a year ago, the Chicago-based company said today. CNA had a $223 million cost to cancel several finite reinsurance policies, a type of contract that has come under regulatory scrutiny in the past year.

CNA, controlled by the Tisch family?s Loews, is restating for the second time in less than a year. The company identified errors in how it booked discontinued businesses after the 1995 purchase of insurer Continental Corp. It will correct results from 2001 through the third quarter of 2005, cutting shareholder equity at yearend 2004 by $204 million, or 2.2 percent.

?At this point, a lot of companies have done restatements and some more than one,? said Gary Ransom, an analyst at Fox- Pitt Kelton Inc. in Hartford, Connecticut, who has an ?in-line? rating on the stock. ?The accounting scrutiny today just requires it.?

Excluding changes in the values of the company?s investments, CNA had a fourth-quarter loss of 74 cents a share. Ransom expected the company to earn 74 cents on that basis.

Shares of CNA, 91 percent owned by Loews, fell 22 cents to $31.18 in New York Stock Exchange composite trading. The stock is up 9.3 percent in the past 12 months, compared with an 11 percent gain in the NYSE Composite Index.

Under the latest restatement, CNA reduced its 2004 net income by $21 million to $425 million, and increased by $2 million its previously reported 2003 net loss of $1.4 billion, according to the company statement.

Restated figures for 2001 and 2002 will be disclosed in the company?s annual filing with the US Securities and Exchange Commission, CNA spokesman Charles Boesel said.

The earlier restatement corrected 2002 to 2004 results to fix accounting for reinsurance with a former Bermuda-based affiliate, Accord Re Ltd. The company said the contracts didn?t transfer risk and should have been treated as loans, not insurance.

CNA said yesterday it cut short finite reinsurance agreements with Hannover Re, the world?s fourth-largest reinsurer, and another reinsurer, leading to the fourth-quarter loss. The cancellations will increase CNA?s net income by $55 million in 2006 and by $42 million next year, CNA Chief Financial Officer Craig Mense said on a conference call with investors.

?The commutations will improve earnings and balance sheet transparency,? Mense said. ?They were negotiated on favourable economic terms.?

New York Attorney General Eliot Spitzer and the US Securities and Exchange Commission have been examining instances in which reinsurance was used to mask losses or smooth earnings.

The inquiry has led to earnings restatements 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.