EMPLOYMENT AGREEMENT

1.

Employment Term . The Company shall employ the Executive under this Agreement, and the Executive shall accept such employment, for the Term. The “Term” shall commence on Monday, June 8, 2009 or such other date as the Parties may agree upon in writing (the “ Commencement Date ”) and shall end on December 31, 2013, subject to annual renewals thereafter, if any, upon mutual written agreement by the Parties. Notwithstanding the foregoing, the Executive’s employment hereunder, and the Term, may be terminated at any time in accordance with Section 6 below.

2.

Duties of the Executive and Place of Business .

time to time agree upon in writing. As the Chief Executive Officer of the Company, the Executive shall have all authorities, duties and responsibilities customarily exercised by an individual serving in that position at an entity of the size and nature of the Company (including, without limitation, responsibility for the day to day operations of the CNA Insurance Companies and for development and implementation of the CNA Insurance Companies’ business plans and strategies); shall be assigned no duties or responsibilities that are materially inconsistent with, or that materially impair his ability to discharge, the foregoing duties and responsibilities; shall have such additional duties and responsibilities, consistent with the foregoing, as may be from time to time reasonably be assigned to him by the Company’s Board; and shall report solely and directly to the Company’s Board. For purposes of this Agreement, “ Affiliate ” of a Person shall mean any Person that directly or indirectly controls, is controlled by, or is under common control with, such Person; “ Board ” shall mean, in the case of a corporation, the board of directors of such corporation and, in the case of any other entity, the corresponding governing Person; and “ Person ” shall mean any individual, corporation, partnership, limited liability company, joint venture, trust, estate, board, committee, agency, body, employee benefit plan, or other person or entity. Notwithstanding the foregoing, for all purposes of this Agreement (except Sections 6.3(b)(ii), 6.7(x), 7, 18(a), 24 and 25 and Exhibit A), the term Affiliate shall not include Loews Corporation or any of its direct or indirect subsidiaries (other than the Company and the Company’s subsidiaries).

(b)

Throughout the Term, the Executive: shall diligently and to the best of his abilities assume, perform, and discharge his duties and responsibilities hereunder as the Chairman of the Board, and the Chief Executive Officer, of the Company, and the CNA Insurance Companies; and shall devote substantially all of his business time and effort to the business and affairs of the Company and its subsidiaries. However, nothing in this Agreement or elsewhere shall preclude the Executive from: (i) engaging in civic, charitable or community services; (ii) devoting a reasonable amount of time to private investments and personal affairs; or (iii) serving, with the prior approval of the Company’s Board, on the boards of for-profit entities, so long as such activities or services do not interfere with the Executive’s responsibilities to the Company.

(c)

The Executive shall establish a residence in the Chicago metropolitan area not later than five (5) days following the Commencement Date and shall maintain such a residence during the Term. The Executive’s principal place of business shall be at the Company’s headquarters in Chicago. As soon as practicable

following the Commencement Date, but no later than ten (10) days following the Commencement Date the Company shall pay the Executive $250,000 in recognition of the expense of establishing and maintaining a Chicago metropolitan area residence.

(a)

Beginning as of the Commencement Date, the Company shall pay the Executive for the period he is employed by the Company hereunder an annualized base salary of $1,000,000.00 (the “ Base Salary ”). The Base Salary shall be paid in accordance with the regular payroll practices applicable to senior executives of the Company generally, but no less frequently than monthly. At the discretion of the Company’s Board, or of the compensation committee of such Board (the “Committee” ), the annualized Base Salary may be increased annually during the Term of the Agreement, beginning in calendar year 2010. The Base Salary shall not be decreased at any time, or for any purpose, during the Term (including, without limitation, for the purpose of determining benefits due under Section 6) without the Executive’s prior written consent.

(ii)

For each full Performance Year during the Term, the Annual Bonus shall equal 1.2% of NOI (as described below) for such year; provided , however, that, for any such year, the Executive’s target Annual Bonus shall not be less than $2,500,000, and his maximum Annual Bonus shall not be more than $4,000,000. For purposes of this Agreement, “ NOI ” for any Performance Year or quarter shall mean the Company’s net income for such Performance Year or quarter, as adjusted in good faith by the Committee for such Performance Year or quarter for the purpose of determining annual bonuses for senior executives of the Company generally. For any Performance Year or quarter, NOI shall be determined on a basis that is no less favorable to the Executive than to other senior executive officers of the Company generally. The Committee may exercise negative discretion under the Plan to decrease or eliminate any

portion of the Executive’s Annual Bonus for any Performance Year that exceeds his Annual Bonus target of $2,500,000.

(iii)

For the first Performance Year that ends during the Term, the Executive’s Annual Bonus shall equal 1.2% of the sum of (x) the Company’s NOI for each calendar quarter during such year that commences after the Commencement Date plus (y) a pro-rata portion of the Company’s NOI for the calendar quarter in which the Commencement Date occurs, such pro-rata portion to be determined by multiplying the Company’s NOI for such quarter by a fraction, the numerator of which is the number of calendar days during such quarter that the Executive is employed hereunder and the denominator of which is the number of calendar days in such quarter (the “ Quarterly Proration Fraction ”). The target Annual Bonus payment for such year, above which the Committee may exercise negative discretion, shall be determined by multiplying $2,500,000 times a fraction, the numerator of which is the number of calendar days during such year that the Executive is employed hereunder and the denominator of which is 365 (the “ Yearly Proration Fraction ”). The maximum Annual Bonus payment for such year shall be determined by multiplying $4,000,000 by the Yearly Proration Fraction.

(iv)

Annual Bonus payments shall be made to the Executive in cash no later than corresponding bonus payments are made to senior executive officers of the Company generally, and in no event later than 70 days after the end of the Performance Year to which they relate. In the event that the Company ceases to maintain an annual bonus program that is based on NOI and that is similar to the program in effect as of the Signing Date, a new program shall be established under which the Executive shall have an annual target bonus of at least $2,500,000.

time(s) at which corresponding bonus payments are made to other senior executive officers of the Company generally. In the event that the long term bonus program that is in effect as of the Signing Date is discontinued with respect to any Covered Year, a new program shall be established under which the Executive has an aggregate target long term incentive cash bonus opportunity for such Covered Year, after taking into account all performance periods that are then ongoing (including performance periods that may be on-going under the former program), that equals at least 25 percent (25%) of his annualized Base Salary as in effect on the last day of the such Covered Year, and that is otherwise on terms and conditions not less favorable to the Executive than those that would have applied if the old program had remained in effect.

(e)

(i)

On the Commencement Date, the Executive shall be granted restricted stock units (“ RSUs ”), each representing the right to receive one share of the Company’s common stock, having a value of $2,500,000 , based upon the volume weighted average price during the ten (10) trading days

% of RSUs

NOI as a % of Budgeted NOI

Earned

0

%

80

%

100

%

(iii)

All RSUs granted pursuant to Section 3(e)(i), and all RSUs that have been earned pursuant to Section 3(e)(ii), shall vest (and thus become non-forfeitable) in equal installments on each of the first four anniversaries of the date of grant, provided that the Executive is employed by the Company on such date, except as otherwise provided in this Agreement.

All RSUs shall be settled in stock promptly after vesting, but in no event more than thirty (30) days after vesting.

(iv)

All rights with regard to unvested RSUs (including RSUs that have not yet been earned) shall, except to the extent otherwise provided in Section 6, terminate upon termination of the Executive’s employment with the Company. The annual grant of RSUs to the Executive may be increased at the recommendation, and with the approval, of the Committee, subject to share availability.

(v)

Upon the Company’s payment of a cash dividend in respect of its outstanding Company common stock, the Executive shall be credited with dividend equivalents in respect of each RSU outstanding on the record date for such dividend. Such dividend equivalents shall be equal to the dividend paid on an outstanding share of common stock and shall be credited as of the dividend payment date until the respective outstanding RSU becomes vested, at which time such dividend equivalent right shall be paid to the Executive, without interest, in cash.

of 5% per annum from January 1, 2014 until the date of payment. The benefits provided under this Section 3(g) shall be in addition to any benefits to which the Executive becomes entitled under any current or future savings or retirement plan or arrangement of the Company or its Affiliates.

(h)

All payments due to the Executive under this Agreement shall be subject to withholding as required by law or as authorized by the Executive in writing.

(i)

It is the Parties’ intention that all payments, benefits and entitlements received by the Executive be provided in a manner that does not impose any additional taxes, interest or penalties on the Executive with respect to such payments, benefits and entitlements under Section 409A of the Code, and its implementing regulations ( “Section 409A” ). Each of the Parties has used, and will continue to use, its best reasonable efforts to avoid the imposition of such additional taxes, interest or penalties, and the Parties agree to work together in good faith to amend this Agreement, and to structure any payment, benefit or other entitlement received by the Executive, in a manner that avoids imposition of such additional taxes, interest or penalties while preserving the affected payment, benefit or entitlement to the extent practicable and maintaining the basic financial provisions of this Agreement. For purposes of this Agreement, “ Code ” shall mean the Internal Revenue Code of 1986, as amended, and any reference to a particular section of the Code shall include any provision that modifies, replaces or supersedes such section.

(j)

If any merger, consolidation, reorganization, recapitalization, spin-off, split-up, combination, exchange of securities, modification of securities, share split, reverse share split, share dividend, other distribution of securities or other property in respect of shares or other securities, or other change in corporate structure or capitalization affecting the rights or value of securities of any class that is to be subject to an SAR grant under Section 3(d), or an RSU grant under Section 3(e)(i) (but only to the extent that the 100,000 share cap applies), occurs (i) on or after the Signing Date and (ii) on or before the date that such grant is awarded, then appropriate adjustment(s) shall be made in the number and/or kind of securities to be subject to such grant, so as to avoid dilution or enlargement of the rights, economic opportunity and value intended to be represented by such grant.

(k)

The Committee, or the Company, shall structure and administer all awards to the Executive under Section 3(b), 3(c), 3(d) and 3(e) hereof in such a manner as to preserve deductibility under Section 162(m) of the Code, provided that the Executive’s rights hereunder are not adversely affected.

(a)

The Executive shall be entitled to prompt reimbursement by the Company for all reasonable and customary travel and other business expenses he incurs in connection with carrying out his duties under this Agreement, in accordance with the general travel and business reimbursement policies then applying to senior executives of the Company generally. The Executive shall report all such expenditures not less frequently than monthly, accompanied by adequate records and such other documentary evidence as required by the Company or by Federal or state tax statutes or regulations governing the substantiation of such expenditures.

(b)

As soon as practicable following the Commencement Date, the Company shall reimburse the Executive for all appropriately documented attorneys’ fees and other charges of counsel he incurred in entering into, and implementing, this Agreement, provided , however, that the amount reimbursed under this Section 5(b) shall not exceed $130,000.

(a)

In the event that the Executive’s employment hereunder terminates due to his death or Permanent Disability (as defined below), the Term shall expire, and he shall be entitled to the following:

any outstanding RSU granted pursuant to Section 3(e)(ii) in the calendar year of termination or in the previous year, subject solely to satisfying the performance criteria governing such RSU; and full vesting, as of the Termination Date, of any other outstanding equity-based award (other than SARs and RSUs).

(iv)

In the event such termination of employment occurs prior to December 31, 2013, the payments described in Section 3(g)(i) and the lump sum payment described in Section 3(g)(ii), with the payments described in Section 3(g)(i) to be made at the times they would have been made if the Executive had been employed hereunder on December 31, 2013 and the lump sum payment described in Section 3(g)(ii) to be made within 30 days following the Termination Date.

(v)

The Executive and his dependents shall be entitled to continued participation for a period of thirty (30) months following the Termination Date (which shall be concurrent with any health care continuation benefits under COBRA), in all medical, dental, vision, prescription drug, hospitalization, life insurance, disability and other welfare benefit coverages and benefits in which they were participating as of such date, on terms and conditions that are no less favorable to them than those that applied as of such date.

(vi)

The benefits described in Section 6.6 below.

such quarter by the Quarterly Proration Fraction. The Committee may exercise negative discretion with respect to amounts in excess of the target Pro-Rata Annual Bonus amount, which amount shall be determined by multiplying $2,500,000 times the Yearly Proration Fraction. The maximum Pro-Rata Annual Bonus shall be determined by multiplying $4,000,000 by the Yearly Proration Fraction. Any Pro-Rata Annual Bonus shall be paid as promptly as reasonably practicable after the last day of the calendar quarter in which the Termination Date occurs, but in no event more than thirty (30) days after such last day.

(d)

For purposes of this Agreement, “ Pro-Rata Long Term Bonus ”, when used in respect of a calendar year, shall mean the amount obtained by multiplying (x) the sum of the Long Term Bonuses that the Executive would have received for such year with respect to each performance period that is then ongoing if he had remained employed hereunder through the end of such year (assuming for this purpose that his annualized Base Salary at the end of such year would have been equal to his annualized Base Salary as of the Termination Date) times (y) the Yearly Proration Fraction. Each of the prorated amounts that constitute the Pro-Rata Long Term Bonus shall be paid on the date that the corresponding Long Term Bonus would have been paid if the Executive’s employment hereunder had not terminated.

(a)

The Company may terminate the Executive’s employment hereunder for Cause. Prior to any such termination of employment for Cause, the Company shall provide the Executive with written notice from the Company’s Board stating in reasonable detail the particular circumstances that constitute the grounds on which the termination for Cause is based (the “ Cause Notice ”). The Executive shall then be entitled to a hearing at a duly convened meeting of the Company’s Board, at which he may be accompanied by counsel of his choice, provided that he submits a request for a hearing within four (4) business days after he receives the Cause Notice. Within four (4) business days following such request the Board shall hold such hearing, which shall last no more than one (1) business day, and within four (4) business days following such hearing the Company’s Board shall give written notice to the Executive stating whether, in the judgment of at least two thirds of the members of the Company’s Board (other than the Executive), Cause for terminating his employment on the basis set forth in the original Cause Notice exists. Upon such notice from such Board, the Executive’s employment

hereunder shall terminate for Cause, subject to de novo review of such Board’s determination, through arbitration in accordance with Section 24, if the Executive so chooses. For avoidance of doubt, the arbitrators shall have no right to order reinstatement of the Executive’s employment. The Company’s Board may suspend the Executive from his duties under this Agreement for up to 30 days following the delivery of any Cause Notice to the Executive, and no such suspension shall by itself constitute grounds for a Good Reason termination.

(b)

In the event that the Executive’s employment hereunder is terminated for Cause in accordance with Section 6.2(a), the Term shall expire and he shall be entitled only to the benefits described in Section 6.6 and, notwithstanding anything in this Agreement to the contrary, the Company shall have no further obligations under Section 19.

(c)

For purposes of this Agreement, “ Cause ” shall mean that: (i) the Executive is convicted of, or pleads guilty or nolo contendere to, a felony, (ii) the Executive engages in conduct that constitutes either (x) a material and willful breach of this Agreement, (y) willful, or reckless, material misconduct in the performance of the Executive’s duties under this Agreement, or (z) habitual neglect of the Executive’s material duties under this Agreement; provided , however, that: (x) in the case of clause (ii) only, such conduct has had a material adverse effect on the business or prospects of the CNA Companies and (y) for purposes of clauses (ii)(y) and (ii)(z), Cause shall not include any of the following: bad judgment, negligence, or any act or omission believed by the Executive in good faith to have been in or not opposed to the interest of the Company (without any intent by the Executive to gain, directly or indirectly, a profit to which he is not legally entitled).

(a)

In the event that the Executive’s employment hereunder is terminated during the Term (other than in accordance with Section 6.5) (x) by the Company other than for Permanent Disability in accordance with Section 6.1 or for Cause in accordance with Section 6.2 or (y) by the Executive with Good Reason in accordance with Section 6.3(b), the Term shall expire and he shall be entitled to the following (in lieu of separation payments under any other Company severance plan, policy or arrangement):

(b)

“ Good Reason ” shall mean the occurrence, at any time during the two (2) year period immediately prior to the Termination Date, of any of the following events, without the Executive’s prior written consent and without cure by the Company within thirty (30) days after the Executive gives notice of such event to the Company requesting cure, such notice to be given within ninety (90) days after the Executive learns that such event has occurred: (i) the assignment to the Executive of duties that are materially inconsistent with his position (including his status, offices, titles and reporting relationships), authority, duties or responsibilities, all as in effect on the Commencement Date, (ii) actions by the Company or its Affiliates that have resulted in a substantial diminution in his position, authority, duties or responsibilities as compared to his position, authority, duties or responsibilities at the Commencement Date; (iii) a substantial breach by the Company or any of its Affiliates of any material obligation to the Executive, under this Agreement or otherwise ( e.g. , a substantial failure to honor the terms of any material equity or long term incentive grant, or a material breach of Section 3(a), 3(b), 3(c), 3(d) or 3(e)); (iv) the Company requiring the Executive to be based at any office or location that is more than 50 miles from the Company’s headquarters in Chicago, Illinois, as of the Signing Date; (v) any failure to elect or appoint the Executive as a member of the Company’s Board, Chairman of such

Board, and Chief Executive Officer of the Company, as of the Commencement Date, or to maintain him in such positions throughout the Term ( provided , however, that the Executive need not be elected as, or maintained as, Chairman of the Company’s Board to the extent that doing so would be a violation of applicable law, or of applicable rules of the New York Stock Exchange or other self-regulatory organization to whose rules the Company is subject, and would result in material harm to the Company); or (vi) any failure of the Company to obtain the assumption in writing of its obligation to perform this Agreement by any successor to all or substantially all of the business or assets of the Company within fifteen (15) calendar days after a merger, consolidation, sale or similar transaction.

(c)

Upon termination of his employment hereunder in a termination governed by this Section 6.3, the Executive shall be entitled to the benefits described in Section 6.3(a), but only if, except in the case of benefits described in Section 6.6, he executes, and delivers to the Company within 21 days after the Termination Date (or such longer period as may reasonably be necessary if the Executive dies or becomes incapacitated, or if the Company has claimed that the termination is for Cause), a Release substantially in the form attached hereto as Exhibit A, which Release he does not revoke during the “Revocation Period” as defined in such Release.

(d)

For all purposes of this Agreement, if an Executive Presentment takes place on the Commencement Date, or within 15 days following the Commencement Date in the event of extraordinary circumstances, the failure by the Company to employ the Executive on or within 15 days following the Executive Presentment shall be treated as if the Executive had become employed hereunder on the date of the Executive Presentment and had been terminated 15 days later in a termination of employment to which Section 6.3(a) applies. Notwithstanding the foregoing and anything to the contrary in Section 1, if an Executive Presentment does not occur on June 8, 2009 (or such other date as the Parties may agree upon in writing in accordance with Section 1), then the Commencement Date shall be the date on which the Executive Presentment occurs. For purposes of this Agreement, an “ Executive Presentment ” shall be deemed to have occurred if (i) the Executive presents himself at the Company’s headquarters prepared to commence employment and perform his duties hereunder, (ii) the Executive is not subject to any injunction preventing him from performing his duties hereunder on the date that he presents himself, and (iii) the Executive has neither been convicted of, nor plead guilty to, any felony.

(a)

In the event that the Executive terminates his employment hereunder prior to the then-scheduled expiration of the Term on his own initiative, other than in a termination governed by Section 6.1 or 6.3, the Term shall expire and he shall be entitled only to the benefits described in Section 6.6 and, notwithstanding anything in this Agreement to the contrary, the Company shall have no further obligations under Section 19. A voluntary termination under this Section 6.4 shall not be deemed a breach of this Ag