OLDWICK, N.J.—A.M. Best Co. Inc. on Monday upgraded its outlook of CNA Insurance Cos. and its members to stable from negative and affirmed its financial strength rating of A.

Best said it revised its outlook of the Chicago-based insurer due to “the significant increase” in the fair market value of CNA’s investments in 2009, an increase in the group’s statutory surplus and “substantially improved” risk-adjusted capitalization that is “more supportive of its ratings.”

“CNA’s ratings reflect its substantially improved risk-adjusted capitalization, continued solid underwriting fundamentals, adequate liquidity and good business position as a leading writer within the commercial lines segment of the property/casualty industry,” Best analysts said in a statement. “In addition, the ratings recognize CNA’s underwriting and other operating initiatives completed and currently under way to improve operating performance; vastly improved technological infrastructure, which has enhanced data collection segmentation and reporting tools; and greater focus on enterprise risk management.”

Partially offsetting the gains, Oldwick, N.J.-based Best said, were the CNA group’s large investment losses in 2007 and 2008; catastrophe losses in recent years; and the runoff of long-term care and liabilities, including those associated with CNA’s life insurance segment and asbestos/environmental torts.

In addition to the revised outlook for CNA’s insurance arm, Best affirmed the financial strength rating of A for CNA Surety Corp. Group and its members, including Western Surety Co., Surety Bonding Co. of America and Universal Surety of America.