UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31,September 30, 2021

OR

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From ____________ to _____________

Commission File Number 1-6541

LOEWS CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 13-2646102
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)

667 Madison Avenue, New York, N.Y.NY 10065-8087
(Address of principal executive offices) (Zip Code)

(212) 521-2000
(Registrant’s telephone number, including area code)

NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareLNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒
 
No ☐
  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒
 
No ☐
  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☒
Accelerated filer  ☐
Non-accelerated filer  ☐
Smaller reporting company  ☐

 
Emerging growth company  ☐
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐
 
No  ☒
  

As of April 30,October 29, 2021, there were 263,175,591253,684,412 shares of the registrant’s common stock outstanding.



INDEX

Page
No.
Part I. Financial Information
 
  
Item 1. Financial Statements (unaudited)
 
  
Consolidated Condensed Balance Sheets
3
March 31,September 30, 2021 and December 31, 2020
 

 
Consolidated Condensed Statements of Operations
4
Three and nine months ended March 31,September 30, 2021 and 2020
 

 
Consolidated Condensed Statements of Comprehensive LossIncome (Loss)
5
Three and nine months ended March 31,September 30, 2021 and 2020
 

 
Consolidated Condensed Statements of Equity
6
Three and nine months ended March 31,September 30, 2021 and 2020
 

 
Consolidated Condensed Statements of Cash Flows
78
ThreeNine months ended March 31,September 30, 2021 and 2020
 

 
Notes to Consolidated Condensed Financial Statements
89
  
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
28
37
  
Item 3. Quantitative and Qualitative Disclosures about Market Risk
4257
  
Item 4. Controls and Procedures
43
57
  
Part II. Other Information
43
58
  
Item 1. Legal Proceedings
43
58
  
Item 1A. Risk Factors
43
58
  
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
45
61
  
Item 6. Exhibits
46
62

2
Index


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.

Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)

 September 30,  December 31, 
 March 31, 2021  December 31, 2020  2021  2020 
(Dollar amounts in millions, except per share data)            
            
Assets:            
            
Investments:            
Fixed maturities, amortized cost of $39,293 and $38,963, less allowance for credit loss of $43 and $40
 $43,584  $44,646 
Equity securities, cost of $1,455 and $1,456
  1,580   1,561 
Fixed maturities, amortized cost of $40,342 and $38,963, less allowance for credit loss of $31 and $40
 $45,069  $44,646 
Equity securities, cost of $1,552 and $1,456
  1,660   1,561 
Limited partnership investments  1,769   1,798   1,996   1,798 
Other invested assets, primarily mortgage loans, less allowance for credit loss of $26 and $26
  1,144   1,165   1,140   1,165 
Short term investments  4,282   4,674   4,178   4,674 
Total investments  52,359   53,844   54,043   53,844 
Cash  660   478   811   478 
Receivables  8,539   7,833   9,187   7,833 
Property, plant and equipment  9,921   10,451   9,878   10,451 
Goodwill  349   785   349   785 
Deferred non-insurance warranty acquisition expenses  3,149   3,068   3,418   3,068 
Deferred acquisition costs of insurance subsidiaries  741   708   721   708 
Other assets  2,501   3,069   3,319   3,069 
Assets held for sale  1,786     
Total assets $80,005  $80,236  $81,726  $80,236 
                
Liabilities and Equity:                
                
Insurance reserves:                
Claim and claim adjustment expense $23,056  $22,706  $23,832  $22,706 
Future policy benefits  12,772   13,318   13,198   13,318 
Unearned premiums  5,319   5,119   5,577   5,119 
Total insurance reserves  41,147   41,143   42,607   41,143 
Payable to brokers  310   92   665   92 
Short term debt  141   37   187   37 
Long term debt  8,996   10,072   8,925   10,072 
Deferred income taxes  924   1,065   1,089   1,065 
Deferred non-insurance warranty revenue  4,119   4,023   4,443   4,023 
Other liabilities  4,375   4,623   4,680   4,623 
Liabilities held for sale  1,456     
Total liabilities  61,468   61,055   62,596   61,055 
                
Commitments and contingent liabilities          0   0
 
                
Preferred stock, $0.10 par value:
                
Authorized – 100,000,000 shares
  0   0   0   0
 
Common stock, $0.01 par value:
  0   0         
Authorized – 1,800,000,000 shares
                
Issued – 269,472,042 and 269,360,973 shares
  3   3 
Issued – 269,574,153 and 269,360,973 shares
  3   3 
Additional paid-in capital  3,119   3,133   3,120   3,133 
Retained earnings  14,394   14,150   15,336   14,150 
Accumulated other comprehensive income  34   581   191   581 
  17,550   17,867   18,650   17,867 
Less treasury stock, at cost (5,708,164 and 150,000 shares)
  (280)  (7)
Less treasury stock, at cost (15,807,106 and 150,000 shares)
  (833)  (7)
Total shareholders’ equity  17,270   17,860   17,817   17,860 
Noncontrolling interests  1,267   1,321   1,313   1,321 
Total equity  18,537   19,181   19,130   19,181 
Total liabilities and equity $80,005  $80,236  $81,726  $80,236 

See accompanying Notes to Consolidated Condensed Financial Statements.

3
Index

Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended March 31 2021  2020 
 Three Months Ended  Nine Months Ended 
 September 30,  September 30, 
 2021  2020  2021  2020 
(In millions, except per share data)                  
                  
Revenues:                  
Insurance premiums $1,962  $1,869  $2,059  $1,953  $6,056  $5,672 
Net investment income  550   163   483   540   1,649   1,347 
Investment gains (losses)  57   (216)
Investment gains (losses) (Note 2)  22   46   657   (1,312)
Non-insurance warranty revenue  338   301   357   317   1,054   926 
Operating revenues and other  715   982   450   609   1,580   2,241 
Total  3,622   3,099   3,371   3,465   10,996   8,874 
                        
Expenses:                        
Insurance claims and policyholders’ benefits  1,506   1,425   1,632   1,616   4,684   4,683 
Amortization of deferred acquisition costs  359   344   368   360   1,084   1,046 
Non-insurance warranty expense  311   281   330   293   973   859 
Operating expenses and other  914   2,026   638   876   2,208   3,894 
Interest  125   144   99   137   324   404 
Total  3,215   4,220   3,067   3,282   9,273   10,886 
Income (loss) before income tax  407   (1,121)  304   183   1,723   (2,012)
Income tax (expense) benefit  (114)  77   (58)  (21)  (391)  284 
Net income (loss)  293   (1,044)  246   162   1,332   (1,728)
Amounts attributable to noncontrolling interests  (32)  412   (26)  (23)  (97)  400 
Net income (loss) attributable to Loews Corporation $261  $(632) $220  $139  $1,235  $(1,328)
                        
Basic net income (loss) per share $0.98  $(2.20) $0.86  $0.50  $4.71  $(4.70)
                
Diluted net income (loss) per share $0.97  $(2.20) $0.85  $0.50  $4.70  $(4.70)
                        
Weighted average shares outstanding:                        
Shares of common stock  267.39   287.04   256.76   279.40   262.27   282.63 
Dilutive potential shares of common stock  0.37       0.54   0.09   0.50     
Total weighted average shares outstanding assuming dilution  267.76   287.04   257.30   279.49   262.77   282.63 

See accompanying Notes to Consolidated Condensed Financial Statements.

4
Index

Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE LOSSINCOME (LOSS)
(Unaudited)

Three Months Ended March 31 2021  2020 
(In millions)      
       
Net income (loss) $293  $(1,044)
         
Other comprehensive loss, after tax        
Changes in:        
Net unrealized losses on investments with an allowance for credit losses      (11)
Net unrealized losses on other investments  (627)  (1,044)
Total unrealized losses on investments  (627)  (1,055)
Unrealized gains (losses) on cash flow hedges  4   (19)
Pension and postretirement benefits  9   14 
Foreign currency translation  3   (84)
         
Other comprehensive loss  (611)  (1,144)
         
Comprehensive loss  (318)  (2,188)
         
Amounts attributable to noncontrolling interests  32   531 
         
Total comprehensive loss attributable to Loews Corporation $(286) $(1,657)
 Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2021  2020  2021  2020 
(In millions)            
             
Net income (loss) $246  $162  $1,332  $(1,728)
                 
Other comprehensive income (loss), after tax                
Changes in:                
Net unrealized gains (losses) on investments with an allowance for credit losses      6       (3)
Net unrealized gains (losses) on other investments  (138)  207   (465)  354 
Total unrealized gains (losses) on investments  (138)  213   (465)  351 
Unrealized gains (losses) on cash flow hedges  2   1   14   (18)
Pension and postretirement benefits  16   7   32   27 
Foreign currency translation  (33)  38   (19)  (17)
                 
Other comprehensive income (loss)  (153)  259   (438)  343 
                 
Comprehensive income (loss)  93   421   894   (1,385)
                 
Amounts attributable to noncontrolling interests  (9)  (49)  (49)  363 
                 
Total comprehensive income (loss) attributable to Loews Corporation $84  $372  $845  $(1,022)

See accompanying Notes to Consolidated Condensed Financial Statements.

5
Index

Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY
(Unaudited)

    Loews Corporation Shareholders    
             Accumulated  Common    
       Additional     Other  Stock    
    Loews Corporation Shareholders        Common  Paid-in  Retained  Comprehensive  Held in  Noncontrolling 
 Total  
Common
Stock
  
Additional
Paid-in
Capital
  
Retained
Earnings
  
Accumulated
Other
Comprehensive
Income (Loss)
  
Common
Stock
Held in
Treasury
  
Noncontrolling
Interests
  Total  Stock  Capital  Earnings  Income (Loss)  Treasury  Interests 
(In millions)                                          
                                          
Balance, January 1, 2020, as reported $21,930  $3  $3,374  $15,823  $(68) $(13) $2,811 
Cumulative effect adjustment from change in accounting standards  (5)          (5)            
Balance, January 1, 2020, as adjusted  21,925   3   3,374   15,818   (68)  (13)  2,811 
Net loss  (1,044)          (632)          (412)
Other comprehensive loss  (1,144)              (1,025)      (119)
Balance, July 1, 2020 $18,413  $3  $3,371  $14,316  $5  $(491) $1,209 
Net income
  162           139           23 
Other comprehensive income  259               233       26 
Dividends paid ($0.0625 per share)
  (87)          (18)          (69)  (27)          (17)          (10)
Purchases of Loews Corporation treasury stock  (445)                  (445)      (195)                  (195)    
Purchases of subsidiary stock from non- controlling interests  (18)                      (18)
Stock-based compensation  (4)      (22)              18   8       8                 
Other  (5)      (5)  (1)          1   0           (1)      1     
Balance,March 31, 2020
 $19,178  $3  $3,347  $15,167  $(1,093) $(458) $2,212 
Balance, September 30, 2020
 $18,620  $3  $3,379  $14,437  $238  $(685) $1,248 
                                                        
Balance, January 1, 2021 $19,181  $3  $3,133  $14,150  $581  $(7) $1,321 
Balance, July 1, 2021 $19,398  $3  $3,121  $15,132  $327  $(500) $1,315 
Net income  293           261           32   246           220           26 
Other comprehensive loss  (611)              (547)      (64)  (153)              (136)      (17)
Dividends paid ($0.0625 per share)
  (49)          (17)          (32)  (27)          (16)          (11)
Purchases of Loews Corporation treasury stock  (274)                  (274)      (333)                  (333)    
Purchases of subsidiary stock from non-controlling interests  (3)                      (3)
Stock-based compensation  4       (11)              15   (2)      (2)                
Other  (4)      (3)          1   (2)  1       1                 
Balance, March 31, 2021
 $18,537  $3  $3,119  $14,394  $34  $(280) $1,267 
Balance, September 30, 2021
 $19,130  $3  $3,120  $15,336  $191  $(833) $1,313 

See accompanying Notes to Consolidated Condensed Financial Statements.

6
Index
Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY
(Unaudited)

    Loews Corporation Shareholders    
              Accumulated  Common    
        Additional     Other  Stock    
     Common  Paid-in  Retained  Comprehensive  Held in  Noncontrolling 
  Total  Stock  Capital  Earnings  Income (Loss)  Treasury  Interests 
(In millions)                     
                      
Balance, January 1, 2020, as reported $21,930  $3  $3,374  $15,823  $(68) $(13) $2,811 
Cumulative effect adjustment from change in accounting standards  (5)          (5)            
Balance, January 1, 2020, as adjusted  21,925   3   3,374   15,818   (68)  (13)  2,811 
Net loss  (1,728)          (1,328)          (400)
Other comprehensive income  343               306       37 
Dividends paid ($0.1875 per share)
  (141)          (53)          (88)
Deconsolidation of Diamond Offshore  (1,087)                      (1,087)
Purchases of Loews Corporation treasury stock  (673)                  (673)    
Purchases of subsidiary stock from noncontrolling interests  (37)      5               (42)
Stock-based compensation  17       (1)              18 
Other  1       1           1   (1)
Balance, September 30, 2020
 $18,620  $3  $3,379  $14,437  $238  $(685) $1,248 
                             
Balance,  January 1, 2021 $19,181  $3  $3,133  $14,150  $581  $(7) $1,321 
Net income  1,332           1,235           97 
Other comprehensive loss  (438)              (390)      (48)
Dividends paid ($0.1875 per share)
  (103)          (49)          (54)
Purchases of Loews Corporation treasury stock  (826)                  (826)    
Purchases of subsidiary stock from noncontrolling interests  (18)                      (18)
Stock-based compensation  5       (11)              16 
Other  (3)      (2)              (1)
Balance, September 30, 2021
 $19,130  $3  $3,120  $15,336  $191  $(833) $1,313 

See accompanying Notes to Consolidated Condensed Financial Statements.

7
Index
Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

Three Months Ended March 31 2021  2020 
Nine Months Ended September 30 2021  2020 
(In millions)            
            
Operating Activities:            
            
Net income (loss) $293  $(1,044) $1,332  $(1,728)
Adjustments to reconcile net income (loss) to net cash provided by operating activities, net  257   1,363 
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities, net  (85)  2,503 
Changes in operating assets and liabilities, net:                
Receivables  (736)  (266)  (1,115)  (273)
Deferred acquisition costs  (32)  (27)  (15)  (36)
Insurance reserves  605   510   1,891   1,479 
Other assets  (250)  (116)  (853)  (411)
Other liabilities  126   (288)  701   238 
Trading securities  (129)  197   (180)  (481)
Net cash flow provided by operating activities  134   329   1,676   1,291 
                
Investing Activities:                
                
Purchases of fixed maturities  (2,203)  (1,818)  (7,127)  (8,466)
Proceeds from sales of fixed maturities  907   823   2,510   5,023 
Proceeds from maturities of fixed maturities  1,084   799   3,360   2,706 
Purchases of equity securities  (81)  (220)  (242)  (373)
Proceeds from sales of equity securities  119   98   237   275 
Purchases of limited partnership investments  (61)  (32)  (281)  (144)
Proceeds from sales of limited partnership investments  49   204   239   305 
Purchases of property, plant and equipment  (87)  (233)  (327)  (584)
Dispositions  52   47 
Sale of interest in Altium Packaging  417     
Deconsolidation of Diamond Offshore      (483)
Change in short term investments  569   837   725   706 
Other, net  10   (31)  13   (120)
Net cash flow provided by investing activities  306   427 
Net cash flow used by investing activities  (424)  (1,108)
                
Financing Activities:                
                
Dividends paid  (17)  (18)  (49)  (53)
Dividends paid to noncontrolling interests  (32)  (69)  (54)  (88)
Purchases of Loews Corporation treasury stock  (280)  (458)  (825)  (678)
Purchases of subsidiary stock from noncontrolling interests  (3)  (18)  (18)  (37)
Principal payments on debt  (1,073)  (223)  (1,154)  (1,157)
Issuance of debt  1,159   654   1,199   2,393 
Other, net  (12)  (12)  (12)  (13)
Net cash flow used by financing activities  (258)  (144)
Net cash flow (used) provided by financing activities  (913)  367 
                
Effect of foreign exchange rate on cash      (9)  (6)    
                
Net change in cash  182   603   333   550 
Cash, beginning of period  478   336   478   336 
Cash, end of period $660  $939  $811  $886 

See accompanying Notes to Consolidated Condensed Financial Statements.

7
8
Index

Loews Corporation and Subsidiaries
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation


Loews Corporation is a holding company. Its consolidated subsidiaries are engaged in the following lines of business: commercial property and casualty insurance (CNA Financial Corporation (“CNA”), an 89.5%89.6% owned subsidiary); transportation and storage of natural gas and natural gas liquids (Boardwalk Pipeline Partners, LP (“Boardwalk Pipelines”), a wholly owned subsidiary); and the operation of a chain of hotels (Loews Hotels Holding Corporation (“Loews Hotels & Co”), a wholly owned subsidiary); and the manufacture of rigid plastic packaging solutions (Altium Packaging LLC (“Altium Packaging”), a 99% owned subsidiary). Unless the context otherwise requires, the term “Company” as used herein means Loews Corporation including its consolidated subsidiaries, the term “Net income (loss) attributable to Loews Corporation” as used herein means Net income (loss) attributable to Loews Corporation shareholders and the term “subsidiaries” means Loews Corporation’s consolidated subsidiaries.


On April 1, 2021, Loews Corporation sold 47% of its interest in Altium Packaging.Packaging, previously a 99% owned subsidiary. See Note 2 for further discussion.


As a result of the April 26, 2020 bankruptcy filing of Diamond Offshore Drilling, Inc. (“Diamond Offshore”) and certain of its subsidiaries and applicable accounting principles generally accepted in the United States of America (“GAAP”), Diamond Offshore was deconsolidated from Loews Corporation’s consolidated financial statements in the second quarter of 2020. Loews Corporation’s operating results for the first quarter of 2020 include the operations of Diamond Offshore. During the first quarter of 2020, Diamond Offshore recorded an aggregate asset impairment charge of $774 million ($408 million after tax and noncontrolling interests), which is reported within Operating expenses and other on the Consolidated Condensed Statements of Operations. For additional information regarding the deconsolidation of Diamond Offshore and the Diamond Offshore asset impairments, see Notes 2 and 6 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.


In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of March 31,September 30, 2021 and December 31, 2020, and results of operations, comprehensive lossincome (loss) and changes in shareholders’ equity for the three and nine months ended September 30, 2021 and 2020 and cash flows for the threenine months ended March 31,September 30, 2021 and 2020. Net income (loss) for the third quarter and first quarternine months of each of the years is not necessarily indicative of net income (loss) for that entire year. These Consolidated Condensed Financial Statements should be read in conjunction with the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.


The Company presents basic and diluted net income (loss) per share on the Consolidated Condensed Statements of Operations. Basic net income (loss) per share excludes dilution and is computed by dividing net income (loss) attributable to common stock by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the three and nine months ended March 31,September 30, 2021, there were 0 shares attributable to employee stock-based compensation awards excluded from the diluted weighted average shares outstanding amounts because the effect would have been antidilutive.


Recently issued ASUs – In August of 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-12, “Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.” The updated accounting guidance requires changes to the measurement and disclosure of long-duration contracts. The guidance requires entities to update annually cash flow assumptions, including morbidity and persistency, and update quarterly discount rate assumptions using an upper-medium grade fixed-income instrument yield. The effect of changes in cash flow assumptions will be recorded in Net income and the effect of changes in discount rate assumptions will be recorded in Other comprehensive income (“OCI”). This guidance is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. The guidance may be applied using either a modified retrospective transition method or a full retrospective transition method. The guidance requires restatement of prior periods presented. The Company plans to adopt on the effective date, using the modified retrospective transition method and is currently evaluating the effect the updated guidance will have on its consolidated financial statements, including the increased disclosure requirements. The annual updating of cash flow assumptions is expected to increase income statement volatility. While the requirements of the new guidance represent a material change from existing accounting guidance, the underlying economics of the business and related cash flows will be unchanged.

8
Index
2.  Significant TransactionTransactions

Altium Packaging


On March 12,April 1, 2021, Loews Corporation entered into a definitive agreement to sellsold 47% of its interest in Altium Packaging to GIC, Singapore’s sovereign wealth fund. On April 1, 2021, the transaction closed and Loews Corporation received approximatelyfund, for $420 million in cash consideration, subject to expenses and post-closing adjustments.consideration. Loews Corporation will shareshares certain participating rights with GIC related to capital allocation and other decisions by Altium Packaging. Therefore, in accordance with Accounting Standards Codification (“ASC”) 810, “Consolidation,” Altium Packaging will bewas deconsolidated from Loews Corporation’s consolidated financial statements effective as of April 1, 2021. The assets and liabilities ofEffective April 1, 2021, Loews Corporation’s investment in Altium Packaging have been classified as heldis accounted for sale at March 31, 2021,under the equity method of accounting, with the investment reported in Other assets on the Consolidated Condensed Balance Sheets and a deferred tax liability of $35 million was recordedequity income (loss) reported in the three months ended March 31, 2021. Assets held for sale of $1.8 billion primarily consist of property, plant and equipment of $0.5 billion, goodwill of $0.4 billion, intangible assets of $0.5 billionOperating expenses and other assetson the Consolidated Condensed Statements of $0.4 billion. Liabilities held for sale of $1.5 billion primarily consist of $1.1 billion of long term debt and other liabilities of $0.4 billion.Operations.

9
Index

The transaction will resultresulted in a pretax gain of approximately $560$555 million to be recorded in($438 million after tax) for the second quarter ofnine months ended September 30, 2021, and the retained 53% investment in Altium Packaging will initially be recorded at an estimated fair value of $475 million. The gain will bewhich is recorded in Investment gains (losses) on the Consolidated Condensed Statement of Operations. Effective April 1, 2021,Loews Corporation’s retained investment in Altium Packaging was recorded at an estimated fair value of $473 million. The difference between the fair value of Loews Corporation’s investment in Altium Packaging and Loews Corporation’s 53% share of the carrying value of Altium Packaging’s net assets was attributed to definite lived intangible assets and goodwill. The amortization of the amounts attributed to definite lived intangible assets will be accountedrecognized as a component of equity income (loss) reported in Operating expenses and other on the Consolidated Condensed Statements of Operations. The assets and liabilities deconsolidated from the Consolidated Condensed Balance Sheets were property, plant and equipment of $490 million, goodwill of $436 million, intangible assets of $488 million, other assets of approximately $370 million, long term debt of $1.1 billion and other liabilities of approximately $380 million.

Diamond Offshore


As a result of the April 26, 2020 (“the Filing Date”) bankruptcy filing of Diamond Offshore Drilling, Inc. (“Diamond Offshore”) and certain of its subsidiaries and applicable accounting principles generally accepted in the United States of America (“GAAP”), Diamond Offshore was deconsolidated from Loews Corporation’s consolidated financial statements in the second quarter of 2020. Through the Filing Date, Diamond Offshore’s results were included in Loews Corporation’s consolidated financial statements and Loews Corporation recognized in its earnings its proportionate share of Diamond Offshore’s losses through such date. The deconsolidation resulted in the recognition of a loss of $1.2 billion ($957 million after tax) during the nine months ended September 30, 2020, which is reported within Investment gains (losses) on the Consolidated Condensed Statements of Operations. During the nine months ended September 30, 2020, Diamond Offshore also recorded an aggregate asset impairment charge of $774 million ($408 million after tax and noncontrolling interests), which is reported within Operating expenses and other on the Consolidated Condensed Statements of Operations. For additional information regarding the deconsolidation of Diamond Offshore and the Diamond Offshore asset impairments, see Notes 2 and 6 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for under the equity method of accounting.
year ended December 31, 2020.

3. Investments


Net investment income is as follows:

Three Months Ended March 31 2021  2020 
Three Months Ended Nine Months Ended 
September 30, 
September 30,
 
2021 2020 2021 2020 
(In millions)              
              
Fixed maturity securities $428  $438  $425  $432  $1,278  $1,300 
Limited partnership investments  47   (102)  89   71   285   26 
Short term investments      7   1   2   1   11 
Equity securities  29   (44)  4   18   53   24 
Income (loss) from trading portfolio (a)  50   (129)  (30)  22   46     
Other  16   14   12   14   42   44 
Total investment income  570   184   501   559   1,705   1,405 
Investment expenses  (20)  (21)  (18)  (19)  (56)  (58)
Net investment income $550  $163  $483  $540  $1,649  $1,347 

(a)
Net unrealized gains (losses) relatedinvestment income recognized due to changesthe change in fair value on securities still held were $32as of September 30, 2021 and $(117)2020 was $(55) and $11 for the three months ended March 31,September 30, 2021 and 2020 and $(9) and $13 for the nine months ended September 30, 2021 and 2020.

10
Index

Investment gains (losses) are as follows:

Three Months Ended March 31 2021  2020 
 Three Months Ended  Nine Months Ended 
 September 30,  
September 30,
 
 2021  2020  2021  2020 
(In millions)                  
                  
Fixed maturity securities $38  $(75)
Fixed maturity securities:          
 
Gross gains $50  $44  $159  $175 
Gross losses  (28)  (18)  (68)  (207)
Investment gains (losses) on fixed maturity securities  22   26   91   (32)
Equity securities  2   (133)  (2)  25   17   (45)
Derivative instruments  17   5   2   (2)  7   (7)
Short term investments and other      (13)      (3)  2   (17)
Altium Packaging (see Note 2)          555     
Diamond Offshore (see Note 2)          (15)  (1,211)
Investment gains (losses) (a) $57  $(216) $22  $46  $657  $(1,312)

(a)
Gross investment gains on available-for-sale securities were $58 and $29 for the three months ended March 31, 2021 and 2020. Gross investment losses on available-for-sale securities were $20 and $104 for the three months ended March 31, 2021 and 2020. During the three and nine months ended March 31,September 30, 2021, $2 of investment losses and $15 of investment gains were recognized due to the change in fair value of non-redeemable preferred stock still held as of September 30, 2021. During the three and nine months ended September 30, 2020, $2$25 of investment gains and $133$44 of investment losses were recognized due to the change in fair value of non-redeemable preferred stock still held as of March 31,2021 and September 30, 2020.
9
Index


The following tables present the activity related to the allowance on available-for-sale securities with credit impairments and purchased credit-deteriorated (“PCD”) assets. Accrued interest receivables on available-for-sale fixed maturity securities totaled $389$387 million, $371$371 million and $390$390 million as of March 31,September 30, 2021, December 31, 2020 and March 31,September 30, 2020 and are excluded from the estimate of expected credit losses and the amortized cost basis in the tables within this Note.

Three months ended March 31, 2021 
Corporate and
Other Bonds
  Asset-backed  Total 
 Corporate and  Asset-    
Three months ended September 30, 2021 Other Bonds  backed  Total 
(In millions)                  
                  
Allowance for credit losses:                  
Balance as of January 1, 2021 $23  $17  $40 
Balance as of July 1, 2021
 $24  $21  $45 
Additions to the allowance for credit losses:                        
Securities for which credit losses were not previously recorded  14       14             
Available-for-sale securities accounted for as PCD assets  2       2   2   
   2 
                        
Reductions to the allowance for credit losses:                        
Securities sold during the period (realized)  6       6             
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis            
Write-offs charged against the allowance
  16       16 
                        
Additional decreases to the allowance for credit losses on securities that had an allowance recorded in a previous period  (6)  (1)  (7)
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period  
  
   
Total allowance for credit losses $27  $16  $43  $10  $21  $31 
            
Three months ended March 31, 2020            
            
Allowance for credit losses:            
Balance as of January 1, 2020 $0  $0  $0 
Additions to the allowance for credit losses:            
Impact of adopting ASC 326  6       6 
Securities for which credit losses were not previously recorded  48       48 
Available-for-sale securities accounted for as PCD assets  1       1 
            
Reductions to the allowance for credit losses:            
Securities sold during the period (realized)  5       5 
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis  1       1 
Total allowance for credit losses $49  $0  $49 

Three months ended September 30, 2020         
          
Allowance for credit losses:         
Balance as of July 1, 2020
 $39  $12  $51 
Additions to the allowance for credit losses:            
Securities for which credit losses were not previously recorded  4   
   4 
Available-for-sale securities accounted for as PCD assets  1       1 
             
Reductions to the allowance for credit losses:            
Securities sold during the period (realized)  9       9 
Write-offs charged against the allowance
            
             
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period  (1)  1   
Total allowance for credit losses $34  $13  $47 

11
Index
  Corporate and
  Asset-
    
Nine months ended September 30, 2021 Other Bonds  backed  Total 
(In millions)         
          
Allowance for credit losses:         
Balance as of January 1, 2021
 $23  $17  $40 
Additions to the allowance for credit losses:            
Securities for which credit losses were not previously recorded  14       14 
Available-for-sale securities accounted for as PCD assets  4   4   8 
             
Reductions to the allowance for credit losses:            
Securities sold during the period (realized)  6       6 
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis            
Write-offs charged against the allowance
  16       16 
             
Additional increases or (decrease) to the allowance for credit losses on securities that had an allowance recorded in a previous period  (9)      (9)
Total allowance for credit losses $10  $21  $31 

Nine months ended September 30, 2020         
          
Allowance for credit losses:         
Balance as of January 1, 2020 $0  $0  $0 
Additions to the allowance for credit losses:            
Impact of adopting ASC 326  6       6 
Securities for which credit losses were not previously recorded  62   12   74 
Available-for-sale securities accounted for as PCD assets  3       3 
             
Reductions to the allowance for credit losses:            
Securities sold during the period (realized)  15       15 
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis  1       1 
Write-offs charged against the allowance
            
             
Additional increases or (decrease) to the allowance for credit losses on securities that had an allowance recorded in a previous period  (21)  1   (20)
Total allowance for credit losses $34  $13  $47 


The components of available-for-sale impairment losses recognized in earnings by asset type are presented in the following table. The table includes losses on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date:

Three Months Ended March 31 2021  2020 
 Three Months Ended  Nine Months Ended 
 September 30,  September 30, 
 2021  2020  2021  2020 
(In millions)                  
                  
Fixed maturity securities available-for-sale:                  
Corporate and other bonds $7  $91  

 $4 $5  $94 
Asset-backed  (1)  1  $11   1   11   14 
Impairment losses recognized in earnings $6  $92  $11 $5  $16  $108 


There were $3 million and $16 million of losses on mortgage loans recognized during the three and nine months ended September 30, 2020 primarily due to changes in expected credit losses. There were 0 losses recognized on mortgage loans during the three and nine months ended March 31,September 30, 2021. During the three months ended March 31, 2020, $13 million of losses were recognized related to mortgage loans due to changes in expected credit losses.

10
12
Index


The amortized cost and fair values of fixed maturity securities are as follows:

March 31, 2021
 
Cost or
Amortized
Cost
  
Gross
Unrealized
Gains
  
Gross
Unrealized
Losses
  
Allowance
for Credit
Losses
  
Estimated
Fair Value
 
 Cost or


Gross


Gross


Allowance



 
  Amortized   Unrealized   Unrealized   for Credit
   Estimated 
September 30, 2021
 Cost  Gains  Losses  Losses  Fair Value 
(In millions)                              
                              
Fixed maturity securities:                              
Corporate and other bonds $21,110  $2,644  $71  $27  $23,656  $21,608  $2,967  $42  $10  $24,523 
States, municipalities and political subdivisions  10,041   1,590   31       11,600   10,384   1,610   15       11,979 
Asset-backed:                                        
Residential mortgage-backed  3,215   108   40       3,283   3,176   89   6       3,259 
Commercial mortgage-backed  1,952   76   24   16   1,988   2,064   85   16   17   2,116 
Other asset-backed  2,281   71   7       2,345   2,429   76   4   4   2,497 
Total asset-backed  7,448   255   71   16   7,616   7,669   250   26   21   7,872 
U.S. Treasury and obligations of government-sponsored enterprises  138   1   7       132   139   1   4       136 
Foreign government  508   23   2       529   521   19   2       538 
Redeemable preferred stock  12               12   12               12 
Fixed maturities available-for-sale  39,257   4,513   182   43   43,545   40,333   4,847   89   31   45,060 
Fixed maturities trading  36   3           39   9               9 
Total fixed maturity securities $39,293  $4,516  $182  $43  $43,584  $40,342  $4,847  $89  $31  $45,069 

December 31, 2020
               
                
Fixed maturity securities:               
Corporate and other bonds $20,792  $3,578  $22  $23  $24,325 
States, municipalities and political subdivisions  9,729   1,863           11,592 
Asset-backed:                    
Residential mortgage-backed  3,442   146   1       3,587 
Commercial mortgage-backed  1,933   93   42   17   1,967 
Other asset-backed  2,179   81   9       2,251 
Total asset-backed  7,554   320   52   17   7,805 
U.S. Treasury and obligations of government-sponsored enterprises  339   2   3       338 
Foreign government  512   32           544 
Fixed maturities available-for-sale  38,926   5,795   77   40   44,604 
Fixed maturities trading  37   5           42 
Total fixed maturity securities $38,963  $5,800  $77  $40  $44,646 


The net unrealized gains on available-for-sale investments included in the tables above are recorded as a component of Accumulated other comprehensive income (loss) (“AOCI”). When presented in AOCI, these amounts are net of tax and noncontrolling interests and any required Shadow Adjustments. To the extent that unrealized gains on fixed income securities supporting long term care products and structured settlements not funded by annuities would result in a premium deficiency if those gains were realized, a related increase in Insurance reserves is recorded, net of tax and noncontrolling interests, as a reduction of net unrealized gains through Other comprehensive income (loss) (“Shadow Adjustments”). As of March 31,September 30, 2021 and December 31, 2020, the net unrealized gains on investments included in AOCI were correspondingly reduced by Shadow Adjustments of $2.1$2.2 billion and $2.5 billion (after tax and noncontrolling interests).

11
13
Index


The available-for-sale securities in a gross unrealized loss position for which an allowance for credit losses has not been recorded are as follows:

 
Less than
12 Months
  
12 Months
or Longer
  Total 
March 31, 2021
 
Estimated
Fair Value
  
Gross
Unrealized
Losses
  
Estimated
Fair Value
  
Gross
Unrealized
Losses
  
Estimated
Fair Value
  
Gross
Unrealized
Losses
 
(In millions)                  
                   
Fixed maturity securities:                  
Corporate and other bonds $1,868  $66  $82  $5  $1,950  $71 
States, municipalities and political subdivisions  866   31           866   31 
Asset-backed:                        
Residential mortgage-backed  1,584   40   12       1,596   40 
Commercial mortgage-backed  320   9   285   15   605   24 
Other asset-backed  337   3   97   4   434   7 
Total asset-backed  2,241   52   394   19   2,635   71 
U.S. Treasury and obligations of government-sponsored enterprises  65   7           65   7 
Foreign government  45   2           45   2 
Total fixed maturity securities $5,085  $158  $476  $24  $5,561  $182 

December 31, 2020                  
                   
Fixed maturity securities:                  
Corporate and other bonds $609  $21  $12  $1  $621  $22 
States, municipalities and political subdivisions  33               33     
Asset-backed:                        
Residential mortgage-backed  71   1   11       82   1 
Commercial mortgage-backed  533   40   28   2   561   42 
Other asset-backed  344   9   13       357   9 
Total asset-backed  948   50   52   2   1,000   52 
U.S. Treasury and obligations of government-sponsored enterprises  63   3           63   3 
Foreign government  13               13     
Total fixed maturity securities $1,666  $74  $64  $3  $1,730  $77 

   Less than
   12 Months
    
 12 Months  or Longer  Total 
      Gross     Gross
     Gross
 
   Estimated   Unrealized  Estimated
   Unrealized  Estimated
   Unrealized 
September 30, 2021
 Fair Value  Losses  Fair Value  Losses  Fair Value  Losses 
(In millions)                  
                   
Fixed maturity securities:                  
Corporate and other bonds $1,853  $37  $88  $5  $1,941  $42 
States, municipalities and political subdivisions  885   15           885   15 
Asset-backed:                        
Residential mortgage-backed  1,295   6   
       1,295   6 
Commercial mortgage-backed  317   4   194   12   511   16 
Other asset-backed  439   3   58   1   497   4 
Total asset-backed  2,051   13   252   13   2,303   26 
U.S. Treasury and obligations of government-sponsored enterprises  65   4   1       66   4 
Foreign government  73   2           73   2 
Total fixed maturity securities $4,927  $71  $341  $18  $5,268  $89 
                         
December 31, 2020
                        
                         
Fixed maturity securities:                        
Corporate and other bonds $609  $21  $12  $1  $621  $22 
States, municipalities and political subdivisions  33               33     
Asset-backed:                        
Residential mortgage-backed  71   1   11       82   1 
Commercial mortgage-backed  533   40   28   2   561   42 
Other asset-backed  344   9   13       357   9 
Total asset-backed  948   50   52   2   1,000   52 
U.S. Treasury and obligations of government-sponsored enterprises  63   3           63   3 
Foreign government  13               13     
Total fixed maturity securities $1,666  $74  $64  $3  $1,730  $77 


Based on current facts and circumstances, the Company believes the unrealized losses presented in the March 31,September 30, 2021 securities in a gross unrealized loss position table above are not indicative of the ultimate collectability of the current amortized cost of the securities, but rather are attributable to changes in interest rates, credit spreads and other factors. There is no current intent to sell securities with unrealized losses, nor is it more likely than not that sale will be required prior to recovery of amortized cost; accordingly, it was determined that there are 0 additional impairment losses to be recorded at March 31,September 30, 2021.

Contractual Maturity


The following table presents available-for-sale fixed maturity securities by contractual maturity.

 September 30, 2021  December 31, 2020 
 Cost or


Estimated


Cost or


Estimated
 
 March 31, 2021  December 31, 2020  Amortized


Fair


Amortized


Fair
 
 
Cost or
Amortized
Cost
  
Estimated
Fair
Value
  
Cost or
Amortized
Cost
  
Estimated
Fair
Value
  Cost  Value  Cost  Value 
(In millions)                        
                        
Due in one year or less $1,468  $1,473  $1,456  $1,458  $1,648  $1,656  $1,456  $1,458 
Due after one year through five years  10,837   11,583   12,304   13,098   10,776   11,517   12,304   13,098 
Due after five years through ten years  13,640   14,685   12,319   13,878   13,628   14,794   12,319   13,878 
Due after ten years  13,312   15,804   12,847   16,170   14,281   17,093   12,847   16,170 
Total $39,257  $43,545  $38,926  $44,604  $40,333  $45,060  $38,926  $44,604 

12
Index

Actual maturities may differ from contractual maturities because certain securities may be called or prepaid. Securities not due at a single date are allocated based on weighted average life.

14
Index
Mortgage Loans


The following table presents the amortized cost basis of mortgage loans for each credit quality indicator by year of origination. The primary credit quality indicators utilized are debt service coverage ratios (“DSCR”) and loan-to-value (“LTV”) ratios:ratios.

 Mortgage Loans Amortized Cost Basis by Origination Year (a)  Mortgage Loans Amortized Cost Basis by Origination Year (a) 
As of March 31, 2021
 2021  2020  2019  2018  2017  Prior  Total 
As of September 30, 2021
 2021  2020  2019  2018  2017  Prior  Total 
(In millions)                                          
                                          
DSCR ≥1.6x                                          
LTV less than 55%    $75  $32  $36  $114  $187  $444  $
 8  $
75  $
16  $
37  $
116  $
203  $
455 
LTV 55% to 65%     14   20   14   15   11   74     38   15   18   
   1   72 
LTV greater than 65% $5       5           24   34  
17       14   7       23   61 
DSCR 1.2x - 1.6x                                                        
LTV less than 55%          16       5   77   98   13   15   95       5   58   186 
LTV 55% to 65%      20   40   53   27       140   25   
   
   24   10   4   63 
LTV greater than 65%  10   52   44       9   12   127       24   9       8   
   41 
DSCR ≤1.2x                                                        
LTV less than 55%          50       8   10   68           35       30   
   65 
LTV 55% to 65%          48               48           42               42 
LTV greater than 65%          29           7   36       9   56           7   72 
Total $15  $161  $284  $103  $178  $328  $1,069  $63  $161  $282  $86  $169  $296  $1,057 

(a)The values in the table above reflect DSCR on a standardized amortization period and LTV ratios based on the most recent appraised values trended forward using changes in a commercial real estate price index.

Derivative Financial Instruments


A summary of the aggregate contractual or notional amounts and gross estimated fair values related to derivative financial instruments follows. The contractual or notional amounts for derivatives are used to calculate the exchange of contractual payments under related agreements and may not be representative of the potential for gain or loss on these instruments. Gross estimated fair values of derivative positions are currently presented in Equity securities, Receivables and Payable to brokers on the Consolidated Condensed Balance Sheets.

 September 30, 2021  December 31, 2020 
 March 31, 2021  December 31, 2020  Contractual/        Contractual/       
 
Contractual/
Notional
  Estimated Fair Value  
Contractual/
Notional
  Estimated Fair Value  Notional  Estimated Fair Value  Notional  Estimated Fair Value 
 Amount  Asset  (Liability)  Amount  Asset  (Liability)  Amount  Asset  (Liability)  Amount  Asset  (Liability) 
(In millions)    _   -                            
                                     
With hedge designation:                                     
Interest rate swaps (a)           $675     $(26)
Interest rate swaps 

  

  

  $
675  

  $(26)
                                             
Without hedge designation:                                             
                     
Equity markets:                                             
Options – purchased $200  $2  _   135  $3      $1           135  $3     
Interest rate swaps  100      $(2)  100       (3)  100      $(1)  100       (3)
Embedded derivative on funds withheld liability  256       (2)  190       (19)  272       (11)  190       (19)

(a)As of March 31, 2021, Interest rate swaps exclude amounts classified as held for sale. See Note 2 for further discussion.
13
Index

Investment Commitments


As part of the overall investment strategy, investments are made in various assets which require future purchase, sale or funding commitments. These investments are recorded once funded, and the related commitments may include future capital calls from various third-party limited partnerships, signed and accepted mortgage loan applications and obligations related to private placement securities. As of March 31,September 30, 2021,commitments to purchase or fund were approximately $1.4$1.3 billion and to sell were approximately $100$55 million under the terms of these investments.

15
Index
4. Fair Value


Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable:

●Level 1 – Quoted prices for identical instruments in active markets.

●Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

●Level 3 – Valuations derived from valuation techniques in which one or more significant inputs are not observable.


Prices may fall within Level 1, 2 or 3 depending upon the methodology and inputs used to estimate fair value for each specific security. In general, securities are priced using third party pricing services. Securities not priced by pricing services are submitted to independent brokers for valuation and, if those are not available, internally developed pricing models are used to value assets using a methodology and inputs the Company believesthat market participants presumably would use to value the assets. Prices obtained from third-party pricing services or brokers are not adjusted.


Control procedures are performed over information obtained from pricing services and brokers to ensure prices received represent a reasonable estimate of fair value and to confirm representations regarding whether inputs are observable or unobservable. Procedures may include:  (i) the review of pricing service methodologies or broker pricing qualifications, (ii) back-testing, where past fair value estimates are compared to actual transactions executed in the market on similar dates, (iii) exception reporting, where period-over-period changes in price are reviewed and challenged with the pricing service or broker based on exception criteria and (iv) detailed analysis, where an independent analysis of the inputs and assumptions used to price individual securities is performed.performed.


Assets and liabilities measured at fair value on a recurring basis are summarized in the following tables. Corporate bonds and other includes obligations of the U.S. Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.stock.

March 31, 2021 Level 1  Level 2  Level 3  Total 
September 30, 2021
 Level 1  Level 2  Level 3  Total 
(In millions)                        
                        
Fixed maturity securities:                        
Corporate bonds and other $152  $23,410  $767  $24,329  $146  $24,186  $877  $25,209 
States, municipalities and political subdivisions      11,556   44   11,600       11,922   57   11,979 
Asset-backed      7,301   315   7,616       7,394   478   7,872 
Fixed maturities available-for-sale  152   42,267   1,126   43,545   146   43,502   1,412   45,060 
Fixed maturities trading      34   5   39       9       9 
Total fixed maturities $152  $42,301  $1,131  $43,584  $146  $43,511  $1,412  $45,069 
                                
Equity securities $824  $711  $45  $1,580  $890  $745  $25  $1,660 
Short term and other (a)  4,140   36       4,176   4,063           4,063 
Payable to brokers (a)  (71)  (2)      (73)  (118)  (1)      (119)

(a)As of March 31, 2021, Short term and other and Payable to brokers exclude amounts classified as held for sale. See Note 2 for further discussion.
December 31, 2020
            
             
Fixed maturity securities:            
Corporate bonds and other $355  $24,082  $770  $25,207 
States, municipalities and political subdivisions      11,546   46   11,592 
Asset-backed      7,497   308   7,805 
Fixed maturities available-for-sale  355   43,125   1,124   44,604 
Fixed maturities trading      34   8   42 
Total fixed maturities $355  $43,159  $1,132  $44,646 
                 
Equity securities $796  $722  $43  $1,561 
Short term and other  4,538   39       4,577 
Payable to brokers  (14)  (29)      (43)
14
16
Index

December 31, 2020 Level 1  Level 2  Level 3  Total 
(In millions)            
Fixed maturity securities:            
Corporate bonds and other $355  $24,082  $770  $25,207 
States, municipalities and political subdivisions      11,546   46   11,592 
Asset-backed      7,497   308   7,805 
Fixed maturities available-for-sale  355   43,125   1,124   44,604 
Fixed maturities trading      34   8   42 
Total fixed maturities $355  $43,159  $1,132  $44,646 
                 
Equity securities $796  $722  $43  $1,561 
Short term and other  4,538   39       4,577 
Payable to brokers  (14)  (29)      (43)

15
Index

The following tables present reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended March 31,September 30, 2021 and 2020:2020:

                            Unrealized 
                            Gains 
                         Unrealized  (Losses) 
                         Gains  Recognized in 
    Net Realized                    (Losses)  Other 
    Investment Gains                    Recognized in  Comprehensive 
    (Losses) and Net Change                    Net Income  Income (Loss) 
    in Unrealized Investment                    (Loss) on Level  on Level 3 
    Gains (Losses)                    3 Assets and  Assets and 
    Included in              Transfers  Transfers     Liabilities  Liabilities 
    
Net Realized Investment
Gains (Losses) and Net
Change in Unrealized
Investment Gains (Losses)
           Transfers  Transfers     
Unrealized
Gains
(Losses)
Recognized in
Net Income
(Loss) on Level
3 Assets and
Liabilities
  
Unrealized
Gains
(Losses)
Recognized in
Other
Comprehensive
Income (Loss)
on Level 3
Assets and
Liabilities
  Balance,  Net Income  Included in           into  out of  Balance,  Held at  Held at 
2021 
Balance,
January 1
  
Included in
Net Income
  
Included in
OCI
  Purchases  Sales  Settlements  
into
Level 3
  
out of
Level 3
  
Balance,
March 31
  
Held at
March 31
  
Held at
March 31
  July 1  (Loss)  OCI  Purchases  Sales  Settlements  Level 3  Level 3  September 30  September 30  September 30 
(In millions)                                                                  
                                                                  
Fixed maturity securities:                                                                  
Corporate bonds and other $770  $(13) $(40) $42     $(2) $10     $767     $(40) $883  $1  $1  $55  
   $(11)    $
(52) $877     $2 
States, municipalities and political Subdivisions  46       (2)                    44      (2)
States, municipalities and political subdivisions  57                              57        
Asset-backed  308   2   (9)  30      (17)  9  $(8)  315      (9)  410   1   1   83  $
(9)  (11) $41  
(38)  478        
Fixed maturities available-for-sale  1,124   (11)  (51)  72  $0   (19)  19   (8)  1,126  $0   (51)  1,350   2   2   138   (9)  (22)  41   (90)  1,412  $0   2 
Fixed maturities trading  8   (3)                          5   (3)      0                               0         
Total fixed maturities $1,132  $(14) $(51) $72  $0  $(19) $19  $(8) $1,131  $(3) $(51) $1,350  $2  $2  $138  $(9) $(22) $41  $(90) $1,412  $0  $2 
                                                                                        
Equity securities $43  $2                          $45  $2      $36  $(2)     $1  $(11)     $
11  $
(10) $25  $
(3)    

16
17
Index

    
























Unrealized 
    
























Gains 
    





















Unrealized

(Losses) 
    





















Gains

Recognized in 
    
Net Realized



















(Losses)

Other 
    
Investment Gains



















Recognized in

Comprehensive 
    
(Losses) and Net Change



















Net Income

Income (Loss) 
    
in Unrealized Investment



















(Loss) on Level

on Level 3 
    
Gains (Losses)



















3 Assets and

Assets and 
     Included in              Transfers  Transfers     Liabilities  Liabilities 
  Balance,  Net Income  Included in           into  out of  Balance,  Held at  Held at 
2020 July 1  (Loss)  OCI  Purchases  Sales  Settlements  Level 3  Level 3  September 30  September 30  September 30 
(In millions)                                 
                                  
Fixed maturity securities:                                 
Corporate bonds and other $555      $5  $129     $(3)
$
8
      $694      $5 
States, municipalities and political subdivisions  0           45                  45         
Asset-backed  222       9   20  

  (14)     $(2)  235       8 
Fixed maturities available-for-sale  777  $0   14   194  $
0  (17) 
8   (2)  974  $0   13 
Fixed maturities  trading  4   4                           8   4     
Total fixed maturities $781  $4  $14  $194  $
0 $(17) $8  $(2) $982  $4  $13 
                                             
Equity securities $27  

  
   $12          

      $39  

    

    
Net Realized Investment
Gains (Losses) and Net
Change in Unrealized
Investment Gains (Losses)
           Transfers  Transfers     
Unrealized
Gains
(Losses)
Recognized in
Net Income
(Loss) on Level
3 Assets and
Liabilities
  
Unrealized
Gains
(Losses)
Recognized in
Other
Comprehensive
Income (Loss)
on Level 3
Assets and
Liabilities
 
2020 
Balance,
January 1
  
Included in
Net Income
  
Included in
OCI
  Purchases  Sales  Settlements  
into
Level 3
  
out of
Level 3
  
Balance,
March 31
  
Held at
March 31
  
Held at
March 31
 
(In millions)                                 
                                  
                                  
Fixed maturity securities:                                 
Corporate bonds and other $468     $(37) $67     $(2)       $496     $(35)
Asset-backed  165      (9)  45      (3)    $(1)  197      (9)
Fixed maturities available-for-sale  633  $0   (46)  112  $0   (5) $0   (1)  693  $0   (44)
Fixed maturities  trading  4   (1)                          3   (1)    
Total fixed maturities $637  $(1) $(46) $112  $0  $(5) $0  $(1) $696  $(1) $(44)
                                             
Equity securities $19  $(3)                         $16  $(3)    
18
Index
                             Unrealized 
                             Gains 
                          Unrealized  (Losses) 
                          Gains  Recognized in 
     Net Realized  
              
  (Losses)  Other 
     Investment Gains  
              
  Recognized in  Comprehensive 
     (Losses) and Net Change  
              
  Net Income  Income (Loss) 
     in Unrealized Investment  
              
  (Loss) on Level  on Level 3 
     Gains (Losses)  
              
  3 Assets and  Assets and 
     Included in              Transfers  Transfers     Liabilities  Liabilities 
  Balance,  Net Income  Included in           into  out of  Balance,  Held at  Held at 
2021 January 1  (Loss)  OCI  Purchases  Sales  Settlements  Level 3  Level 3  September 30  September 30  September 30 
(In millions)                                 
                                  
Fixed maturity securities:                                 
Corporate bonds and other $770  $(9) $(23) $219  $(3) $(35) $10  $(52) $877     $(22)
States, municipalities and political subdivisions  46           12       (1)          57        
Asset-backed  308   4   (4)  197   (9)  (38)  71   (51)  478      (5)
Fixed maturities available-for-sale  1,124   (5)  (27)  428   (12)  (74)  81   (103)  1,412  $0   (27)
Fixed maturities trading  8   (6)              (2)          0         
Total fixed maturities $1,132  $(11) $(27) $428  $(12) $(76) $81  $
(103) $1,412  $0  $(27)
                                             
Equity securities $43  $(15)     $11  $(15)     $11  $(10) $25  $(1)    

19
Index

                              Unrealized 
                              Gains 
                           Unrealized   (Losses) 
                           Gains  Recognized in
 
      Net Realized                     (Losses)   Other 
      Investment Gains                    Recognized in
  Comprehensive
 
      (Losses) and Net Change                     Net Income  Income (Loss)
 
      in Unrealized Investment                     (Loss) on Level   on Level 3 
      Gains (Losses)                     3 Assets and  Assets and
 
     Included in              Transfers  Transfers     Liabilities  Liabilities 
  Balance,  Net Income  Included in           into  out of  Balance,  Held at  Held at 
2020 January 1  (Loss)  OCI  Purchases  Sales  Settlements  Level 3  Level 3  
September 30
  
September 30
  
September 30
 
(In millions)                                 
                                  
Fixed maturity securities:                                 
Corporate bonds and other $468      $27  $200     $(9) $
8
      $694      $29 
States, municipalities and political subdivisions  
0
           45                  45         
Asset-backed  165       18   100  $(9)  (22)     $(17)  235       19 
Fixed maturities available-for-sale  633  $0   45   345   (9)  (31) 
8   (17)  974  $0   48 
Fixed maturities  trading  4   4                           8   4     
Total fixed maturities $637  $4  $45  $345  $(9) $(31) $8  $(17) $982  $4  $48 
                                             
Equity securities $19  $(7)      $12          $15      $39  $(7)    


Net investment gains and losses are reported in Net income (loss) as follows:

Major Category of Assets and LiabilitiesConsolidated Condensed Statements of Operations Line Items
  
Fixed maturity securities available-for-saleInvestment gains (losses)
Fixed maturity securities tradingNet investment income
Equity securitiesInvestment gains (losses) and Net investment income
Other invested assetsInvestment gains (losses) and Net investment income
Derivative financial instruments held in a trading portfolioNet investment income
Derivative financial instruments, otherInvestment gains (losses) and Operating revenues and other

17
20

Securities may be transferred in or out of levels within the fair value hierarchy based on the availability of observable market information and quoted prices used to determine the fair value of the security. The availability of observable market information and quoted prices varies based on market conditions and trading volume.

Valuation Methodologies and Inputs


The following section describes the valuation methodologies and relevant inputs used to measure different financial instruments at fair value, including an indication of the level in the fair value hierarchy in which the instruments are generally classified.

Fixed Maturity Securities


Level 1 securities include highly liquid government securities and exchange traded bonds valued using quoted market prices. Level 2 securities include most other fixed maturity securities as the significant inputs are observable in the marketplace. All classes of Level 2 fixed maturity securities are valued using a methodology based on information generated by market transactions involving identical or comparable assets, a discounted cash flow methodology or a combination of both when necessary. Common inputs for all classes of fixed maturity securities include prices from recently executed transactions of similar securities, marketplace quotes, benchmark yields, spreads off benchmark yields, interest rates and U.S. Treasury or swap curves. Specifically for asset-backed securities, key inputs include prepayment and default projections based on past performance of the underlying collateral and current market data. Fixed maturity securities are primarily assigned to Level 3 in cases where broker/dealer quotes are significant inputs to the valuation, and there is a lack of transparency as to whether these quotes are based on information that is observable in the marketplace. Level 3 securities also include private placement debt securities whose fair value is determined using internal models with some inputs that are not market observable.

Equity Securities


Level 1 securities include publicly traded securities valued using quoted market prices. Level 2 securities are primarily valued using pricing for similar securities, recently executed transactions and other pricing models utilizing market observable inputs. Level 3 securities are primarily priced using broker/dealer quotes and internal models with some inputs that are not market observable.

Derivative Financial Instruments


Equity options are valued using quoted market prices and are classified within Level 1 of the fair value hierarchy. Over-the-counter derivatives, principally interest rate swaps, currency forwards, total return swaps, commodity swaps, equity warrants and options, are valued using inputs including broker/dealer quotes and are classified within Level 2 or Level 3 of the valuation hierarchy, depending on the amount of transparency as to whether these quotes are based on information that is observable in the marketplace.

Short Term and Other Invested Assets


Securities that are actively traded or have quoted prices are classified as Level 1. These securities include money market funds, treasury bills and exchange traded open-end funds valued using quoted market prices. Level 2 primarily includes commercial paper, for which all inputs are market observable. Fixed maturity securities purchased within one year of maturity are classified consistent with fixed maturity securities discussed above. Short term investments as presented in the tables above differ from the amounts presented in the Consolidated Condensed Balance Sheets because certain short term investments, such as time deposits, are not measured at fair value.

18
21
Significant Unobservable Inputs


The following tables present quantitative information about the significant unobservable inputs utilized in the fair value measurement of Level 3 assets. Valuations for assets and liabilities not presented in the tables below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of unobservable inputs from these broker quotes is neither provided nor reasonably available. The weighted average rate is calculated based on fair value.

March 31, 2021
Estimated
Fair Value
 
Valuation
Techniques
 
Unobservable
Inputs
 
Range
(Weighted
Average)
 (In millions)      
         
Fixed maturity securities$936 Discounted cash flow Credit spread 1% – 8% (2%)
         
December 31, 2020
        
         
Fixed maturity securities$966 Discounted cash flow Credit spread 1% – 8% (3%)

 





Range
 Estimated

Valuation

Unobservable

(Weighted
September 30, 2021
Fair Value Techniques Inputs Average)
 (In millions)      
         
Fixed maturity securities$1,154 Discounted cash flow Credit spread 1% – 7% (2%)
         
December 31, 2020
        
         
Fixed maturity securities$966 Discounted cash flow Credit spread 1% – 8% (3%)


For fixed maturity securities, an increase to the credit spread assumptions would result in a lower fair value measurement.

Financial Assets and Liabilities Not Measured at Fair Value


The carrying amount, estimated fair value and the level of the fair value hierarchy of the financial assets and liabilities which are not measured at fair value on the Consolidated Condensed Balance Sheets are presented in the following tables. The carrying amounts and estimated fair values of short term debt and long term debt exclude finance lease obligations. The carrying amounts reported on the Consolidated Condensed Balance Sheets for cash and short term investments not carried at fair value and certain other assets and liabilities approximate fair value due to the short term nature of these items.

 Carrying  Estimated Fair Value 
March 31, 2021
 Amount  Level 1  Level 2  Level 3  Total 
(In millions)     -          
                 
Assets:                
Other invested assets, primarily mortgage loans $1,043         $1,107  $1,107 
                    
Liabilities:                   
Short term debt (a)  140          144   144 
Long term debt (a)  8,990      $9,204   622   9,826 
                     
December 31, 2020
                    
                     
Assets:                    
Other invested assets, primarily mortgage loans $1,068          $1,151  $1,151 
                     
Liabilities:                    
Short term debt  35      $19   17   36 
Long term debt  10,042       10,482   765   11,247 

(a)As of March 31, 2021, Short and Long term debt exclude amounts classified as held for sale. See Note 2 for further discussion. 
 Carrying  Estimated Fair Value 
September 30, 2021
 Amount  Level 1  Level 2  Level 3  Total 
(In millions)               
                
Assets:               
Other invested assets, primarily mortgage loans $1,031  
   
   $1,106  $1,106 
                     
Liabilities:                    
Short term debt  186           190   190 
Long term debt  8,919      $9,319   554   9,873 
                     
December 31, 2020
                    
                     
Assets:                    
Other invested assets, primarily mortgage loans $1,068          $1,151  $1,151 
                     
Liabilities:                    
Short term debt  35      $19   17   36 
Long term debt  10,042       10,482   765   11,247 

5. Claim and Claim Adjustment Expense Reserves


Property and casualty insurance claim and claim adjustment expense reserves represent the estimated amounts necessary to resolve all outstanding claims, including incurred but not reported (“IBNR”) claims as of the reporting date. Reserve projections are based primarily on detailed analysis of the facts in each case, experience with similar cases and various historical development patterns. Consideration is given to historical patterns such as claim reserving
19
trends and settlement practices, loss payments, pending levels of unpaid claims and product mix, as well as court decisions and economic conditions, including inflation and public attitudes. All of these factors can affect the estimation of claim and claim adjustment expense reserves.

22

Establishing claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves for catastrophic events that have occurred, is an estimation process. Many factors can ultimately affect the final settlement of a claim and, therefore, the necessary reserve. Changes in the law, results of litigation, medical costs, the cost of repair materials and labor rates can affect ultimate claim costs. In addition, time can be a critical part of reserving determinations since the longer the span between the incidence of a loss and the payment or settlement of the claim, the more variable the ultimate settlement amount can be. Accordingly, short-tail claims, such as property damage claims, tend to be more reasonably estimable than long-tail claims, such as workers’ compensation, general liability and professional liability claims. Adjustments to prior year reserve estimates, if necessary, are reflected in the results of operations in the period that the need for such adjustments is determined. There can be no assurance that the ultimate cost for insurance losses will not exceed current estimates.


Catastrophes are an inherent risk of the property and casualty insurance business and have contributed to material period-to-period fluctuations in the Company’s results of operations and/or equity. The Company reported catastrophe losses, net of reinsurance, of $125$178 million and $75$160 million for the three months ended March 31,September 30, 2021 and 2020 and $357 million and $536 million for the nine months ended September 30, 2021 and 2020. Net catastrophe losses for the three months ended March 31,September 30, 2021 included $114 million for Hurricane Ida. Net catastrophe losses for the nine months ended September 30, 2021 were primarily driven by severe weather-related events, primarily Hurricane Ida and Winter Storms Uri and Viola. Net catastrophe losses for the three months ended March 31,September 30, 2020 were driven by severe weather-related events, primarily Hurricanes Laura, Isaias and Sally and the Midwest derecho. Net catastrophe losses for the nine months ended September 30, 2020 included $13$273 million primarily related to severe weather-related events, $195 million related to the coronavirus (“COVID-19”)COVID-19 pandemic with the remaining $62and $68 million related primarily to U.S. weather related events.civil unrest.

Liability for Unpaid Claim and Claim Adjustment Expenses


The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of other insurance operations.

Three Months Ended March 31
 2021  2020 
(In millions)      
       
Reserves, beginning of year:      
Gross $22,706  $21,720 
Ceded  4,005   3,835 
Net reserves, beginning of year  18,701   17,885 
         
Reduction of net reserves due to the excess workers’ compensation loss portfolio transfer  (632)    
         
Net incurred claim and claim adjustment expenses:        
Provision for insured events of current year  1,474   1,355 
Increase (decrease) in provision for insured events of prior years  (54)  (8)
Amortization of discount  50   51 
Total net incurred (a)  1,470   1,398 
         
Net payments attributable to:        
Current year events  (85)  (72)
Prior year events  (1,067)  (1,218)
Total net payments  (1,152)  (1,290)
         
Foreign currency translation adjustment and other  (32)  (88)
         
Net reserves, end of period  18,355   17,905 
Ceded reserves, end of period  4,701   3,967 
Gross reserves, end of period $23,056  $21,872 
Nine Months Ended September 30
 2021  2020 
(In millions)      
       
Reserves, beginning of year:      
Gross $22,706  
$
21,720
 
Ceded  4,005   
3,835
 
Net reserves, beginning of year  18,701   
17,885
 
         
Reduction of net reserves due to the excess workers’ compensation loss portfolio transfer  (632)    
         
Net incurred claim and claim adjustment expenses:        
Provision for insured events of current year  4,474   
4,425
 
Increase (decrease) in provision for insured events of prior years  (130)  
(68
)
Amortization of discount  137   
143
 
Total net incurred (a)  4,481   
4,500
 
         
Net payments attributable to:        
Current year events  (629)  
(556
)
Prior year events  (2,874)  
(3,285
)
Total net payments  (3,503)  
(3,841
)
         
Foreign currency translation adjustment and other  (51)  
39
 
         
Net reserves, end of period  18,996   
18,583
 
Ceded reserves, end of period  4,836   
3,951
 
Gross reserves, end of period $23,832  
$
22,534
 

(a)
Total net incurred above does not agree to Insurance claims and policyholders’ benefits as reflected on the Consolidated Condensed Statements of Operations due to amounts related to retroactive reinsurance deferred gain accounting, the loss on the excess workers’ compensation loss portfolio transfer, uncollectible reinsurance and benefit expenses related to future policy benefits, which are not reflected in the table above.
above.

20
23
Net Prior Year Development


Changes in estimates of claim and claim adjustment expense reserves net of reinsurance, for prior years are defined as net prior year loss reserve development. These changes can be favorable or unfavorable.


Favorable net prior year loss reserve development of $10 million and $15 million was recorded for commercial property and casualty operations (“Property & Casualty Operations”) for the three months ended March 31,September 30, 2021 and 2020 and favorable net prior year loss reserve development of $36 million and $58 million was recorded for the nine months ended September 30, 2021 and 2020. Unfavorable net prior year loss reserve development of $40 million and $50 million was recorded in CNA’s operations outside of Property & Casualty Operations (“Other Insurance Operations”) for the nine months ended September 30, 2021 and 2020.


The following table and discussion present details of the net prior year claim and claim adjustment expenseloss reserve development in Property & Casualty Operations and Other Insurance Operations:

Three Months Ended March 31 2021  2020 
(In millions)      
       
Medical professional liability $8  $10 
Other professional liability and management liability      3 
Surety  (15)  (30)
Commercial auto      9 
Workers’ compensation      (13)
Property and other  (8)  6 
Total pretax (favorable) unfavorable development $(15) $(15)
  Three Months Ended  Nine Months Ended 
  September 30,
  September 30, 
  2021  2020  2021  2020 
(In millions)            
             
Medical professional liability $8  $25  $16  
$
35
 
Other professional liability and management liability          10   (6)
Surety  (15)  (40)  (53)  (70)
Commercial auto      
9
   30   
33
 
General liability      15       15 
Workers’ compensation  2   
(23
)  (40)  (97)
Property and other  (5)  
(1
)  1   
32
 
Other insurance operations          40   
50
 
Total pretax (favorable) unfavorable development $(10) 
$
(15
) $4  
$
(8
)

Three Months

2021


Favorable development in surety was primarily due to lower than expected frequency and lack of systemic activity in recent accident years.

2020


Unfavorable development in medical professional liability was primarily due to higher than expected frequency of large losses in recent accident years and unfavorable outcomesdevelopment on specific claimsa latent claim for an older accident year.



Favorable development in surety was due to lower than expected frequency and lack of systemic activity for accident years 2019 and prior.


Unfavorable development in general liability was primarily due to increased bodily injury severities in accident years 2012 through 2016 and higher than expected frequency and severity in CNA’s umbrella business in accident years 2015 and 2016through 2019.


Favorable development in the aging services business.workers’ compensation was due to favorable medical trends driving lower than expected severity in multiple accident years.

Nine Months

2021


Unfavorable development in medical professional liability was due to higher than expected frequency of large losses in recent accident years.



Favorable development in surety was primarily due to lower than expected frequency forand lack of systemic activity in recent accident years 2017years.

24

Unfavorable development in commercial auto was due to higher than expected claim severity in CNA’s construction and prior.middle market businesses in recent accident years.


Favorable development in workers’ compensation was due to favorable medical trends driving lower than expected severity in multiple accident years.


Unfavorable development in property and other was due to higher than expected claim severity in CNA’s medical treatment business mostly offset by favorable development due to lower than expected loss emergence across multiple accident years 2016 through 2018.in property, energy and marine.


Unfavorable development in other insurance operations was due to higher than expected emergence in mass tort exposures in older accident years primarily related to abuse.

2020


Unfavorable development in medical professional liability was primarily due to higher than expected frequency of large losses in recent accident years, unfavorable development on a latent claim for an older accident year and unfavorable outcomes on specific claims in accident years 2015 and 2016 in CNA’s aging services business.


Favorable development in surety was due to lower than expected frequency and lack of systemic activity for accident years 2019 and prior.


Unfavorable development in commercial auto was due to unfavorable claim severity in CNA’s middle market and construction businesses in accident years 2017 through 2019.


Unfavorable development in general liability was driven by increased bodily injury severities in accident years 2012 through 2016 and higher than expected frequency and severity in CNA’s umbrella business in accident years 2015 through 2019.


Favorable development in workers’ compensation was due to favorable medical trends driving lower than expected severity in multiple accident years.


Unfavorable development in property and other was primarily due to higher than expected large loss activity in CNA’s middle market, national accounts and marine business units in accident year 2019.


Unfavorable development in other insurance operations was due to higher than expected emergence in mass tort exposures in older accident years primarily related to abuse.

Asbestos & Environmental Pollution (“A&EP”) Reserves


In 2010, Continental Casualty Company (“CCC”) together with several insurance subsidiaries completed a transaction with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc., under which substantially all of thetheir legacy A&EP liabilities were ceded to NICO through a loss portfolio transfer (“LPT”). At the effective date of the transaction, approximately $1.6 billion of net A&EP claim and allocated claim adjustment expense reserves were ceded to NICO under a retroactive reinsurance agreement with an aggregate limit of $4.0 billion. The $1.6 billion of claim and allocated claim adjustment expense reserves ceded to NICO was net of $1.2 billion of ceded claim and allocated claim adjustment expense reserves under existing third party reinsurance contracts. The NICO LPT aggregate reinsurance limit also covers credit risk on the existing third party reinsurance related to these liabilities. NICO was paid a reinsurance premium of $2.0 billion and billed third party reinsurance receivables related to A&EP claims with a net book value of $215 million were transferred to NICO, resulting in total consideration of $2.2 billion.

25

In years subsequent to the effective date of the LPT, adverse prior year development on A&EP reserves was recognized resulting in additional amounts ceded under the LPT. As a result, the cumulative amounts ceded under the LPT have exceeded the $2.2 billion consideration paid, resulting in the NICO LPT moving into a gain position, requiring retroactive reinsurance accounting. Under retroactive reinsurance accounting, this gain is deferred and only recognized in earnings in proportion to actual paid recoveries under the LPT. Over the life of the contract, there is no economic impact as long as any additional losses incurred are within the limit of the LPT. In a period in which a change in the estimate of A&EP reserves is recognized that increases or decreases the amounts ceded under the LPT, the proportion of actual paid recoveries to total ceded losses is affected and the change in the deferred gain is recognized in earnings as if the revised estimate of ceded losses was available at the effective date of the LPT. The effect of the deferred retroactive reinsurance benefit is recorded in Insurance claims and policyholders’ benefits on the Consolidated Condensed Statements of Operations.

21

The impact of the LPT on the Consolidated Condensed Statements of Operations was the recognition of a retroactive reinsurance benefit of $108 million and $14$9 million for the three months ended March 31,September 30, 2021 and 2020 and $30 million and $43 million for the nine months ended September 30, 2021 and 2020. As of March 31,September 30, 2021 and December 31, 2020, the cumulative amounts ceded under the LPT were $3.3$3.3 billion. The unrecognized deferred retroactive reinsurance benefit was $388$368 million and $398$398 million as of March 31,September 30, 2021 and December 31, 2020 and is included within Other liabilities on the Consolidated Condensed Balance Sheets.



NICO established a collateral trust account as security for its obligations under the LPT. The fair value of the collateral trust account was $4.6 billion and $4.2$2.9 billion as of March 31, 2021 and December 31, 2020.September 30, 2021. In addition, Berkshire Hathaway Inc. guaranteed the payment obligations of NICO up to the aggregate reinsurance limit as well as certain of NICO’s performance obligations under the trust agreement. NICO is responsible for claims handling and billing and collection from third-party reinsurers related to the majority of the Company’s A&EP claims.


Excess Workers’ Compensation LPT


On February 5, 2021, CNA completed a transaction with Cavello Bay Reinsurance Limited (“Cavello”), a subsidiary of Enstar Group Limited, under which certain legacy excess workers’ compensation (“EWC”) liabilities were ceded to Cavello. Under the terms of the transaction, based on reserves in place as of January 1, 2020, approximately $690$690 million of net EWC claim and allocated claim adjustment expense reserves were ceded to Cavello under a loss portfolio transfer (“EWC LPT”) with an aggregate limit of $1.0 billion. Cavello was paid a reinsurance premium of $697 million, less claims paid between January 1, 2020 and the closing date of the agreement of $64 million. After transaction costs, a loss of approximately $11 million (after tax and noncontrolling interest) was recognized in the Other Insurance Operations business forin the three months ended March 31,first quarter of 2021 related to the EWC LPT.

As of September 30, 2021, the cumulative amount ceded under the EWC LPT was $690 million.

Cavello established a collateral trust account as security for its obligations, which will be maintained at 105% of outstanding reserves. As of March 31, 2021, the remaining amount available under the $1.0 billion aggregate limit of the EWC LPT was $310 million on an incurred basis.

Credit Risk for Ceded Reserves


The majority of CNA’s outstanding voluntary reinsurance receivables are due from reinsurers with financial strength ratings of A- or higher. Receivables due from reinsurers with lower financial strength ratings are primarily due from captive reinsurers and are backed by collateral arrangements.

6. Debt


On February 3, 2021, Altium Packaging entered into a $1.05 billion seven-year secured
Life & Group Policyholder Reserves


CNA’s Life & Group business includes its run-off long term loan. Thecare business as well as structured settlement obligations not funded by annuities related to certain property and casualty claimants. Long term loan is a variable rate facility which bears interest at a floating rate equal to the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 2.75%,care policies provide benefits for nursing homes, assisted living facilities and home health care subject to a 0.5% LIBOR floor. The proceeds were usedvarious daily and lifetime caps. Generally, policyholders must continue to paymake periodic premium payments to keep the outstanding principal balances of its variable rate term loanspolicy in force and lending facility and a dividend of $200 million.
CNA has the ability to increase policy premiums, subject to state regulatory approval.


CNA maintains both claim and claim adjustment expense reserves as well as future policy benefit reserves for policyholder benefits for its Life & Group business. Claim and claim adjustment expense reserves consist of estimated reserves for long term care policyholders that are currently receiving benefits, including claims that have been incurred but are not yet reported. In developing the claim and claim adjustment expense reserve estimates for long term care policies, CNA’s actuaries perform a detailed claim reserve review on an annual basis. The review analyzes the sufficiency of existing reserves for policyholders currently on claim and includes an evaluation of expected benefit utilization and claim duration. In addition, claim and claim adjustment expense reserves are also maintained for the
22
26
structured settlement obligations. In developing the claim and claim adjustment expense reserve estimates for structured settlement obligations, CNA’s actuaries review mortality experience on an annual basis. CNA’s recorded claim and claim adjustment expense reserves reflect management’s best estimate after incorporating the results of the most recent reviews.



CNA completed its annual claim reserve reviews in the third quarters of 2021 and 2020 resulting in $40 million and $37 million pretax reductions in long term care reserves primarily due to lower claim severity than anticipated in the reserve estimates and $2 million and $46 million pretax increases in the structured settlement claim reserves primarily due to lower discount rate assumptions and mortality assumption changes.


Future policy benefit reserves consist of active life reserves related to CNA’s long term care policies for policyholders that are not currently receiving benefits and represent the present value of expected future benefit payments and expenses less expected future premium. The determination of these reserves requires management to make estimates and assumptions about expected investment and policyholder experience over the life of the contract. Since many of these contracts may be in force for several decades, these assumptions are subject to significant estimation risk.



The actuarial assumptions that CNA believes are subject to the most variability are morbidity, persistency, discount rates and anticipated future premium rate increases. Morbidity is the frequency and severity of injury, illness, sickness and diseases contracted. Persistency is the percentage of policies remaining in force and can be affected by policy lapses, benefit reductions and death. Discount rates are influenced by the investment yield on assets supporting long term care reserves which is subject to interest rate and market volatility and may also be affected by changes to the Internal Revenue Code. Future premium rate increases are generally subject to regulatory approval, and therefore the exact timing and size of the approved rate increases are unknown. As a result of this variability, CNA’s long term care reserves may be subject to material increases if actual experience develops adversely to CNA’s expectations.


Annually, in the third quarter, CNA assesses the adequacy of its long term care future policy benefit reserves by performing a gross premium valuation (“GPV”) to determine if there is a premium deficiency. Under the GPV, management estimates required reserves using best estimate assumptions as of the date of the assessment without provisions for adverse deviation. The GPV required reserves are then compared to the existing recorded reserves. If the GPV required reserves are greater than the existing recorded reserves, the existing assumptions are unlocked and future policy benefit reserves are increased to the greater amount. Any such increase is reflected in the Company’s results of operations in the period in which the need for such adjustment is determined. If the GPV required reserves are less than the existing recorded reserves, assumptions remain locked in and no adjustment is required.


The GPV for the long term care future policy benefit reserves, performed in the third quarter of 2021, indicated the recorded reserves included a pretax margin of approximately $72 million as of September 30, 2021.


The GPV for the long term care future policy benefit reserves performed in the third quarter of 2020 indicated a premium deficiency primarily driven by lower discount rate assumptions. Recognition of the premium deficiency resulted in a $74 million pretax increase in policyholders’ benefits reflected in the Company’s results of operations for the three and nine months ended September 30, 2020.

27
7.6. Shareholders’ Equity

Accumulated other comprehensive income (loss)


The tables below present the changes in AOCI by component for the three and nine months ended March 31,September 30, 2020 and 2021:

 
Net Unrealized
Gains (Losses)
on Investments
with an
Allowance for
Credit Losses
  
Net Unrealized
Gains (Losses)
on Other
Investments
  
Unrealized
Gains (Losses)
on Cash Flow
Hedges
  
Pension and
Postretirement
Benefits
  
Foreign
Currency
Translation
  
Total
Accumulated
Other
Comprehensive
Income (Loss)
 
(In millions)                  
                   
Balance, January 1, 2020 $0  $918  $(6) $(855) $(125) $(68)
Other comprehensive income (loss) before reclassifications, after tax of $13, $287, $6, $0 and $0
  (48)  (1,066)  (19)  1   (84)  (1,216)
Reclassification of losses from accumulated other comprehensive income, after tax of $(10), $(6), $0, $(3) and $0
  37   22       13       72 
Other comprehensive income (loss)  (11)  (1,044)  (19)  14   (84)  (1,144)
Amounts attributable to noncontrolling interests  1   111       (1)  8   119 
Balance, March 31, 2020
 $(10) $(15) $(25) $(842) $(201) $(1,093)
 Net Unrealized                
  Gains (Losses)              Total 
  on Investments  Net Unrealized  Unrealized        Accumulated 
  with an  Gains (Losses)  Gains (Losses)  Pension and  Foreign  Other 
  Allowance for  on Other  on Cash Flow  Postretirement  Currency  Comprehensive 
  Credit Losses  Investments  Hedges  Benefits  Translation  Income (Loss) 
(In millions)                  
                   
Balance, July 1, 2020 $(8) $1,050  $(25) $(837) $(175) $5 
Other comprehensive income (loss) before reclassifications, after tax of $0, $(63), $0, $0 and $0
  2   231   (2)  (2)  38   267 
Reclassification of (income) losses from accumulated other comprehensive income, after tax of $(1), $7, $0, $(3) and $0
  4   (24)  3   9       (8)
Other comprehensive income  6   207   1   7   38   259 
Amounts attributable to noncontrolling interests  (1)  (22)      
   (3)  (26)
Balance, September 30, 2020
 $(3) $1,235  $(24) $(830) $(140) $238 

Balance, January 1, 2021 $0  $1,563  $(23) $(877) $(82) $581 
Other comprehensive income (loss) before reclassifications, after tax of $1, $154, $(2), $0 and $0
  (3)  (593)  3       3   (590)
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $(1), $8, $(1), $(2) and $0
  3   (34)  1   9       (21)
Other comprehensive income (loss)  0   (627)  4   9   3   (611)
Amounts attributable to noncontrolling interests      66       (1)  (1)  64 
Balance, March 31, 2021
 $0  $1,002  $(19) $(869) $(80) $34 
Balance, July 1, 2021 $0  $1,271  $(11) $(863) $(70) $327 
Other comprehensive income (loss) before reclassifications, after tax of $0, $32, $0, $0 and $0
      (121)  1   3   (33)  (150)
Reclassification of (income) losses from accumulated other comprehensive income, after tax of $0, $5, $0, $(2) and $0
      (17)  1   13       (3)
Other comprehensive income (loss)
      (138)  2
   16   (33)  (153)
Amounts attributable to noncontrolling interests      14       (1)  4   17 
Balance, September 30, 2021
 $0  $1,147  $(9) $(848) $(99) $191 

28
 Net Unrealized                
  Gains (Losses)              Total 
  on Investments  Net Unrealized  Unrealized        Accumulated 
  with an  Gains (Losses)  Gains (Losses)  Pension and  Foreign  Other 
  Allowance for  on Other  on Cash Flow  Postretirement  Currency  Comprehensive 
  Credit Losses  Investments  Hedges  Benefits  Translation  Income (Loss) 
(In millions)                  
                   
Balance, January 1, 2020 $0  $918  $(6) $(855) $(125) $(68)
Other comprehensive income (loss) before reclassifications, after tax of $13, $(97), $8, $0 and $0
  (48)  374   (22)  (3)  (17)  284 
Reclassification of losses from accumulated other comprehensive income, after tax of $(12), $5, $(1), $(8) and $0
  45   (20)  4   30       59 
Other comprehensive income (loss)  (3)  354   (18)  27   (17)  343 
Amounts attributable to noncontrolling interests      (37)      (2)  2   (37)
Balance, September 30, 2020
 $(3) $1,235  $(24) $(830) $(140) $238 

Balance, January 1, 2021 $0  $1,563  $(23) $(877) $(82) $581 
Other comprehensive income (loss) before reclassifications, after tax of $1, $104, $(3), $0 and $0
  (2)  (391)  12   1   (19)  (399)
Reclassification of (income) losses from accumulated other comprehensive income, after tax of $(1), $20, $(2), $(7) and $0
  2   (74)  2   31       (39)
Other comprehensive income (loss)  0   (465)  14   32   (19)  (438)
Amounts attributable to noncontrolling interests      49       (3)  2   48 
Balance, September 30, 2021
 $0  $1,147  $(9) $(848) $(99) $191 


Amounts reclassified from AOCI shown above are reported in Net income (loss) as follows:

Major Category of AOCIAffected Line Item
  
Net unrealized gains (losses) on investments with an allowance for credit losses, Net
unrealized gains (losses) on investments with OTTI losses and Net unrealized gains
(losses) on other investmentsInvestment gains (losses)
Unrealized gains (losses) on cash flow hedgesOperating revenues and other, Interest expense and Operating expenses and other
Pension and postretirement benefitsOperating expenses and other

23
29
Treasury Stock


Loews Corporation repurchased 5.615.7 million and 9.716.1 million shares of its common stock at an aggregate cost of $274826 million and $445673 million during the threenine months ended March 31,September 30, 2021 and 2020.

8.
7. Revenue from Contracts with Customers


Disaggregation of revenues – Revenue from contracts with customers, other than insurance premiums, is reported as Non-insurance warranty revenue and within Operating revenues and other on the Consolidated Condensed Statements of Operations.TheOperations. The following table presents revenues from contracts with customers disaggregated by revenue type along with the reportable segment and a reconciliation to Operating revenues and other as reported in Note 12:11:

Three Months Ended March 31 2021  2020 
(In millions)      
       
Non-insurance warranty - CNA Financial $338  $301 
         
Transportation and storage of natural gas and NGLs and other services - Boardwalk Pipelines  361   332 
Lodging and related services - Loews Hotels & Co  56   142 
Rigid plastic packaging and recycled resin – Corporate  280   256 
Contract drilling – Diamond Offshore      229 
Total revenues from contracts with customers  697   959 
Other revenues  18   23 
Operating revenues and other $715  $982 
  Three Months Ended

Nine Months Ended 
  September 30,
  September 30, 
  2021  2020  2021  2020 
(In millions)            
             
Non-insurance warranty – CNA Financial $357  $317  $1,054  $926 
                 
Transportation and storage of natural gas and NGLs and other services – Boardwalk Pipelines  296   280   959   898 
Lodging and related services – Loews Hotels & Co  129   36   279   194 
Rigid plastic packaging and recycled resin – Corporate (a)      253   280   753 
Contract drilling – Diamond Offshore (b)
      
       300 
Total revenues from contracts with customers  425   569   1,518   2,145 
Other revenues  25   40   62   96 
Operating revenues and other $450  $609  $1,580  $2,241 


(a)
Revenues presented for Corporate reflect the periods prior to the deconsolidation of Altium Packaging in the second quarter of 2021. See Note 2 for further discussion.
(b)Revenues presented for Diamond Offshore reflect the period prior to its deconsolidation in the second quarter of 2020. See Note 2 for further discussion.


Receivables from contracts with customers – As of March 31,September 30, 2021 and December 31, 2020, receivables from contracts with customers were approximately $251$118 million and $246 million and are included within Receivables on the Consolidated Condensed Balance Sheets.


Deferred revenue – As of March 31,September 30, 2021 and December 31, 2020, deferred revenue resulting from contracts with customers was approximately $4.2$4.5 billion and $4.1 billion and is reported as Deferred non-insurance warranty revenue and within Other liabilities on the Consolidated Condensed Balance Sheets. Approximately $316$916 million and $297$839 million of revenues recognized during the threenine months ended March 31,September 30, 2021 and 2020 were included in deferred revenue as of December 31, 2020 and 2019.


Performance obligations – As of March 31,September 30, 2021, approximately $13.3$13.3 billion of estimated operating revenues is expected to be recognized in the future related to outstanding performance obligations. The balance relates primarily to transportation and storage of natural gas and natural gas liquids and hydrocarbons (“NGLs”) services and non-insurance warranty revenue. Approximately $1.9$0.7 billion will be recognized during the remaining ninethree months of 2021, $2.1$2.3 billion in 2022 and the remainder in following years. The actual timing of recognition may vary due to factors outside of the Company’s control.

9.
30
8. Benefit Plans


The Company has several non-contributory defined benefit plans and postretirement benefit plans covering eligible employees and retirees.


The following table presents the components of net periodic benefit(benefit) cost for thesethe defined benefit plans:

 Pension Benefits  
Other
Postretirement Benefits
 
Three Months Ended March 31 2021  2020  2021  2020 
(In millions)            
             
Service cost $1  $1       
Interest cost  18   23       
Expected return on plan assets  (43)  (43) $(1) $(1)
Amortization of unrecognized net loss  12   11         
Settlement charge      4         
Net periodic benefit $(12) $(4) $(1) $(1)
 Pension Benefits 
  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2021  2020  2021  2020 
(In millions)            
             
Service cost $1  
   $2  $2 
Interest cost  17  $24   53   70 
Expected return on plan assets  (41)  (43)  (127)  (130)
Amortization of unrecognized net loss  12   12   37   35 
Amortization of unrecognized prior service cost              1 
Settlement charge      1   2   8 
Regulatory asset decrease
  1       1     
Net periodic benefit $(10) $(6) $(32) $(14)


24The net periodic benefit for other postretirement benefits was $1 million for the three months ended September 30, 2021 and the nine months ended September 30, 2021 and 2020. There was 0 net periodic benefit for the three months ended September 30, 2020.

10.9. Legal Proceedings


On May 25, 2018, plaintiffs Tsemach Mishal and Paul Berger (on behalf of themselves and the purported class, “Plaintiffs”) initiated a purported class action in the Court of Chancery of the State of Delaware (the “Court”) against the following defendants:  Boardwalk Pipelines, Boardwalk GP, LP (“General Partner”), Boardwalk GP, LLC and Boardwalk Pipelines Holding Corp. (“BPHC”) (together, “Defendants”), regarding the potential exercise by the General Partner of its right to purchase all of the issued and outstanding common units representing limited partnership interests in Boardwalk Pipelines not already owned by the General Partner or its affiliates.


On June 25, 2018, Plaintiffs and Defendants entered into a Stipulation and Agreement of Compromise and Settlement, subject to the approval of the Court (the “Proposed Settlement”). Under the terms of the Proposed Settlement, the lawsuit would be dismissed, and related claims against the Defendants would be released by the Plaintiffs, if BPHC, the sole member of the General Partner, elected to cause the General Partner to exercise its right to purchase the issued and outstanding common units of Boardwalk Pipelines pursuant to Boardwalk Pipelines’ Third Amended and Restated Agreement of Limited Partnership, as amended (“Limited Partnership Agreement”), within a period specified by the Proposed Settlement. On June 29, 2018, the General Partner elected to exercise its right to purchase all of the issued and outstanding common units representing limited partnership interests in Boardwalk Pipelines not already owned by the General Partner or its affiliates pursuant to the Limited Partnership Agreement within the period specified by the Proposed Settlement. The transaction was completed on July 18, 2018.


On September 28, 2018, the Court denied approval of the Proposed Settlement. On February 11, 2019, a substitute verified class action complaint was filed in this proceeding. The Defendants filed a motion to dismiss, which was heard by the Court in July of 2019. In October of 2019, the Court ruled on the motion and granted a partial dismissal, with certain aspects of the case proceeding to trial. A trial was held the week of February 22, 2021 and post-trial oral arguments are scheduled forwere held on July 14, 2021.


The Company is from time to time party to other litigation arising in the ordinary course of business. While it is difficult to predict the outcome or effect of any litigation, management does not believe that the outcome of any pending litigation, including the Boardwalk Pipelines matter described above, will materially affect the Company’s results of operations or equity.

11.
31
10. Commitments and Contingencies

CNA Data Breach-related Contingency


As previously disclosed, CNA sustained a sophisticated cybersecurity attack in March of 2021 involving ransomware. CNA’s investigation revealed that an unauthorized third party copied some personal information relating to certain current and former employees, contractor workers and their dependents and certain other persons, including some policyholders. In July of 2021, CNA provided notifications to the impacted individuals and to regulators, in accordance with applicable law. CNA may be subject to subsequent investigations, fines or penalties, as well as other legal claims and actions, related to the foregoing. The likelihood is reasonably possible, but the amount of such fines, penalties or costs, if any, cannot be estimated at this time.


Based on the information currently known, CNA does not believe that the March 2021 cybersecurity attack will have a material impact on its business, results of operations or financial condition, but no assurances can be given as it continues to assess the full impact from the incident, including costs, expenses and insurance coverage.

CNA Guarantees


CNA has provided guarantees, if the primary obligor fails to perform, to holders of structured settlement annuities issued by a previously owned subsidiary. As of March 31,September 30, 2021, the potential amount of future payments CNA could be required to pay under these guarantees was approximately $1.6 billion, which will be paid over the lifetime of the annuitants. CNA does not believe any payment is likely under these guarantees, as CNA is the beneficiary of a trust that must be maintained at a level that approximates the discounted reserves for these annuities.

12.
11. Segments


Loews Corporationhas 4 reportable segments comprised of 3 individual consolidated operating subsidiaries, CNA, Boardwalk Pipelines and Loews Hotels & Co; and the Corporate segment. In the first quarter of 2020, Diamond Offshore was a reportable segment.segment; it was deconsolidated during the second quarter of 2020. The Corporate segment is primarily comprised of Loews Corporation, excluding its subsidiaries, and the operations of Altium Packaging.Packaging through March 31, 2021. On April 1, 2021, Loews Corporation sold 47% of its interest in Altium Packaging and as a result, Altium Packaging was deconsolidated from Loews Corporation’s consolidated financial results. Subsequent to deconsolidation, Loews Corporation’s investment in Altium Packaging is accounted for under the equity method of accounting, with Equity income (loss) reported in Operating expenses and other on the Consolidated Condensed Statements of Operations in the Corporate segment. For further discussion on the deconsolidations of Diamond Offshore was deconsolidated during the second quarter of 2020. and Altium Packaging see Note 2.


Each of the operating subsidiaries and Diamond Offshore areis headed by a chief executive officer who is responsible for the operation of its business and has the duties and authority commensurate with that position. For additional disclosures regarding the composition of Loews Corporation’sCorporation’s segments, see Note 20 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.


The following tables present the reportable segments and their contribution to the Consolidated Condensed Statements of Operations. Amounts presented will not necessarily be the same as those in the individual financial statements of the subsidiaries due to adjustments for purchase accounting, income taxes and noncontrolling interests.

25
32

Statements of Operations by segment are presented in the following tables.

Three Months Ended March 31, 2021
 
CNA
Financial
  
Boardwalk
Pipelines
  
Loews
Hotels & Co
  Corporate  Total 
 CNA
  Boardwalk
  Loews
  
  
 
Three Months Ended September 30, 2021
 Financial  Pipelines  Hotels & Co  Corporate  Total 
(In millions)                              
                              
Revenues:                              
                              
Insurance premiums $1,962           $1,962  $2,059           $2,059 
Net investment income  504        $46   550 
Net investment income (loss)
  513     
   $(30)  483 
Investment gains  57             57   22              22 
Non-insurance warranty revenue  338             338   357              357 
Operating revenues and other  5  $372  $57   281   715   8  $307  $
134   1   450 
Total  2,866   372   57   327   3,622   2,959   307   134   (29)  3,371 
                                        
Expenses:                                        
                                        
Insurance claims and policyholders’ benefits  1,506               1,506   1,632               1,632 
Amortization of deferred acquisition costs  359               359   368               368 
Non-insurance warranty expense  311               311   330               330 
Operating expenses and other  285   217   104   308   914   287   215   109   27   638 
Interest  28   41   8   48   125   28   40   8   23   99 
Total  2,489   258   112   356   3,215   2,645   255   117   50   3,067 
Income (loss) before income tax  377   114   (55)  (29)  407   314   52   17   (79)  304 
Income tax (expense) benefit  (66)  (29)  12   (31)  (114)  (59)  (14)  (4)  19   (58)
Net income (loss)  311   85   (43)  (60)  293   255   38   13   (60)  246 
Amounts attributable to noncontrolling interests  (32)              (32)  (26)              (26)
Net income (loss) attributable to Loews Corporation $279  $85  $(43) $(60) $261  $229  $38  $13  $(60) $220 

26
33
  CNA
  Boardwalk
  Loews
  
  
 
Three Months Ended September 30, 2020
 Financial  Pipelines  Hotels & Co  Corporate (a)  Total 
(In millions)               
                
Revenues:               
                
Insurance premiums $1,953           $1,953 
Net investment income  517        $23   540 
Investment gains
  46             46 
Non-insurance warranty revenue  317             317 
Operating revenues and other  7  $289  $60   253   609 
Total  2,840   289   60   276   3,465 
                     
Expenses:                    
                     
Insurance claims and policyholders’ benefits  1,616               1,616 
Amortization of deferred acquisition costs  360               360 
Non-insurance warranty expense  293               293 
Operating expenses and other  268   219   114   275   876 
Interest  52   44   8   33   137 
Total  2,589   263   122   308   3,282 
Income (loss) before income tax  251   26   (62)  (32)  183 
Income tax (expense) benefit  (36)  (6)  15   6   (21)
Net income (loss)  215   20   (47)  (26)  162 
Amounts attributable to noncontrolling interests  (23)              (23)
Net income (loss) attributable to Loews Corporation $192  $20  $(47) $(26) $139 

Three Months Ended March 31, 2020
 
CNA
Financial
  
Boardwalk
Pipelines
  
Loews
Hotels & Co
  Corporate  
Diamond
Offshore
  Total 
(In millions)                  
                   
Revenues:                  
                   
Insurance premiums $1,869              $1,869 
Net investment income (loss)  329        $(166)     163 
Investment losses  (216)               (216)
Non-insurance warranty revenue  301                301 
Operating revenues and other  8  $341  $142   257  $234   982 
Total  2,291   341   142   91   234   3,099 
                         
Expenses:                        
                         
Insurance claims and policyholders’ benefits  1,425                   1,425 
Amortization of deferred acquisition costs  344                   344 
Non-insurance warranty expense  281                   281 
Operating expenses and other  300   211   167   268   1,080   2,026 
Interest  31   42   8   31   32   144 
Total  2,381   253   175   299   1,112   4,220 
Income (loss) before income tax  (90)  88   (33)  (208)  (878)  (1,121)
Income tax (expense) benefit  28   (23)  8   43   21   77 
Net income (loss)  (62)  65   (25)  (165)  (857)  (1,044)
Amounts attributable to noncontrolling interests  7               405   412 
Net income (loss) attributable to Loews Corporation $(55) $65  $(25) $(165) $(452) $(632)
(a)Amounts presented for Corporate include the operating results of Altium Packaging prior to the deconsolidation.

27
34
  CNA


Boardwalk


Loews






 
Nine Months Ended September 30, 2021 Financial  Pipelines  Hotels & Co  Corporate (b)  Total 
(In millions)               
                
Revenues:               
                
Insurance premiums $6,056              $6,056 
Net investment income  1,608      $1  $40   1,649 
Investment gains  117           540   657 
Non-insurance warranty revenue  1,054               1,054 
Operating revenues and other  19  $991   288   282   1,580 
Total  8,854   991   289   862   10,996 
                     
Expenses:                    
                     
Insurance claims and policyholders’ benefits  4,684               4,684 
Amortization of deferred acquisition costs  1,084               1,084 
Non-insurance warranty expense  973               973 
Operating expenses and other  874   641   328   365   2,208 
Interest  85   121   25   93   324 
Total  7,700   762   353   458   9,273 
Income (loss) before income tax  1,154   229   (64)  404   1,723 
Income tax (expense) benefit  (219)  (59)  13   (126)  (391)
Net income (loss)  935   170   (51)  278   1,332 
Amounts attributable to noncontrolling interests  (97)              (97)
Net income (loss) attributable to Loews Corporation $838  $170  $(51) $278  $1,235 

(b)Amounts presented for Corporate include the operating results of Altium Packaging through March 31, 2021. Beginning April 1, 2021, Altium Packaging is recorded as an equity method investment.

35
  CNA
  Boardwalk
  Loews
  
  Diamond
  
 
Nine Months Ended September 30, 2020
 Financial  Pipelines  Hotels & Co  Corporate (a)  Offshore (c)  Total 
(In millions)                  
                   
Revenues:                  
                   
Insurance premiums $5,672              $5,672 
Net investment income (loss)  1,380        $(33)     1,347 
Investment losses  (101)        (1,211)     (1,312)
Non-insurance warranty revenue  926                926 
Operating revenues and other  20  $926  $236   754  $305   2,241 
Total  7,897   926   236   (490)  305   8,874 
                         
Expenses:                        
                         
Insurance claims and policyholders’ benefits  4,683                   4,683 
Amortization of deferred acquisition costs  1,046                   1,046 
Non-insurance warranty expense  859                   859 
Operating expenses and other  851   633   404   810   1,196   3,894 
Interest  114   127   24   96   43   404 
Total  7,553   760   428   906   1,239   10,886 
Income (loss) before income tax  344   166   (192)  (1,396)  (934)  (2,012)
Income tax (expense) benefit  (40)  (43)  48   293   26   284 
Net income (loss)  304   123   (144)  (1,103)  (908)  (1,728)
Amounts attributable to noncontrolling interests  (32)              432   400 
Net income (loss) attributable to Loews Corporation $272  $123  $(144) $(1,103) $(476) $(1,328)

(c)Amounts presented for Diamond Offshore reflect the period prior to the deconsolidation.

36
Item 2.  
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with our Consolidated Condensed Financial Statements included under Item 1 of this Report, Risk Factors included under Part II, Item 1A of this Report, Risk Factors included in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 and the Consolidated Financial Statements, Risk Factors, and MD&A included in our Annual Report on Form 10-K for the year ended December 31, 2020. This MD&A is comprised of the following sections:


Page
No.
  
Overview2837
Results of Operations2938
Consolidated Financial Results2938
CNA Financial3039
Boardwalk Pipelines3448
Loews Hotels & Co3549
Corporate3650
Diamond Offshore3751
Liquidity and Capital Resources3751
Parent Company3751
Subsidiaries3752
Investments3853
Critical Accounting Estimates4256
Accounting Standards Update4257
Forward-Looking Statements4257

OVERVIEW

Loews Corporation is a holding company and has four reportable segments comprised of three individual consolidated operating subsidiaries, CNA Financial Corporation (“CNA”), Boardwalk Pipeline Partners, LP (“Boardwalk Pipelines”) and Loews Hotels Holding Corporation (“Loews Hotels & Co”); and the Corporate segment. In the first quarter of 2020, Diamond Offshore Drilling Inc. (“Diamond Offshore”) was a reportable segment.segment; Diamond Offshore was deconsolidated during the second quarter of 2020. The Corporate segment is primarily comprised of Loews Corporation, excluding its subsidiaries, and the operations of Altium Packaging LLC (“Altium Packaging”) through March 31, 2021. On April 1, 2021, Loews Corporation sold 47% of its interest in Altium Packaging to GIC, Singapore’s sovereign wealth fund, for $420 million in cash consideration. As a result of the terms of this transaction, Loews Corporation shares certain participating rights with GIC related to capital allocation and other decisions and was therefore required to deconsolidate Altium Packaging as of the date of the sale under accounting principles generally accepted in the United States of America (“GAAP”). Subsequent to deconsolidation, Loews Corporation’s investment in Altium Packaging is accounted for under the equity method of accounting, with Equity income (loss) reported in Operating expenses and other on the Consolidated Condensed Statements of Operations in the Corporate segment. For further information on the deconsolidations of Diamond Offshore was deconsolidated during the second quarter of 2020. For more informationand Altium Packaging see Note 2 of the Notes to Consolidated Condensed Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020. Eachincluded under Item 1 of the operating subsidiaries and Diamond Offshore are headed by a chief executive officer who is responsible for the operation of its business and has the duties and authority commensurate with that position.this Report.

Unless the context otherwise requires, the term “Company” as used herein means Loews Corporation including its consolidated subsidiaries, the terms “Parent Company,” “we,” “our,” “us” or like terms as used herein mean Loews Corporation excluding its subsidiaries, and the term “Net income (loss) attributable to Loews Corporation” as used herein means Net income (loss) attributable to Loews Corporation shareholders.shareholders and the term “subsidiaries” means Loews Corporation’s consolidated subsidiaries.

We rely upon our invested cash balances and distributions from our subsidiaries to generate the funds necessary to meet our obligations and to declare and pay any dividends to shareholders. The ability of subsidiaries to pay dividends is subject to, among other things, the availability of sufficient earnings and funds in such subsidiaries, applicable state laws, including in the case of the insurance subsidiaries of CNA, laws and rules governing the payment of dividends by regulated insurance companies (see Note 14 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020) and compliance with covenants in their respective loan agreements. Claims of creditors of our subsidiaries will generally have priority as to the assets of such subsidiaries over our claims and those of our creditors and shareholders.

28
37

RESULTS OF OPERATIONS

Consolidated Financial Results

The following table summarizes net income (loss) attributable to Loews Corporation by segment and net income (loss) per share attributable to Loews Corporation for the three and nine months ended March 31,September 30, 2021 and 2020:

Three Months Ended March 31 2021  2020 

 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 

 2021  2020  2021  2020 
(In millions, except per share data)                  
                  
CNA Financial $279  $(55) $229  $192  $838  $272 
Boardwalk Pipelines  85   65  38  20  170  123 
Loews Hotels & Co  (43)  (25) 13  (47) (51) (144)
Corporate  (60)  (165) (60) (26) 278  (1,103)
Diamond Offshore      (452)              (476)
Net income (loss) attributable to Loews Corporation $261  $(632) $220  $139  $1,235  $(1,328)
                    
Basic net income (loss) per common share $0.98  $(2.20)
Diluted net income (loss) per common share $0.97  $(2.20)
Basic net income (loss) per share $0.86  $0.50  $4.71  $(4.70)
            
Diluted net income (loss) per share $0.85  $0.50  $4.70  $(4.70)

Net income attributable to Loews Corporation for the three months ended March 31,September 30, 2021 was $261$220 million, or $0.97$0.85 per share, compared to $139 million, or $0.50 per share in the comparable 2020 period. Net income attributable to Loews Corporation for the nine months ended September 30, 2021 was $1.2 billion, or $4.70 per share, compared to a net loss of $632 million,$1.3 billion, or $2.20$4.70 per share in the comparable 2020 period.

Each of the company’s consolidated subsidiaries, CNA Financial Corporation, Boardwalk Pipelines, and Loews Corporation’sHotels & Co, contributed meaningfully to the year-over-year increase in Loews’s 2021 third quarter net income foras compared to the first three monthscomparable 2020 period. As compared to the third quarter of 2021 was driven by2020, CNA which had improved net investment income, net investment gains, and solidbenefited from higher Property & Casualty non-catastrophe current accident year propertyunderwriting results and casualty underwriting results. Boardwalk Pipelines also contributed positivelyimproved Life & Group business results primarily due to Loews Corporation’s 2021 quarterly results.

the absence of the active life premium deficiency charge recorded in the third quarter of 2020, partially offset by higher net catastrophe losses and lower investment gains. Loews Hotels & Co posted a net loss for the first three months of 2021significantly improved year-over-year third quarter results due to the continued negativecontinuing rebound in leisure travel, especially at resort destinations. Boardwalk Pipelines revenues for the third quarter of 2021 increased compared to the comparable prior year period, reflecting the impact on travelof recently completed growth projects and higher system utilization. The parent company investment portfolio experienced lower net investment income in the third quarter of 2021 compared to the comparable prior year period.

The improved results for the nine months ended September 30, 2021 compared to the comparable 2020 period are due to higher Property & Casualty non-catastrophe current accident year underwriting results at CNA, improved results for CNA’s Life & Group business which benefited from the absence of the COVID-19 pandemic. Last year’sactive life premium deficiency charge recorded in the third quarter of 2020, lower net catastrophe losses at CNA, significantly higher net investment income at CNA and the parent company, and investment gains in 2021 as compared to losses in 2020 at CNA and in the parent company investment portfolio. All other segment improvements for the nine months ended September 31, 2021 as compared to the comparable 2020 period are primarily due to the reasons discussed in the three month comparison above. In addition, the nine months ended September 30, 2021 include a gain of $438 million (after tax) related to the sale of 47% of Altium Packaging and its deconsolidation on April 1, 2021. The nine months ended September 30, 2020 included a loss of $957 million (after tax), related to the bankruptcy filing and deconsolidation of Diamond Offshore, and impairment charges totaling $774 million ($408 million after tax and noncontrolling interests) at Diamond Offshore in the first quarter results included a significant loss relatedof 2020, prior to Diamond Offshore, which is no longer a subsidiary.

On April 1, 2021 Loews Corporation sold 47% of its interest in Altium Packaging for approximately $420 million in cash consideration, subject to expenses and post-closing adjustments. As a result of the terms of this transaction, Loews Corporation will share certain participating rights with GIC related to capital allocation and other decisions and is required to deconsolidate Altium Packaging as of the date of the sale under accounting principles generally accepted in the United States of America (“GAAP”). In connection with the sale and subsequent deconsolidation, Loews Corporation expects to recognize a pretax gain of approximately $560 million in the second quarter of 2021.deconsolidation.

29
38

CNA Financial

The following table summarizes the results of operations for CNA for the three and nine months ended March 31,September 30, 2021 and 2020 as presented in Note 1211 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report. For further discussion of Net investment income and Investment gains (losses), see the Investments section of this MD&A.

Three Months Ended March 31 2021  2020 
 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
 2021  2020  2021  2020 
(In millions)                  
                  
Revenues:                  
Insurance premiums $1,962  $1,869  $2,059  $1,953  $6,056  $5,672 
Net investment income  504   329  513  
517
  1,608  
1,380
 
Investment gains (losses)  57   (216) 22  
46
  117  
(101
)
Non-insurance warranty revenue  338   301  357  
317
  1,054  
926
 
Other revenues  5   8   8   
7
   19   
20
 
Total  2,866   2,291  2,959  
2,840
  8,854  
7,897
 
Expenses:                    
Insurance claims and policyholders’ benefits  1,506   1,425  1,632  
1,616
  4,684  
4,683
 
Amortization of deferred acquisition costs  359   344  368  
360
  1,084  
1,046
 
Non-insurance warranty expense  311   281  330  
293
  973  
859
 
Other operating expenses  285   300  287  
268
  874  
851
 
Interest  28   31  28  
52
  85  
114
 
Total  2,489   2,381   2,645   
2,589
   7,700   
7,553
 
Income (loss) before income tax  377   (90)
Income tax (expense) benefit  (66)  28 
Net income (loss)  311   (62)
Income before income tax 314  
251
  1,154  
344
 
Income tax expense  (59)  
(36
)
  (219)  
(40
)
Net income 255  
215
  935  
304
 
Amounts attributable to noncontrolling interests  (32)  7   (26)  
(23
)
  (97)  
(32
)
Net income (loss) attributable to Loews Corporation $279  $(55)
Net income attributable to Loews Corporation $229  $192  $838  $272 

Three Months Ended September 30, 2021 Compared to the Comparable 2020 Period

Net income attributable to Loews Corporation was $279increased $37 million for the three months ended March 31,September 30, 2021 as compared with a net loss of $55 million in the comparable 2020 period. The improvement wasperiod primarily due to higher net investment income, investment gainsthe absence of a $74 million charge ($52 million after tax and noncontrolling interests) related to the recognition of an active life reserve premium deficiency for long term care policies in the third quarter of 2020. Results for the three months ended March 31,September 30, 2021 as compared with investment losses in the comparable 2020 period andalso included improved non-catastrophe current accident year underwriting results. Higher net investment income in the firstThe three months ended September 30, 2020 also included a $14 million charge (after tax and noncontrolling interests) related to the early retirement of 2021 was driven by limited partnership and common stock returns. Investment gains were driven by the favorable relative change in the fair value of non-redeemable preferred stock and lower impairment losses.debt. These resultsincreases were partially offset by higherlower investment gains and net catastrophe losses of $125$178 million ($88125 million after tax and noncontrolling interests) for the three months ended March 31,September 30, 2021 as compared with $75to $160 million ($53112 million after tax and noncontrolling interests) in the comparable 2020 period. Net catastrophe losses for the three months ended September 30, 2021 included $114 million for Hurricane Ida. Net catastrophe losses for the three months ended September 30, 2020 were driven by severe weather-related events, primarily Hurricanes Laura, Isaias and Sally and the Midwest derecho.

Nine Months Ended September 30, 2021 Compared to the Comparable 2020 Period

Net income attributable to Loews Corporation increased $566 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period primarily due to improved current accident year underwriting results. Net catastrophe losses were $357 million ($251 million after tax and noncontrolling interests) for the nine months ended September 30, 2021 as compared to $536 million ($377 million after tax and noncontrolling interests) in the comparable 2020 period. Net catastrophe losses for the nine months ended September 30, 2021 were driven by severe weather-related events, primarily Hurricane Ida and Winter Storms Uri and Viola. Net catastrophe losses for the nine months ended September 30, 2020 included $273 million primarily related to severe weather-related events, $195 million related to COVID-19 and $68 million related to civil unrest. Results also reflect higher net investment income and investment gains during the nine months ended September 30, 2021 as compared with investment losses in the comparable 2020 period. Higher net investment income was driven by limited partnership and common stock returns and investment gains were driven by lower impairment losses and the favorable change in fair value of non-redeemable preferred stock for the nine months ended September 30, 2021 as compared with the comparable 2020

39
period. Results for the nine months ended September 30, 2021 also reflect the absence of a $74 million charge ($52 million after tax and noncontrolling interests) related to the recognition of an active life reserve premium deficiency for long term care policies in the comparable 2020 period.

CNA’s Property & Casualty and Other Insurance Operations

CNA’s commercial property and casualty insurance operations (“Property & Casualty Operations”) include its Specialty, Commercial and International lines of business. CNA’s Other Insurance Operations outside of Property & Casualty Operations include its long term care business that is in run-off, certain corporate expenses, including interest on CNA’s corporate debt, certain property and casualty businesses in run-off, including CNA Re, Asbestos & Environmental Pollution (“A&EP,&EP”), excess workers’ compensation and legacy mass tort. We believe the presentation of CNA as one reportable segment is appropriate in accordance with applicable accounting standards on segment reporting. However, for purposes of this discussion and analysis of the results of operations, we provide greater detail with respect to CNA’s Property & Casualty Operations and Other Insurance Operations to enhance the reader’s understanding and to provide further transparency into key drivers of CNA’s financial results.

30

Effective January 1, 2021, and in connection with the ceding of certain legacy reserves under a retroactive reinsurance agreement executed in February 2021, CNA changed the presentation of a legacy portfolio of excess workers’ compensation policies relating to business written in 2007 and prior. This business, which was previously reported as part of the Commercial business, is now reported as part of the Other Insurance Operations business. See Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report for further information on this retroactive reinsurance agreement. In addition, a determination was made to change the presentation of certain legacy mass tort reserves. Similar to the aforementioned excess workers’ compensation legacy business, these legacy mass tort reserves were previously reported in the Commercial business and are now reported as part of the Other Insurance Operations business. These changes were made to better reflect the manner in which CNA is organized for purposes of making operating decisions and assessing performance. Prior period information has been conformed to the new presentation.

In assessing its insurance operations, CNA utilizes the core income (loss) financial measure. Core income (loss) is calculated by excluding from net income (loss), investment gains or losses and any cumulative effects of changes in accounting guidance. In addition, core income (loss) excludes the effects of noncontrolling interests. The calculation of core income (loss) excludes investment gains or losses because investment gains or losses are generally driven by economic factors that are not necessarily reflective of CNA’s primary insurance operations. Core income (loss) is deemed to be a non-GAAP financial measure and management believes this measure is useful for investors to evaluate its insurance operations. Please see the non-GAAP reconciliation of core income (loss) to net income (loss) that follows in this MD&A.

Recent Developments

As previously disclosed, CNA sustained a sophisticated cybersecurity attack in March of 2021 involving ransomware that caused a network disruption and impacted certain of its systems. CNA has incurred expenses within Other Insurance Operations related to the cybersecurity attack and expects these expenses will continue. Additionally, CNA anticipates making continued investments in technology to improve its security and infrastructure, which will increase expenses in future periods. While CNA does not believe that the March 2021 cybersecurity attack will have a material impact on its business, results of operations or financial condition, no assurances can be given at this time as it continues to assess the full impact from the incident, including costs, expenses and insurance coverage.

Property & Casualty Operations

In evaluating the results of Property & Casualty Operations, CNA utilizes the loss ratio, the loss ratio excluding catastrophes and development, the expense ratio, the dividend ratio, the combined ratio and the combined ratio excluding catastrophes and development. These ratios are calculated using GAAP financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The loss ratio excluding catastrophes and development excludes net catastrophes losses and changes in estimates of claim and claim adjustment expense reserves, net of reinsurance, for prior years from the loss ratio. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders’ dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios. The combined ratio excluding catastrophes and development is the sum of the loss ratio excluding catastrophes and development, the expense ratio and the dividend ratio. In addition, renewal premium change, rate, retention and new business are also utilized in evaluating operating trends. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. Rate represents the average change in price on policies that renew excluding exposure change.

40
For certain products within Small Business, where quantifiable, rate includes the influence of new business as well. Exposure represents the measure of risk used in the pricing of the insurance product. Retention represents the percentage of premium dollars renewed in comparison to the expiring premium dollars from policies available to renew. Renewal premium change, rate and retention presented for the prior period are updated to reflect subsequent activity on policies written in the period. New business represents premiums from policies written with new customers and additional policies written with existing customers. Gross written premiums, excluding third party captives, represents gross written premiums excluding business which is ceded to third party captives, including business related to large warranty programs.

31
41

The following tables summarize the results of CNA’s Property & Casualty Operations for the three and nine months ended March 31,September 30, 2021 and 2020:

Three Months Ended March 31, 2021 Specialty  Commercial  International  Total 
Three Months Ended September 30, 2021 Specialty  Commercial  International  Total 
(In millions, except %)                        
                        
Gross written premiums $1,794  $1,113  $343  $3,250  $1,953  $1,010  $276  $3,239 
Gross written premiums excluding third                
party captives  816   1,111   343   2,270 
Gross written premiums excluding third party captives 943  1,005  276  2,224 
Net written premiums  742   960   235   1,937  822  831  256  1,909 
Net earned premiums  735   855   252   1,842  773  893  271  1,937 
Net investment income  117   148   14   279  116  141  14  271 
Core income  170   69   24   263  173  27  17  217 
                            
Other performance metrics:                            
Loss ratio excluding catastrophes                
and development  59.4%  60.8%  59.6%  60.1%
Loss ratio excluding catastrophes and development 59.1% 61.5% 58.9% 60.2%
Effect of catastrophe impacts  0.7   13.4   2.0   6.8  0.4  18.6  3.4  9.2 
Effect of development-related items  (2.1)  0.5   (0.1)  (0.6)  (1.8)  0.5   1.1   (0.3)
Loss ratio  58.0%  74.7%  61.5%  66.3% 57.7% 80.6% 63.4% 69.1%
Expense ratio  30.6   31.4   34.4   31.5  30.6  30.4  32.1  30.7 
Dividend ratio  0.2   0.6       0.3  (0.1) 0.6     0.2 
Combined ratio  88.8%  106.7%  95.9%  98.1%  88.2%  111.6%  95.5%  100.0%
Combined ratio excluding catastrophes                
and development  90.2%  92.8%  94.0%  91.9%
Combined ratio excluding catastrophes and development 89.6% 92.5% 91.0% 91.1%
                            
Rate  10%  10%  14%  11% 9% 6% 13% 8%
Renewal premium change  9   8   11   9  8  8  12  9 
Retention  86   84   74   83  80  83  79  81 
New business $103  $211  $80  $394  $147  $204  $54  $405 

Three Months Ended March 31, 2020            
Three Months Ended September 30, 2020            
                        
Gross written premiums $1,714  $1,062  $307  $3,083  $1,855  $915  $238  $3,008 
Gross written premiums excluding third                
party captives  741   1,059   307   2,107 
Gross written premiums excluding third party captives 861  915  238  2,014 
Net written premiums  694   950   219   1,863  795  804  222  1,821 
Net earned premiums  685   818   239   1,742  734  857  236  1,827 
Net investment income  56   42   15   113  126  151  15  292 
Core income  96   23   2   121  168  41  27  236 
                            
Other performance metrics:                            
Loss ratio excluding catastrophes                
and development  59.5%  60.8%  60.3%  60.2%
Loss ratio excluding catastrophes and development 60.0% 60.8% 60.1% 60.5%
Effect of catastrophe impacts  1.1   7.0   4.3   4.3  1.0  17.0  3.0  8.7 
Effect of development-related items  (1.5)      (0.1)  (0.7)  (2.0)  0.6   0.1   (0.4)
Loss ratio  59.1%  67.8%  64.5%  63.8% 59.0% 78.4% 63.2% 68.8%
Expense ratio  32.0   33.2   35.4   33.1  30.5  32.3  34.9  31.8 
Dividend ratio  0.2   0.6       0.4     0.6     0.3 
Combined ratio  91.3%  101.6%  99.9%  97.3%  89.5%  111.3%  98.1%  100.9%
Combined ratio excluding catastrophes                
and development  91.7%  94.6%  95.7%  93.7%
Combined ratio excluding catastrophes and development 90.5% 93.7% 95.0% 92.6%
                            
Rate  10%  8%  9%  9% 13% 11% 17% 12%
Renewal premium change  11   9   9   9  15  9  15  12 
Retention  83   86   70   82  87  82  69  82 
New business $74  $198  $68  $340  $105  $168  $54  $327 

32
42
Nine Months Ended September 30, 2021 Specialty  Commercial  International  Total 
(In millions, except %)            
             
Gross written premiums $5,650  $3,284  $958  $9,892 
Gross written premiums excluding third party captives  2,656   3,176   958   6,790 
Net written premiums  2,350   2,622   783   5,755 
Net earned premiums  2,270   2,629   789   5,688 
Net investment income  367   463   42   872 
Core income  531   233   67   831 
                 
Other performance metrics:                
Loss ratio excluding catastrophes and development  59.1%  60.8%  59.2%  59.9%
Effect of catastrophe impacts  0.4   12.6   2.0   6.3 
Effect of development-related items  (1.7)  0.6   0.3   (0.4)
Loss ratio  57.8%  74.0%  61.5%  65.8%
Expense ratio  30.4   31.4   33.3   31.3 
Dividend ratio  0.1   0.6       0.3 
Combined ratio  88.3%  106.0%  94.8%  97.4%
Combined ratio excluding catastrophes and development  89.6%  92.8%  92.5%  91.5%
                 
Rate  10%  8%  13%  10%
Renewal premium change  10   9   12   10 
Retention  84   82   76   82 
New business $370  $615  $204  $1,189 

Nine Months Ended September 30, 2020            
             
Gross written premiums $5,331  $3,103  $822  $9,256 
Gross written premiums excluding third party captives
  2,413   3,018   822   6,253 
Net written premiums  2,231   2,703   680   5,614 
Net earned premiums  2,124   2,470   699   5,293 
Net investment income  315   354   44   713 
Core income  354   113   15   482 
                 
Other performance metrics:                
Loss ratio excluding catastrophes and development  59.8%  60.1%  60.1%  59.9%
Effect of catastrophe impacts  5.7   14.3   8.9   10.1 
Effect of development-related items  (2.1)  0.1   (0.4)  (0.8)
Loss ratio  63.4%  74.5%  68.6%  69.2%
Expense ratio  31.5   33.2   35.6   32.9 
Dividend ratio  0.1   0.6       0.3 
Combined ratio  95.0%  108.3%  104.2%  102.4%
Combined ratio excluding catastrophes and development  91.4%  93.9%  95.7%  93.1%
                 
Rate  12%  10%  13%  11%
Renewal premium change  13   9   11   11 
Retention  86   84   71   83 
New business $275  $564  $184  $1,023 

Total gross written premiums increased $167 million forThree Months Ended September 30, 2021 Compared to the three months ended March 31, 2021 as compared with the comparableComparable 2020 period. Total net written premiums increased $74 million for the three months ended March 31, 2021 as compared with the comparable 2020 period.Period

Gross written premiums, excluding third party captives, for Specialty increased $75$82 million for the three months ended March 31,September 30, 2021 as compared with the comparable 2020 period driven by rate and higher new business and strong rate.business. Net written premiums for Specialty increased $48$27 million for the three months ended March 31,September 30, 2021 as compared with the comparable 2020 period. The increase in net earned premiums for the three months ended March 31,September 30, 2021 was consistent with the trend in net written premiums for Specialty.

43
Gross written premiums for Commercial increased $51$95 million for the three months ended March 31,September 30, 2021 as compared with the comparable 2020 period driven by rate and higher new business and strong rate.business. Net written premiums for Commercial increased $10$27 million for the three months ended March 31,September 30, 2021 as compared with the comparable 2020 period. The increase in net earned premiums for the three months ended March 31,September 30, 2021 was consistent with the trend in net written premiums in recent quarters for Commercial.

Gross written premiums for International increased $36$38 million for the three months ended March 31,September 30, 2021 as compared with the comparable 2020 period. Excluding the effect of foreign currency exchange rates, gross written premiums increased $19$26 million driven by growth in Europerate and Canada.retention. Net written premiums for International increased $16$34 million for the three months ended March 31,September 30, 2021 as compared with the comparable 2020 period. Excluding the effect of foreign currency exchange rates, net written premiums increased $3$23 million for the three months ended March 31,September 30, 2021 as compared with the comparable 2020 period. The increase in net earned premiums for the three months ended March 31,September 30, 2021 was consistent with the trend in net written premiums for International.

Total core income increased $142decreased $19 million for the three months ended March 31,September 30, 2021 as compared with the comparable 2020 period primarily due to higher net catastrophe losses and lower net investment income, drivenpartially offset by limited partnership and common stock returns and improved non-catastrophe current accident year underwriting results, partially offset by higher net catastrophe losses.results.

Total net catastrophe losses were $125$178 million for the three months ended March 31,September 30, 2021 as compared with $75$160 million forin the comparable 2020 period. For the three months ended March 31,September 30, 2021 and 2020, Specialty had net catastrophe losses of $5$3 million and $8$7 million, Commercial had net catastrophe losses of $115$166 million and $57$146 million and International had net catastrophe losses of $5$9 million and $10$7 million.

Favorable net prior year loss reserve development of $10 million and $15 million was recorded for the three months ended March 31,September 30, 2021 and 2020. For the three months ended March 31,September 30, 2021 and 2020, Specialty recorded favorable net prior year loss reserve development of $15 million and $11 million. For the three months ended March 31, 2021,$16 million, Commercial recorded no net prior year loss reserve development as compared with favorableunfavorable net prior year loss reserve development of $4$2 million in the comparable 2020 period. There wasand $1 million and International recorded unfavorable net prior year loss reserve development of $3 million and no net prior year loss reserve development recorded for International for the three months ended March 31, 2021 and 2020.development. Further information on net prior year loss reserve development is included in Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1.1 of this Report.

Specialty’s combined ratio improved 2.51.3 points for the three months ended March 31,September 30, 2021 as compared with the comparable 2020 period due to a 1.4 point improvement in the expense ratio and a 1.11.3 point improvement in the loss ratio driven by improved current accident year underwriting results.

Commercial’s combined ratio increased 0.3 points for the three months ended September 30, 2021 as compared with the comparable 2020 period due to a 2.2 point increase in the loss ratio largely offset by a 1.9 improvement in the expense ratio. The increase in the loss ratio was driven by higher net catastrophe losses, which were 18.6 points of the loss ratio for the three months ended September 30, 2021 as compared with 17.0 points of the loss ratio in the comparable 2020 period. The improvement in the lossexpense ratio was primarily due to higher favorable net prior year loss reserve developmentearned premiums and lower net catastrophe losses.acquisition costs driven by ceded commissions.

International’s combined ratio improved 2.6 points for the three months ended September 30, 2021 as compared with the comparable 2020 period primarily due to a 2.8 point improvement in the expense ratio. The improvement in the expense ratio was driven by higher net earned premiums.premiums and lower acquisition costs.

Commercial’sNine Months Ended September 30, 2021 Compared to the Comparable 2020 Period

Gross written premiums, excluding third party captives, for Specialty increased $243 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period driven by rate and higher new business. Net written premiums for Specialty increased $119 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period. The increase in net earned premiums for the nine months ended September 30, 2021 was consistent with the trend in net written premiums for Specialty.

Gross written premiums for Commercial increased $181 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period driven by rate and higher new business. Net written premiums for Commercial decreased $81 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period driven by the impact of the June 1, 2021 written premium catch-up resulting from the addition of the quota share treaty to the property reinsurance program. Excluding the impact of the June 1, 2021 written premium catch-up, net written premiums increased $31 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period. Net earned premiums for Commercial increased $159 million for the nine months
44
ended September 30, 2021 as compared with the comparable 2020 period. The increase in net earned premiums for the nine months ended September 30, 2021 was partially impacted by a reduction in estimated audit premiums related to COVID-19 in 2020 for Commercial.

Gross written premiums for International increased $136 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period. Excluding the effect of foreign currency exchange rates, gross written premiums increased $82 million driven by rate and higher new business. Net written premiums for International increased $103 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period. Excluding the effect of foreign currency exchange rates, net written premiums increased $57 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period. The increase in net earned premiums for the nine months ended September 30, 2021 was consistent with the trend in net written premiums for International.

Total core income increased $349 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period primarily due to improved current accident year underwriting results and higher net investment income driven by limited partnership and common stock returns.

Total net catastrophe losses were $357 million for the nine months ended September 30, 2021 as compared with $536 million in the comparable 2020 period. For the nine months ended September 30, 2021 and 2020, Specialty had net catastrophe losses of $9 million and $120 million, Commercial had net catastrophe losses of $332 million and $354 million and International had net catastrophe losses of $16 million and $62 million.

Favorable net prior year loss reserve development of $36 million and $58 million was recorded for the nine months ended September 30, 2021 and 2020. For the nine months ended September 30, 2021 and 2020, Specialty recorded favorable net prior year loss reserve development of $40 million and $47 million, Commercial recorded unfavorable net prior loss reserve development of $2 million and favorable net prior year loss reserve development of $8 million and International recorded unfavorable net prior year loss reserve development of $2 million and favorable net prior year loss reserve development of $3 million. Further information on net prior year loss reserve development is included in Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report.

Specialty’s combined ratio increased 5.1improved 6.7 points for the threenine months ended March 31,September 30, 2021 as compared with the comparable 2020 period due to a 6.95.6 point increaseimprovement in the loss ratio partially offset byand a 1.81.1 point improvement in the expense ratio. The increaseimprovement in the loss ratio was primarily due to higherlower net catastrophe losses whichand improved non-catastrophe current accident year underwriting results. Net catastrophe losses were 13.40.4 points of the loss ratio for the threenine months ended March 31,September 30, 2021, as compared with 7.05.7 points of the loss ratio in the comparable 2020 period. The improvement in the expense ratio was driven by favorable acquisition expenses and higher net earned premiums.

Commercial’s combined ratio improved 2.3 points for the nine months ended September 30, 2021 as compared with the comparable 2020 period primarily due to a 1.8 point improvement in the expense ratio. The improvement in the expense ratio was primarily due to higher net earned premiums and a favorable acquisition ratio. Net catastrophe losses were 12.6 points of the loss ratio for the nine months ended September 30, 2021 as compared with 14.3 points of the loss ratio for the comparable 2020 period.

International’s combined ratio improved 4.09.4 points for the threenine months ended March 31,September 30, 2021 as compared with the comparable 2020 period due to a 3.07.1 point improvement in the loss ratio and a 1.02.3 point improvement in the expense ratio. The improvement in the loss ratio was driven by lower net catastrophe losses, which were 2.0 points of the loss ratio for the nine months ended September 30, 2021 as compared with 8.9 points of the loss ratio in the comparable 2020 period, and improved non-catastrophe current accident year underwriting results. The improvement in the expense ratio was driven by a favorable commission ratesacquisition ratio and higher net earned premiums.

33
45

Other Insurance Operations

The following table summarizes the results of CNA’s Other Insurance Operations for the three and nine months ended March 31,September 30, 2021 and 2020:

Three Months Ended March 31 2021  2020 
  
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
 2021  2020  2021  2020 
(In millions)                  
                  
Net earned premiums $120  $127  $123  $127  $369  $380 
Net investment income  225   216  242  225  736  667 
Core income (loss)  -   (13) 20  (43) 10  (82)

Three Months Ended September 30, 2021 Compared to the Comparable 2020 Period

Core results improved $13$63 million for the three months ended March 31,September 30, 2021 as compared with the comparable 2020 period driven by better than expected morbidity in the long term care business and higher net investment income, driven by returns in the limited partnership portfolio. Further, during the first three months of 2021, relative to expectations, CNA experienced lower new claim frequency, higher claim terminations and more favorable claim severity in the long term care business amid the effects of the coronavirus disease (“COVID-19”). Given the uncertainty of these trends, CNA increased its incurred but not reported (“IBNR”) reserves in anticipation of increased claim activity as the COVID-19 pandemic abates.

period. Results for the three months ended March 31,September 30, 2021 included no unlocking event for active life reserves as a result of the gross premium valuation (“GPV”). Core results for the three months ended September 30, 2021 included a $31 million favorable impact from the reduction in long term care claim reserves resulting from the annual claim reserve reviews in the third quarter of 2021. Core results for the three months ended September 30, 2020 included a $59 million charge related to the recognition of an active life reserve premium deficiency for long term care policies. The results for the three months ended September 30, 2020 also included a $36 million charge related to the increase in structured settlement claim reserves partially offset by a $30 million favorable impact from the reduction in long term care claim reserves, both resulting from the annual claim reserve reviews in the third quarter of 2020.

Nine Months Ended September 30, 2021 Compared to the Comparable 2020 Period

Core results improved $92 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period. The drivers of the improved results were generally consistent with the three month discussion above. In addition, core results for the nine months ended September 30, 2021 included lower unfavorable net prior year loss reserve development related to legacy mass tort exposures as compared with the comparable 2020 period. Core results for the nine months ended September 30, 2021 also reflect expenses related to the March 2021 cybersecurity attack, the recognition of a $12 million loss resulting from the legacy excess workers’ compensation loss portfolio transfer (“EWC LPT”). and lower amortization of the deferred gain related to the A&EP Loss Portfolio Transfer (“LPT”) as compared with the comparable 2020 period. For further information on the A&EP LPT, EWC LPT and net prior year loss reserve development see Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1.1 of this Report.

Life & Group Policyholder Reserves

Annually, in the third quarter, CNA assesses the adequacy of its long term care future policy benefit reserves by performing a GPV to determine if there is a premium deficiency. See the Insurance Reserves section of our MD&A included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 for further information on the reserving process.

46
The September 30, 2021 GPV indicated that the recorded reserves included a margin of approximately $72 million. A summary of the changes in the estimated reserve margin is presented in the table below:

(In millions)   
    
Long term care active life reserve - change in estimated reserve margin   
    
September 30, 2020 estimated margin $- 
     
Changes in underlying discount rate assumptions (a)  65 
Changes in underlying morbidity assumptions  205 
Changes in underlying persistency assumptions  (233)
Changes in underlying premium rate action assumptions  27 
Changes in underlying expense and other assumptions  8 
     
September 30, 2021 Estimated Margin $72 

(a)
Including cost of care inflation assumption.

The increase in the margin in 2021 was primarily driven by changes in discount rate assumptions due to higher near term expected reinvestment rates and favorable changes to underlying morbidity assumptions. These favorable drivers were partially offset by unfavorable changes to underlying persistency assumptions.

CNA has determined that additional future policy benefit reserves for profits followed by losses are not currently required based on the most recent projections.

The table below summarizes the estimated pretax impact on CNA’s results of operations from various hypothetical revisions to its active life reserve assumptions. The annual GPV process involves updating all assumptions to management’s then current best estimate, and historically all significant assumptions have been revised each year. In the table below, CNA has assumed that revisions to such assumptions would occur in each policy type, age and duration within each policy group and would occur absent any changes, mitigating or otherwise, in the other assumptions. Although such hypothetical revisions are not currently required or anticipated, CNA believes they could occur based on past variances in experience and its expectations of the ranges of future experience that could reasonably occur. Any required increase in the recorded reserves resulting from a hypothetical revision in the table below would first reduce the margin in the carried reserves before it would affect results from operations. Any actual adjustment would be dependent on the specific policies affected and, therefore, may differ from the estimates summarized below. The estimated impacts to results of operations in the table below are after consideration of the existing margin.

September 30, 2021 
Estimated Reduction
to Pretax Income
 
(In millions)   
    
Hypothetical revisions   
Morbidity:   
2.5% increase in morbidity $300 
5% increase in morbidity  600 
Persistency:    
5% decrease in active life mortality and lapse $100 
10% decrease in active life mortality and lapse  300 
Discount rates:    
25 basis point decline in new money interest rates $100 
50 basis point decline in new money interest rates  200 
Premium rate actions:    
25% decrease in anticipated future premium rate increases $- 
50% decrease in anticipated future premium rate increases  - 

47
Non-GAAP Reconciliation of Core Income (Loss) to Net Income (Loss)

The following table reconciles core income (loss) to net income (loss) attributable to Loews Corporation for the three and nine months ended March 31,September 30, 2021 and 2020:

Three Months Ended March 31 2021  2020 
 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
 2021  2020  2021  2020 
(In millions)                  
                  
Core income (loss):                  
Property & Casualty Operations $263  $121  $217  $236  $831  $482 
Other Insurance Operations      (13) 20  (43) 10  (82)
Total core income  263   108  237  193  841  400 
Investment gains (losses)  49   (170) 18  36  94  (81)
Consolidating adjustments including noncontrolling interests  (33)  7  (26) (37) (97) (47)
Net income (loss) attributable to Loews Corporation $279  $(55)
Net income attributable to Loews Corporation $229  $192  $838  $272 

Boardwalk Pipelines

Results of Operations

A significant portion of Boardwalk Pipelines’ revenues are fee-based, being derived from capacity reservation charges under firm agreements with customers, which do not vary significantly period to period, but are impacted by longer term trends in its business such as lower pricing on contract renewals and other factors. Boardwalk Pipelines’ operating costs and expenses do not vary significantly based upon the amount of products transported, with the exception of costs recorded in fuel and transportation expense, which are netted with fuel retained on our Consolidated Condensed Statements of Operations. For further information on Boardwalk Pipelines’ revenue recognition policies see Note 1 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020.

34

The following table summarizes the results of operations for Boardwalk Pipelines for the three and nine months ended March 31,September 30, 2021 and 2020 as presented in Note 1211 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:

Three Months Ended March 31 2021  2020 

 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
 2021  2020  2021  2020 
(In millions)                  
                  
Revenues:                  
Operating revenues and other $372  $341  $307  $289  $991  $926 
Total  372   341  307  
289
  991  
926
 
Expenses:                    
Operating and other  217   211  215  
219
  641  
633
 
Interest  41   42   40   
44
   121   
127
 
Total  258   253  255  
263
  762  
760
 
Income before income tax  114   88  52  
26
  229  
166
 
Income tax expense  (29)  (23) (14) 
(6
)
 (59) 
(43
)
Net income attributable to Loews Corporation $85  $65  $38  $20  $170  $123 

Three Months Ended September 30, 2021 Compared to the Comparable 2020 Period

Total revenues increased $31$18 million for the three months ended March 31,September 30, 2021 as compared with the comparable 2020 period. Including the effect of fuel and transportation expense, revenues increased $21 million, primarily driven by revenues from recently completed growth projects and higher utilization-based revenues.

Operating and other expenses decreased $4 million for the three months ended September 30, 2021 as compared with the comparable 2020 period. Excluding fuel and transportation expense, which was offset with operating revenues, operating and other expenses were essentially flat.

48
Interest expenses decreased $4 million for the three months ended September 30, 2021 as compared with the comparable 2020 period, primarily due to lower average interest rates and lower average outstanding long term debt balances.

Nine Months Ended September 30, 2021 Compared to the Comparable 2020 Period

Total revenues increased $28$65 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period, primarily driven primarily by recently completed growth projects and higher system utilization from colder winter weather experienced during the first three monthsquarter of 2021, partially offset by higher fuel and transportation expense.2021.

Operating and other expenses increased $6$8 million for the threenine months ended March 31,September 30, 2021 as compared with the comparable 2020 period. Excluding items offset with operating revenues, operating costs increased $3 million,period, primarily due to an increased asset base from recently completed growth projects.

Interest expense decreased $6 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period, primarily due to lower average interest rates and the colder winter weather experienced during the first three months of 2021.lower average outstanding long term debt balances.

Loews Hotels & Co

The following table summarizes the results of operations for Loews Hotels & Co for the three and nine months ended March 31,September 30, 2021 and 2020 as presented in Note 1211 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:

Three Months Ended March 31 2021  2020 
 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
 2021  2020  2021  2020 
(In millions)                  
                  
Revenues:                  
Operating revenue $39  $109  $107  $22  $222  $140 
Gain on sale of assets    
24
     
37
 
Revenues related to reimbursable expenses  18   33   27   
14
   67   
59
 
Total  57   142  134  
60
  289  
236
 
Expenses:                    
Operating and other:                    
Operating  58   116  93  
53
  231  
219
 
Asset impairments    
10
     
30
 
Reimbursable expenses  18   33  27  
14
  67  
59
 
Depreciation  16   14  15  
15
  47  
45
 
Equity loss from joint ventures  12   4 
Equity (income) loss from joint ventures (26) 
22
  (17) 
51
 
Interest  8   8  8  
8
  25  
24
 
Total  112   175   117   
122
   353   
428
 
Loss before income tax  (55)  (33)
Income tax benefit  12   8 
Net loss attributable to Loews Corporation $(43) $(25)
Income (loss) before income tax 17  
(62
)
 (64) 
(192
)
Income tax (expense) benefit  (4)  
15
   13   
48
 
Net income (loss) attributable to Loews Corporation $13  $(47) $(51) $(144)

Loews Hotels & Co’s results declined mainly due to the continuing adverse impact ofhave been significantly impacted by the COVID-19 pandemic on its operations. Beginning in mid-Marchpandemic. By April 2020, occupancy rates declined significantly, and most hotel properties owned and/or operated by Loews Hotels & Co had temporarily suspended operations. These hotel properties gradually resumed operations at various times, culminating with all hotels having resumed operations by the end of March or early April 2020. While almost all of these hotel properties resumed operations during 2020,June 30, 2021. During 2021, occupancy rates in the first three months of 2021have gradually improved as social distancing restrictions were considerably lower than the prior year period before mid-March 2020. Occupancyscaled back and vaccinations helped reduce infection rates, have been gradually improving since June of 2020 with hotel properties located in resort destinations experiencing improvement at a faster paceimproving sooner than hotel properties located in urbancity centers. However, occupancy levels have not reached pre-pandemic levels at many hotels owned and/or operated by Loews Hotels & Co.

35
49

Although Loews Hotels & Co has enacted significant measures to adjust the operating cost structure of each hotel during the COVID-19 pandemic, deferred a significant amount of capital expenditures and reduced the operating costs of its management company, it has not been able to fully offset the lost revenues resulting from lower occupancies. This has resulted in the decreaseThe increase in operating revenues of $70 million, the decrease in operating expenses of $58$85 million and the increase in equity loss from joint venturesoperating expenses of $8$40 million for the three months ended March 31,September 30, 2021 as compared with the comparable 2020 period, when operations were significantly impacted by the pandemic, was due to improved performance. For the nine months ended September 30, 2021 operating revenues improved by $82 million and operating expenses increased $12 million as compared with the comparable 2020 period. The nine-month comparison is impacted by pre-pandemic business levels prior to mid-March 2020 followed by results that were significantly impacted by the pandemic for the remainder of 2020. Through 2021, occupancy levels have gradually increased leading to improved revenues at most hotel properties, with operating expenses also increasing to support the increased demand levels. As all properties have not resumed all levels of pre-pandemic service offerings, hotel operating expenses, including staffing levels, will increase as those return.

Pre-opening costs included in equityEquity (income) loss from joint ventures decreased $5improved $48 million and $68 million for the three and nine months ended March 31,September 30, 2021 as compared with the comparable 2020 period.periods driven by the resumption of operations and associated occupancy improvement at all joint venture hotels. The three months ended September 30, 2021 was the first quarter during which all 9,000 rooms that are part of the Universal Orlando Resort joint ventures were open for the full quarter. In addition, pre-opening costs included in equity (income) loss from joint ventures decreased $1 million and $8 million for the three and nine months ended September 30, 2021 as compared with the comparable 2020 periods.

Loews Hotels & Co considers events or changes in circumstances that indicate the carrying amount of its assets may not be recoverable. For the three and nine months ended September 30, 2020, Loews Hotels & Co recorded impairment charges of $10 million and $30 million to reduce the carrying value of certain assets to their estimated fair value.

Loews Hotels & Co recorded gains on the sale of assets of $24 million and $37 million for the three and nine months ended September 30, 2020 related to sales of an office building in the third quarter and an owned hotel in the second quarter.

Corporate

Corporate operations consist primarily of investment income, interest expense and administrative costs at the Parent Company, operating results of Altium Packaging, Parent Company interest expense and other Parent Company administrative costs.Company. Investment income includes earnings on cash and short term investments held at the Parent Company to meet current and future liquidity needs, as well as results of limited partnership investments and the trading portfolio held at the Parent Company. Corporate also includes the operating results of Altium Packaging through March 31, 2021 and the loss related to the Parent Company’s equity method investment in Altium Packaging beginning on April 1, 2021, as a result of the sale of 47% of the Parent Company’s interest in Altium Packaging and the resulting deconsolidation. See Note 2 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report for further information.

The following table summarizes the results of operations for Corporate for the three and nine months ended March 31,September 30, 2021 and 2020 as presented in Note 1211 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:

Three Months Ended March 31 2021  2020 

 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
 2021  2020  2021  2020 
(In millions)                  
                  
Revenues:                  
Net investment income (loss) $46  $(166) $(30) $23  $40  $(33)
Investment gains (losses)       540  
(1,211
)
Operating revenues and other  281   257   1   
253
   282   
754
 
Total  327   91  (29) 
276
  862  
(490
)
Expenses:                    
Operating and other  308   268  27  
275
  365  
810
 
Interest  48   31   23   
33
   93   
96
 
Total  356   299  50  
308
  458  
906
 
Loss before income tax  (29)  (208)
Income (loss) before income tax (79) 
(32
)
 404  
(1,396
)
Income tax (expense) benefit  (31)  43  19  
6
  (126) 
293
 
Net loss attributable to Loews Corporation $(60) $(165)
Net income (loss) attributable to Loews Corporation $(60) $(26) $278  
$
(1,103
)

50
Net investment loss for the Parent Company was $30 million for the three months ended September 30, 2021 as compared with net investment income of $23 million for the comparable 2020 period, primarily due to lower results from equity based investments in the Parent Company trading portfolio. Net investment income for the Parent Company for the threenine months ended March 31,September 30, 2021 was $46$40 million as compared with a net investment loss of $166$33 million for the comparable 2020 period, primarily due to improved results from equity based investments in the Parent Company trading portfolio.

Investment gains of $540 million for the nine months ended September 30, 2021 were primarily due to a gain of $555 million ($438 million after tax) on the sale of 47% of Altium Packaging. Investment loss of $1.2 billion ($957 million after tax) for the nine months ended September 30, 2020 was due to the loss recognized upon deconsolidation of Diamond Offshore as a result of its Chapter 11 Filing.

Operating revenues and other include Altium Packaging revenues of $280 million for 2021, prior to its deconsolidation on April 1, 2021, and $256$253 million and $753 million for the three and nine months ended September 30, 2020.

Operating and other expenses decreased by $248 million and $445 million for the three and nine months ended September 30, 2021 as compared with the comparable 2020 periods primarily due to the deconsolidation of Altium Packaging as the three and nine months ended September 30, 2020 included $247 million and $729 million of Operating and other expenses for Altium Packaging. Operating and other expenses also include legal and other corporate overhead expenses at the Parent Company. In addition, pursuant to the deconsolidation of Altium Packaging, the related loss related to the Parent Company’s investment in Altium Packaging is included in Operating and other expenses.

Interest expenses decreased $10 million for the three months ended March 31, 2021 and 2020. The increase of $24 million for the three months ended March 31,September 30, 2021 as compared with the comparable 2020 period reflects higher year-over-year resin prices and an increase of $7 million related to an acquisition in 2020, partially offset by lower volumes, primarily due to the impactdeconsolidation of the winter storms in 2021. Altium Packaging’s contracts with its customers provide for price adjustments for changes in resin prices on a prospective basis. Due to fluctuations in resin prices, over time resin raw material costs are generally offset by the change in revenues, so that Altium Packaging’s gross margins return to the same level as prior to the change in prices.

Operating and other expenses include Altium Packaging operating expenses of $279 million and $246 million foras the three months ended March 31, 2021 and 2020. The increase in operatingSeptember 30, 2020 included $12 million of interest expense for Altium packaging. Interest expenses of $33decreased $3 million for the threenine months ended March 31,September 30, 2021 as compared with the comparable 2020 period is primarily due to the increase in resin prices, an increasedeconsolidation of $4 million related to an acquisition in 2020 and increased labor costs.

Corporate Operating and other expenses were $29 million and $22 million forAltium Packaging as of April 1, 2021, partially offset by the three months ended March 31, 2021 and 2020. The increase of $7 million for the three months ended March 31, 2021 as compared with the comparable 2020 period is primarily due to legal and other corporate overhead expenses.

Interest expenses increased $17 million for the three months ended March 31, 2021 as compared with the comparable 2020 period due to the May of 2020 issuance of the Parent Company’s $500 million aggregate principal amount of 3.2% senior notes due May 15, 2030 and a charge of approximately $14 million to write off debt issuance costs for the early retirement of debt at Altium Packaging in the current year period.
36
first quarter of 2021.

Income tax expense was $31$126 million for the threenine months ended March 31,September 30, 2021 as compared with an income tax benefit of $43$293 million for the comparable 2020 period. The income tax expense for the threenine months ended March 31,September 30, 2021 is primarily due to the recognition of $117 million of taxes on the investment gain related to the sale of 47% of Altium Packaging and also includes the recognition of a $35$40 million deferred tax liability resulting from the asset held for sale designation of Altium Packaging in the first quarter of 2021. The income tax benefit for the nine months ended September 30, 2020 is primarily due to the recognition of taxes on the investment loss related to the saledeconsolidation of 47% of the Company’s interest in Altium Packaging. For more information on the sale see Note 2 of the Notes to Consolidated Condensed Financial Statements included under Item 1.Diamond Offshore.

Diamond Offshore

Amounts presented for Diamond Offshore for the threenine months ended March 31,September 30, 2020 reflect the periodperiods prior to its deconsolidation in the second quarter of 2020. Contract drilling revenues were $218 million and Contractcontract drilling expenses were $185$287 million and $254 million for the threenine months ended March 31,September 30, 2020. Operating and other expenses includefor the nine months ended September 30, 2020 included an aggregate asset impairment charge of $774 million ($408 million after tax and noncontrolling interests) recognized in the first quarter of 2020. For more information on the deconsolidation of Diamond Offshore see Note 2 of the Notes to Consolidated Condensed Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020.included under Item 1 of this Report.

LIQUIDITY AND CAPITAL RESOURCES

Parent Company

Parent Company cash and investments, net of receivables and payables, totaled $3.6 billion at March 31,September 30, 2021 as compared to $3.5 billion at December 31, 2020. During the threenine months ended March 31,September 30, 2021, we received $275$460 million in dividends from CNA, including a special dividend of $182 million. We also received a $199 million dividend from Altium Packaging in February of 2021. Cash outflows during the threenine months ended March 31,September 30, 2021 included the payment of $280$825 million to fund treasury stock purchases, $17$49 million of cash dividends to our shareholders and $32 million of cash contributions to Loews Hotels & Co. On April 1, 2021, Loews Corporation sold its 47% interest in Altium Packaging to GIC and received approximately $420 million in cash consideration, subject to expenses and post-closing adjustments.consideration. As a holding company we depend on dividends from our subsidiaries and returns on our investment portfolio to fund our obligations. We

51
also have an effective Registration Statement on file with the Securities and Exchange Commission (“SEC”) registering the future sale of an unlimited amount of our debt and equity securities from time to time. We are not responsible for the liabilities and obligations of our subsidiaries and there are no Parent Company guarantees.

Depending on market and other conditions, we may purchase our shares and shares of our subsidiariessubsidiaries’ outstanding common stock in the open market, in privately negotiated transactions or otherwise. During the threenine months ended March 31,September 30, 2021, we purchased 5.615.7 million shares of Loews Corporation common stock. As of April 30,October 29, 2021, we had purchased an additional 0.60.1 million shares of Loews Corporation common stock in 2021 at an aggregate cost of $32$5 million. As of April 30,October 29, 2021, there were 263,175,591253,684,412 shares of Loews Corporation common stock outstanding.

Future uses of our cash may include investing in our subsidiaries, new acquisitions, dividends and/or repurchases of our and our subsidiaries’ outstanding common stock. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend on many factors, including our earnings, financial condition and business needs.

Subsidiaries

CNA’s cash provided by operating activities was $82$1,354 million for the threenine months ended March 31,September 30, 2021 and $212$1,408 million for the comparable 2020 period. The decrease in cash provided by operating activities was driven by the payment of the EWC LPT premium, increased ceded premiums paid and higher taxes paid, partially offset by an increase in gross premiums collected, lower net claim payments and an increase in premiums collected.a higher level of distributions from limited partnerships. For further information on the EWC LPT see Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1.1 of this Report.

CNA paid a quarterly cash dividenddividends of $0.38$1.89 per share on its common stock, andincluding a special cash dividend of $0.75 per share, on its common stock induring the first quarter ofnine months ended September 30, 2021. On April 30,October 29, 2021, CNA’s Board of Directors declared a quarterly cash dividend of $0.38 per share, payable June 3,December 2, 2021 to shareholders of record on May 17,November 15, 2021. CNA’s declaration and payment of future dividends is at the discretion of its Board of Directors and will depend on many factors, including CNA’s earnings, financial condition, business needs and regulatory constraints.

Dividends from Continental Casualty Company (“CCC”), a subsidiary of CNA, are subject to the insurance holding company laws of the State of Illinois, the domiciliary state of CCC. Under these laws, ordinary dividends, or dividends that do not require prior approval by the Illinois Department of Insurance (the “Department”), are determined based on the greater of the prior year’s statutory net income or 10% of statutory surplus as of the end of the prior year, as
37
well as the timing and amount of dividends paid in the preceding 12 months. Additionally, ordinary dividends may only be paid from earned surplus, which is calculated by removing unrealized gains from unassigned surplus. As of March 31,September 30, 2021, CCC was in a positive earned surplus position. CCC paid dividends of $330$600 million and $670$855 million during the threenine months ended March 31,September 30, 2021 and 2020. The actual level of dividends paid in any year is determined after an assessment of available dividend capacity, holding company liquidity and cash needs as well as the impact the dividends will have on the statutory surplus of the applicable insurance company.

CNA has an effective shelf registration statement on file with the SEC under which it may publicly issue debt, equity or hybrid securities from time to time.

Boardwalk Pipelines’ cash provided by operating activities increased $40$26 million for the threenine months ended March 31,September 30, 2021 as compared to the comparable 2020 period, primarily due to the change in net income.

For the threenine months ended March 31,September 30, 2021 and 2020, Boardwalk Pipelines’ capital expenditures were $53$239 million and $101$351 million, consisting primarily of a combination of growth and maintenance capital.

As of March 31,In May 2021, Boardwalk Pipelines had $10 million of outstanding borrowings under itsentered into an amended revolving credit facility.agreement to decrease the borrowing capacity from $1.5 billion to $1.0 billion and extend the maturity date to May 27, 2026, although the maturity date may be further extended for two one-year extensions at Boardwalk Pipelines’ election. As of AprilSeptember 30, 2021, Boardwalk Pipelines had no outstanding borrowings and approximately $1.5 billionunder its revolving credit facility. In the second quarter of 2022, Boardwalk Pipelines expects to retire the $300 million outstanding aggregate principal amount of its 4.0% notes at maturity through available capital resources, including, but not limited to, using available cash, borrowing under its credit facility. Boardwalk Pipelines anticipates that its existing capital resources, including itsrevolving credit facility and cash flows from operating activities, will be adequate to fund its operations and capital expenditures for 2021.or publicly issuing debt securities. Boardwalk Pipelines has an effective shelf registration statement on file with the SEC under which it may publicly issue debt securities, warrants or rights from time to time.

52
Certain of the hotels wholly or partially owned by subsidiaries of Loews Hotels & Co are financed by debt facilities, with a number of different lenders. Each of the loan agreements underlying these facilities contain a variety of financial and operational covenants. As a result of the impacts of COVID-19, Loews Hotels & Co has proactively requested certain lenders, where applicable, to (1) temporarily waive certain covenants to avoid an event of default and/or further restriction of the hotel’s cash balances through the establishment of lockboxes and other measures; (2) temporarily allow funds previously restricted directly or indirectly under the hotel’s underlying loan agreement for the renewal, replacement and addition of building improvements, furniture and fixtures to be used instead for hotel operations and maintenance; and/or (3) defer certain interest and/or principal payments while the hotels operations arewere temporarily suspended or significantly impacted by a decline in occupancy. Loews Hotels & Co also continues to work with lenders on loans that are being reviewed for extension. These discussions with lenders are ongoing and may require Loews Hotels & Co to make principal paydowns, establish restricted cash reserves or provide guaranties of a subsidiary’s debt to otherwise avoid an event of default. Through the date of this Report, none of Loews Hotels & CoCo’s subsidiaries is not in default on any of its loans.

Additionally, due to temporary suspensionAs of operations and lost revenues in certain joint venture entities, Loews Hotels & Co has received capital call notices in accordance with the underlying joint venture agreements to support the properties’ operations. Through AprilSeptember 30, 2021, Loews Hotels & Co has three subsidiaries with mortgage loans that mature within twelve months and is actively working with lenders to refinance $190 million in current maturities of long-term debt.

In October 2021 Loews Hotels & Co announced the development of the Loews Arlington Hotel and Convention Center in Arlington, Texas. The hotel, for which Loews Hotels & Co will serve as manager and hold a majority equity interest, is expected to open in early 2024 with approximately 888 guestrooms and over 250,000 square feet of function space. The approximately $550 million hotel project will be funded approximately $13 million to these joint venturesthrough a mix of partner contributions in 2021. Additional capital calls are anticipated from certain joint ventures during 2021 and will depend2022 before drawing on future occupancy levels and cash needs.a $300 million construction loan. Based on the timing of construction relative to the seasonality of Loews Hotels & Co’s business, a Loews Corporation capital contribution may be required.

Through April 30,October 29, 2021, Loews Hotels & Co received capital contributions in 2021 of $32 million from Loews Corporation. Additional funding from Loews Corporation during the remainder of 2021 will be needed and will depend on numerous factors, including how quickly properties are able to return to sustainable operating levels as well as any strategically aligned development opportunities.

On February 3, 2021, Altium Packaging entered into a $1.05 billion seven-year secured term loan. The term loan is a variable rate facility which bears interest at a floating rate equal to the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 2.75%, subject to a 0.5% LIBOR floor. The proceeds were used to pay the outstanding principal balances of its variable rate term loans and lending facility and a dividend of $200 million.

INVESTMENTS

Investment activities of our non-insurance subsidiaries primarily consist of investments in fixed income securities, including short term investments. The Parent Company portfolio also includes equity securities, including short sales and derivative instruments, and investments in limited partnerships. These types of investments generally presenthave greater volatility, less liquidity and greater risk than fixed income investments and are included within Results of Operations – Corporate.

38

We enterThe Parent Company enters into short sales and investinvests in certain derivative instruments that are used for asset and liability management activities, income enhancements to theits portfolio management strategy and to benefit from anticipated future movements in the underlying markets. If such movements do not occur as anticipated, then significant losses may occur. Monitoring procedures include senior management review of daily reports of existing positions and valuation fluctuations to seek to ensure that open positions are consistent with the portfolio strategy.

Credit exposure associated with non-performance by counterparties to derivative instruments is generally limited to the uncollateralized change in fair value of the derivative instruments recognized in the Consolidated Condensed Balance Sheets. We mitigate theThe risk of non-performance is mitigated by monitoring the creditworthiness of counterparties and diversifying derivatives by using multiple counterparties. WeCollateral is occasionally require collateralrequired from derivative investment counterparties depending on the amount of the exposure and the credit rating of the counterparty.

Insurance

CNA maintains a large portfolio of fixed maturity and equity securities, including large amounts of corporate and government issued debt securities, residential and commercial mortgage-backed securities, other asset-backed securities and investments in limited partnerships which pursue a variety of long and short investment strategies across a broad array of asset classes. CNA’s investment portfolio supports its obligation to pay future insurance claims and provides investment returns which are an important part of CNA’s overall profitability.

53
Net Investment Income

The significant components of CNA’s net investment income are presented in the following table. Fixed income securities, as presented, include both fixed maturity securities and non-redeemable preferred stock.

Three Months Ended March 31 2021  2020 
(In millions)      
       
Fixed income securities:      
Taxable fixed income securities $359  $371 
Tax-exempt fixed income securities  80   78 
Total fixed income securities  439   449 
Limited partnership investments  43   (70)
Common stock  18   (55)
Other, net of investment expense  4   5 
Net investment income $504  $329 

 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
 2021  2020  2021  2020 
(In millions)            
            
Fixed income securities:            
Taxable fixed income securities $360  $363  $1,075  $1,094 
Tax-exempt fixed income securities 77  80  236  238 
Total fixed income securities 437  443  1,311  1,332 
Limited partnership and common stock investments 77  71  294  30 
Other, net of investment expense  (1)  3   3   18 
Net investment income $513  $517  $1,608  $1,380 
            
Effective income yield for the fixed income securities portfolio  4.4%  4.6% 4.3
% 4.5
%
 4.3
% 4.6
%
Limited partnership and common stock return  3.4%  (7.0)% 3.8
% 4.1
% 16.4
% 1.7
%

CNA’s net investment income increased $228 million for the threenine months ended March 31,September 30, 2021 increased $175 million as compared with the comparable 2020 period, driven by increased limited partnership and common stock returns.returns partially offset by lower yields in the fixed income portfolio.

Investment Gains (Losses)

The components of CNA’s investment gains (losses) are presented in the following table:

Three Months Ended March 31 2021  2020 
 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
 2021  2020  2021  2020 
(In millions)                  
                  
Investment gains (losses):                  
Fixed maturity securities:                  
Corporate and other bonds $36  $(79) $36  $14  $115  $(105)
States, municipalities and political subdivisions  (1)     1  6     39 
Asset-backed  3   4   (15)  6   (24)  34 
Total fixed maturity securities  38   (75) 22  26  91  (32)
Non-redeemable preferred stock  2   (133) (2) 25  17  (45)
Short term and other  17   (8) 2  (5) 9  (24)
Total investment gains (losses)  57   (216) 22  46  117  (101)
Income tax (expense) benefit  (8)  46  (4) (10) (23) 20 
Amounts attributable to noncontrolling interests  (5)  18   (2)  (3)  (10)  9 
Net investment gains (losses) attributable to Loews Corporation
 $44  $(152)
Investment gains (losses) attributable to Loews Corporation
 $16  $33  $84  $(72)
39

CNA’s investment gains (losses) decreased $24 million for the three months ended September 30, 2021 as compared with the comparable 2020 period.
Index

CNA’s investment gains (losses) increased $273$218 million for the threenine months ended March 31,September 30, 2021 as compared with the comparable 2020 period driven by lower impairment losses and the favorable relative change in fair value of non-redeemable preferred stock and lower impairment losses.stock.

Further information on CNA’s investment gains and losses is set forth in Note 3 of the Notes to Consolidated Condensed Financial Statements included under Item 1.1 of this Report.

54
Portfolio Quality

The following table presents the estimated fair value and net unrealized gains (losses) of CNA’s fixed maturity securities by rating distribution:

 March 31, 2021  December 31, 2020 
    Net     Net 
    Unrealized     Unrealized 
 Estimated  Gains  Estimated  Gains  September 30, 2021  December 31, 2020 
 Fair Value  (Losses)  Fair Value  (Losses)  
Estimated
Fair Value
  
Net
Unrealized
Gains
(Losses)
  
Estimated
Fair Value
  
Net
Unrealized
Gains
(Losses)
 
(In millions)                        
                        
U.S. Government, Government agencies and            
Government-sponsored enterprises $3,149  $36  $3,672  $117 
U.S. Government, Government agencies and Government-sponsored enterprises
 $2,938  $57  $3,672  $117 
AAA  3,589   385   3,627   454  3,778  371  3,627  454 
AA  7,221   802   7,159   1,012  7,737  833  7,159  1,012 
A  9,380   1,057   9,543   1,390  9,538  1,159  9,543  1,390 
BBB  17,692   1,920   18,007   2,596  18,505  2,215  18,007  2,596 
Non-investment grade  2,548   131   2,623   149  2,573  123  2,623  149 
Total $43,579  $4,331  $44,631  $5,718  $45,069  $4,758  $44,631  $5,718 

As of March 31,September 30, 2021 and December 31, 2020, 1% of CNA’s fixed maturity portfolio was rated internally. AAA rated securities included $1.9$1.7 billion and $1.8 billion of pre-refunded municipal bonds as of March 31,September 30, 2021 and December 31, 2020.

The following table presents CNA’s available-for-sale fixed maturity securities in a gross unrealized loss position by ratings distribution:

    Gross 
  Estimated  Unrealized 
March 31, 2021 Fair Value  Losses 
(In millions)      
       
U.S. Government, Government agencies and      
Government-sponsored enterprises $1,631  $47 
AAA  202   9 
AA  896   29 
A  1,096   33 
BBB  1,372   47 
Non-investment grade  364   17 
Total $5,561  $182 

40
September 30, 2021 
Estimated
Fair Value
  
Gross
Unrealized
Losses
 
(In millions)      
       
U.S. Government, Government agencies and Government-sponsored enterprises $1,200  $9 
AAA  388   5 
AA  906   16 
A  1,191   18 
BBB  1,187   31 
Non-investment grade  396   10 
Total $5,268  $89 

The following table presents the maturity profile for these available-for-sale fixed maturity securities. Securities not due to mature on a single date are allocated based on weighted average life:

    Gross 
 Estimated  Unrealized 
March 31, 2021 Fair Value  Losses 
September 30, 2021 
Estimated
Fair Value
  
Gross
Unrealized
Losses
 
(In millions)            
            
Due in one year or less $135  $5  $133  $5 
Due after one year through five years  672   21  709  13 
Due after five years through ten years  3,090   82  2,639  33 
Due after ten years  1,664   74  1,787  38 
Total $5,561  $182  $5,268  $89 

55
Duration

A primary objective in the management of CNA’s investment portfolio is to optimize return relative to the corresponding liabilities and respective liquidity needs. CNA’s views on the current interest rate environment, tax regulations, asset class valuations, specific security issuer and broader industry segment conditions as well as domestic and global economic conditions, are some of the factors that enter into an investment decision. CNA also continually monitors exposure to issuers of securities held and broader industry sector exposures and may from time to time adjust such exposures based on its views of a specific issuer or industry sector.

A further consideration in the management of CNA’s investment portfolio is the characteristics of the corresponding liabilities and the ability to align the duration of the portfolio to those liabilities and to meet future liquidity needs, minimize interest rate risk and maintain a level of income sufficient to support the underlying insurance liabilities. For portfolios where future liability cash flows are determinable and typically long term in nature, CNA segregates investments for asset/liability management purposes. The segregated investments support the long term care and structured settlement liabilities in Other Insurance Operations.

The effective durations of CNA’s fixed income securities and short term investments are presented in the following table. Amounts presented are net of payable and receivable amounts for securities purchased and sold, but not yet settled.

March 31, 2021 December 31, 2020 September 30, 2021  December 31, 2020 
Estimated
Fair Value
Effective
Duration
(Years)
 
Estimated
Fair Value
Effective
Duration
(Years)
 
Estimated
Fair Value
  
Effective
Duration
(Years)
  
Estimated
Fair Value
  
Effective
Duration
(Years)
 
(In millions of dollars)                   
                   
Investments supporting Other Insurance Operations$17,9529.1 $18,5189.2 $18,431  9.3  
$
18,518
  9.2 
Other investments 27,6664.9  28,8394.5 28,520  5.1   
28,839
  4.5 
Total$45,6186.5 $47,3576.3 $46,951  6.7  
$
47,357
  6.3 

CNA’s investment portfolio is periodically analyzed for changes in duration and related price risk. Certain securities have duration characteristics that are variable based on market interest rates, credit spreads and other factors that may drive variability in the amount and timing of cash flows. Additionally, CNA periodically reviews the sensitivity of the portfolio to the level of foreign exchange rates and other factors that contribute to market price changes. A summary of these risks and specific analysis on changes is included in the Quantitative and Qualitative Disclosures about Market Risk included under Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2020.

41

Short Term Investments

The carrying value of the components of CNA’s Short term investments are presented in the following table:

 March 31,  December 31, 
 2021  2020  
September 30,
2021
  
December 31,
2020
 
(In millions)
            
            
Short term investments:            
U.S. Treasury securities $1,109  $1,702  $916  $1,702 
Other  225   205  219  205 
Total short term investments $1,334  $1,907  $1,135  $1,907 

CRITICAL ACCOUNTING ESTIMATES

Certain accounting policies require us to make estimates and judgments that affect the amounts reflected in the Consolidated Condensed Financial Statements. Such estimates and judgments necessarily involve varying, and possibly significant, degrees of uncertainty. Accordingly, certain amounts currently recorded in the financial statements will likely be adjusted in the future based on new available information and changes in other facts and circumstances. See the Critical Accounting Estimates and the Insurance Reserves sections of our MD&A included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 for further information.

56
ACCOUNTING STANDARDS UPDATE

For a discussion of accounting standards updates that have been adopted or will be adopted in the future, please read Note 1 of the Notes to Consolidated Condensed Financial Statements included under Item 1.1 of this Report.

FORWARD-LOOKING STATEMENTS

Investors are cautioned that certain statements contained in this Report as well as in other of our and our subsidiaries’ SEC filings and periodic press releases and certain oral statements made by us and our subsidiaries and our and their officials during presentations may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements include, without limitation, any statement that does not directly relate to any historical or current fact and may project, indicate or imply future results, events, performance or achievements. Such statements may contain the words “expect,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “will be,” “will continue,” “will likely result,” and similar expressions. In addition, any statement concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible actions taken by us or our subsidiaries are also forward-looking statements as defined by the Act. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to a variety of risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from those anticipated or projected.

Developments in any of the risks or uncertainties facing us or our subsidiaries, including those described under Part II, Item 1A, Risk Factors in this Report, and Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020, Part II, Item 1A, Risk Factors in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 and in our other filings with the SEC, could cause our results to differ materially from results that have been or may be anticipated or projected. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made and we expressly disclaim any obligation or undertaking to update these statements to reflect any change in our expectations or beliefs or any change in events, conditions or circumstances on which any forward-looking statement is based.

Item 3.
Item 3.Quantitative and Qualitative Disclosures about Market Risk.

There were no material changes in our market risk components as of March 31,September 30, 2021. See the Quantitative and Qualitative Disclosures about Market Risk included under Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2020 for further information. Additional information related to portfolio duration and market conditions is discussed in the Investments section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included under Part I, Item 2.


Item 4.
Item 4.Controls and Procedures.

The Company maintains a system of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), which is designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, including this Report, is recorded, processed, summarized and reported on a timely basis. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Company under the Exchange Act is accumulated and communicated to the Company’s management on a timely basis to allow decisions regarding required disclosure.

The Company’s management, including the Company’s principal executive officer (“CEO”) and principal financial officer (“CFO”) conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Report and, based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of March 31,September 30, 2021.

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31,September 30, 2021 that have materially affected or that are reasonably likely to materially affect the Company’s internal control over financial reporting.

57
PART II. OTHER INFORMATION

Item 1.
Item 1.Legal Proceedings.

Information on our legal proceedings is set forth in Note 109 to the Consolidated Condensed Financial Statements included under Part I, Item 1.

Item 1A.
Item 1A.Risk Factors.

Our business and the businesses of our subsidiaries face many risks and uncertainties. These risks and uncertainties could lead to events or circumstances that have a material adverse effect on our business, results of operations, cash flows, financial condition or equity and/or the business, results of operations, cash flows, financial condition, or equity of one or more of our subsidiaries. Our Annual Report on Form 10-K for the year ended December 31, 2020 includes aand our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 include detailed discussiondiscussions of certain risk factors facing the company. Except as described below, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A, Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2020.2020 and Part II, Item 1A. Risk Factors of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021.

Risks Related to Us and Our Subsidiary, CNA Financial Corporation (“CNA”)

Any significant interruption in the operation of CNA’s business functions, facilities and systems or its vendors’ facilities and systems could result in a materially adverse effect on its operations.

CNA’s business is highly dependent upon its ability to perform, in an efficient and uninterrupted manner, through its employees or vendor relationships, necessary business functions, (suchsuch as internet support and 24-hour call centers),centers, processing new and renewal business, and processing and paying claims and other obligations. obligations and issuing financial statements.

CNA’s, or its vendors’, facilities and systems could become unavailable, inoperable, or otherwise impaired from a variety of causes, including natural events, such as hurricanes, tornadoes, windstorms, earthquakes, severe winter weather and fires, or other events, such as explosions, terrorist attacks, computer security breaches or cyber attacks, riots, hazardous material releases, medical epidemics or pandemics, utility outages, interruptions of CNA’s data processing and storage systems or the systems of third-party vendors, or unavailability of communications facilities. An interruption of CNA’s system availability occurred in March of 2021 as a result of a cybersecurity attack sustained by CNA. Please refer to the immediately following risk factor for further information regarding this incident.

Likewise, CNA could experience a significant failure, interruption or corruption of one or more of its vendors’ information technology, telecommunications, or other systems for various reasons, including significant failures or interruptions that might occur as existing systems are replaced or upgraded. The shut-down or unavailability of one or more of CNA’s or its vendors’ systems or facilities for these and other reasons could significantly impair CNA’s ability to perform critical business functions on a timely basis.

In addition, because CNA’s information technology and telecommunications systems interface with and depend on third-party systems, CNA could experience service denials if demand for such service exceeds capacity or a third-party system fails or experiences an interruption. If sustained or repeated, such events could result in a deterioration of CNA’s ability to write and process new and renewal business, provide customer service, pay claims in a timely manner, or perform other necessary business functions, including the ability to issue financial statements in a timely manner.
43

The foregoing risks could also expose CNA to monetary and reputational damages. Potential exposures resulting from the March of 2021 cybersecurity attack, described in the immediately following risk factor, as well as any future incidents may include substantially increased compliance costs, and requiredas well as increased costs relating to investments in computer system upgrades and security-related investments.upgrades, with those costs potentially not recoverable under relevant insurance coverage. CNA anticipates making continued investments to improve its security and infrastructure. These expenses are not recoverable under relevant insurance coverage. If CNA’s business continuity plans or system security do not sufficiently address these risks, they could have a material adverse effect on CNA’s business, results of operations and financial condition.

58
Based on the information currently known, CNA does not believe that the March of 2021 cybersecurity attack will have a material impact on its business, results of operations or financial condition. However,condition, but no assurances can be given as it continues to assess the full impact from the incident, including costs, expenses and insurance coverage. CNA may also be subject to future incidents that could have a material adverse effect on its business, results of operations or financial condition or may result in operational impairments and financial losses, as well as significant harm to its reputation.

Any significant breach in CNA’s data security infrastructure or its vendors’ facilities and systems could disrupt business, cause financial losses and damage its reputation, and insurance coverage may not be available for claims related to a breach.

A significant breach of CNA’s data security infrastructure may result from actions by its employees, vendors, third-party administrators, or unknown third parties or through cyber attacks. The risk of a breach can exist whether software services are in CNA’s data centers or CNA uses cloud-based software services. Breaches have occurred, and may occur again, in CNA’s systems and in the systems of its vendors and third party administrators.

Such a breach could affect CNA’s data framework or cause a failure to protect the personal information of its customers, claimants or employees, or sensitive and confidential information regarding its business and may result in operational impairments and financial losses, as well as significant harm to its reputation. The breach of confidential information also could give rise to legal liability and regulatory action under data protection and privacy laws, as well as evolving regulation in this regard. AnyDuring the third quarter of 2021, CNA was notified of a breach of certain systems of a third party administrator, which resulted in breach notifications sent by such administrator to potentially impacted persons, including a limited number of CNA claimants. While CNA does not believe such notifications and resultant actions will have a material adverse effect on its business, this or similar incidents, or any other such breach of CNA’s or its vendors’ data security infrastructure could have a material adverse effect on its business, results of operations and financial condition.

CNA sustained a sophisticated cybersecurity attack in March of 2021 involving ransomware that caused a network disruption and impacted certain of its systems. Promptly uponUpon detection, CNA undertook steps to address the incident, including engaging a team of third-party forensic experts and notifying law enforcement and key regulators. As of the date of this report, CNA has restored network systems and resumed normal operations. CNA is continuing to assess the full extent of the impact from the incident, as well as determining any additionalall actions that it maywill take to improve its existing systems.

Although theCNA’s investigation is ongoing, should CNA determinerevealed that an unauthorized third party copied some personal information wasrelating to certain current and former employees, contractor workers and their dependents and certain other persons, including some policyholders. In July of 2021, CNA provided notifications to the impacted it is possible that notificationindividuals and to individuals, other parties and/or regulators, may be required based onin accordance with applicable law. As a resultAlthough CNA currently has no indication that the impacted data has been misused, or otherwise related tothat CNA or its policyholder data was specifically targeted by the incident, CNAunauthorized third party, it may be subject to subsequent investigations, claims or actions in addition to other costs, fines, penalties, or other obligations.obligations related to impacted data, whether or not such data is misused. In addition, the misuse, or perceived misuse, of sensitive or confidential information regarding its business or policyholders could cause harm to CNA’s reputation and result in the loss of business with existing or potential customers, which could adversely impact its business, results of operations and financial condition.

Although CNA maintains cybersecurity insurance coverage insuring against costs resulting from cyber attacks (including the attack described above)March 2021 attack), it is possible losses may exceedCNA does not expect that the amount available under CNA’sits coverage andand/or its coverage policy may notto cover all losses. Costs and expenses incurred and likely to be incurred by CNA in connection with the March 2021 attack include both direct and indirect costs and not all may be covered by its insurance coverage. In addition, potential disputes with its insurers about the availability of insurance coverage for claims relating to the March 2021 attack or any future incident could occur. Further, both as a result of the March 2021 attack and industry trends generally, CNA will incur higher costs for the replenishment of its current policy through the end of the term, as well as future cybersecurity insurance coverage may be difficult to obtain or may only be available at significantly higher costs to CNA.beyond the current term.

Based on the information currently known, CNA does not believe that the March of 2021 cybersecurity attack will have a material impact on its business, results of operations or financial condition. However,condition, but no assurances can be given as it continues to assess the full impact from the incident, including costs, expenses and insurance coverage. CNA may also be subject to future incidents that could have such a material adverse effect on its business, results of operations or financial condition or may result in operational impairments and financial losses, as well as significant harm to CNA’s reputation.

44
59
Risks Related to Us and Our Subsidiaries Generally

Failures or interruptions in or breaches to our or our subsidiaries’ computer systems or those of our third party vendors could materially and adversely affect our or our subsidiaries’ operations.

We and our subsidiaries are dependent upon information technologies, computer systems and networks, including those maintained by us and our subsidiaries and those maintained and provided to us and our subsidiaries by third parties (for example, “software-as-a-service” and cloud solutions), to conduct operations and are reliant on technology to help increase efficiency in our and their businesses. We and our subsidiaries are dependent upon operational and financial computer systems to process the data necessary to conduct almost all aspects of our and their businesses. Any failure of our or our subsidiaries’ computer systems, or those of our or their customers, vendors or others with whom we and they do business, could materially disrupt business operations.

Computer, telecommunications and other business facilities and systems could become unavailable or impaired from a variety of causes, including cyber attacks or other cyber incidents, storms and other natural disasters, terrorist attacks, fires, utility outages, theft, design defects, human error or complications encountered as existing systems are replaced or upgraded. Cyber attacks and other cyber incidents are occurring more frequently, are constantly evolving in nature, are becoming more sophisticated and are being carried out by groups and individuals with a wide range of expertise and motives. The U.S. government has issued public warnings that indicate energy assets may be specific targets of cyber attacks, which can have catastrophic consequences, and hotel chains, among other consumer-facing businesses, have been subject to various cyber attacks targeting payment card and other sensitive consumer information. Cyber attacks and cyber incidents take many forms, including cyber extortion, denial of service, social engineering, introduction of viruses or malware, exploiting vulnerabilities in hardware, software or other infrastructure, hacking, website defacement, theft of passwords and other credentials, unauthorized use of computing resources for digital currency mining and business email compromise. CNA was recently subjected to a cybersecurity incident. In addition, one of CNA’s vendors also recently experienced a cybersecurity incident. For additional information about these incidents see “Risks Related to Us and Our Subsidiary, CNA Financial Corporation” above under this Part II, Item 1A.

As with other large companies, we and our subsidiaries and our and their third party vendors have experienced cyber attacks and other cyber incidents and expect this to continue. If we and our subsidiaries and our and their third party vendors do not allocate and effectively manage the resources necessary to continue to build and maintain our and their information technology security infrastructure, or if we or our subsidiaries or our or our subsidiaries’ vendors fail to timely identify or appropriately respond to cyber attacks or other cyber incidents, then this may disrupt our and our subsidiaries’ operations, cause significant damage to our or their assets and surrounding areas, cause loss of life or serious bodily injury, impact our or their data framework or cause a failure to protect personal information of customers or employees.

The foregoing risks relating to disruption of service, interruption of operations and data loss could impact our and our subsidiaries’ ability to timely perform critical business functions, resulting in disruption or deterioration in our and our subsidiaries’ operations and business and expose us and our subsidiaries to significant financial losses and monetary and reputational damages. In addition, potential exposures include substantially increased compliance costs and required computer system upgrades and security related investments. The breach of confidential information also could give rise to legal liability and regulatory action under data protection and privacy laws and regulations, both in the U.S. and foreign jurisdictions.

60
Item 2.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

Items 2 (a) and (b) are inapplicable.

(c) STOCK REPURCHASES

Period 
(a) Total number
of shares
purchased
  
(b) Average
price paid per
share
  
(c) Total number of
shares purchased as
part of publicly
announced plans or
programs
  
(d) Maximum number of shares
(or approximate dollar value)
of shares that may yet be
purchased under the plans or
programs (in millions)
 
             
January 1, 2021 -            
 January 31, 2021  1,836,740  $45.96   N/A   N/A 
                 
February 1, 2021 -                
 February 28, 2021  344,380   46.24   N/A   N/A 
                 
March 1, 2021 -                
 March 31, 2021  3,377,044   51.27   N/A   N/A 
Period 
(a) Total number
of shares
purchased
  
(b) Average
price paid per
share
  
(c) Total number of
shares purchased as
part of publicly
announced plans or
programs
  
(d) Maximum number of shares
(or approximate dollar value)
of shares that may yet be
purchased under the plans or
programs (in millions)
 
             
July 1, 2021 -            
July 31, 2021
  
2,590,255
  
$
54.01
   
N/A
   
N/A
 

                
August 1, 2021 -                
August 31, 2021
  
1,730,048
   
54.60
   
N/A
   
N/A
 
                 
September 1, 2021 -                
September 30, 2021
  
1,834,131
   
53.74
   
N/A
   
N/A
 

45
61
Item 6.
Item 6.Exhibits.

Exhibit
Description of Exhibit
Exhibit
Number
  
Certification by the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) and Rule 15d-14(a)
31.131.1**
  
Certification by the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) and Rule 15d-14(a)
31.231.2**
  
Certification by the Chief Executive Officer of the Company pursuant to 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of 2002)
32.132.1**
  
Certification by the Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of 2002)
32.232.2**
  
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document101.INS *
  
Inline XBRL Taxonomy Extension Schema101.SCH *
  
Inline XBRL Taxonomy Extension Calculation Linkbase101.CAL *
  
Inline XBRL Taxonomy Extension Definition Linkbase101.DEF *
  
Inline XBRL Taxonomy Label Linkbase101.LAB *
  
Inline XBRL Taxonomy Extension Presentation Linkbase101.PRE *
  
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)104*

*Filed herewith.

46
62
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.

 
LOEWS CORPORATION
 
(Registrant)
   
Dated:  November 1, 2021
By:
Dated:  May 7, 2021By:
/s/ David B. Edelson
  
DAVID B. EDELSON
  
Senior Vice President and
  
Chief Financial Officer
  
(Duly authorized officer
  
and principal financial
  
officer)


63
47