FORM
2019
Delaware | 13-2646102 | |||||||
(State or other jurisdiction of | (I.R.S. Employer | |||||||
incorporation or organization) | ||||||||
Identification No.) |
(212)
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common stock , par value $0.01 per share | L | New York Stock Exchange |
Yes X | No | _____ |
Yes X | No | _____ |
Large accelerated filer X Accelerated filer Non-accelerated filer Smaller reporting company
Large accelerated filer X | Accelerated filer ____ | Non-accelerated filer ____ | Smaller reporting company ____ |
____
______ |
Yes ______ | No X |
| |||||||
| Page No. | ||||||
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3 | |||||
4 | |||||
5 | |||||
6 | |||||
8 | |||||
9 | |||||
57 |
September 30, 2017 | December 31, 2016 | |||||||
(Dollar amounts in millions, except per share data) | ||||||||
Assets: | ||||||||
Investments: | ||||||||
Fixed maturities, amortized cost of $39,230 and $38,947 | $ | 42,507 | $ | 41,494 | ||||
Equity securities, cost of $592 and $571 | 610 | 549 | ||||||
Limited partnership investments | 3,201 | 3,220 | ||||||
Other invested assets, primarily mortgage loans | 825 | 683 | ||||||
Short term investments | 4,991 | 4,765 | ||||||
Total investments | 52,134 | 50,711 | ||||||
Cash | 416 | 327 | ||||||
Receivables | 7,792 | 7,644 | ||||||
Property, plant and equipment | 15,475 | 15,230 | ||||||
Goodwill | 648 | 346 | ||||||
Other assets | 2,419 | 1,736 | ||||||
Deferred acquisition costs of insurance subsidiaries | 643 | 600 | ||||||
Total assets | $ | 79,527 | $ | 76,594 | ||||
Liabilities and Equity: | ||||||||
Insurance reserves: | ||||||||
Claim and claim adjustment expense | $ | 22,209 | $ | 22,343 | ||||
Future policy benefits | 11,040 | 10,326 | ||||||
Unearned premiums | 4,060 | 3,762 | ||||||
Total insurance reserves | 37,309 | 36,431 | ||||||
Payable to brokers | 324 | 150 | ||||||
Short term debt | 194 | 110 | ||||||
Long term debt | 11,239 | 10,668 | ||||||
Deferred income taxes | 905 | 636 | ||||||
Other liabilities | 5,195 | 5,238 | ||||||
Total liabilities | 55,166 | 53,233 | ||||||
Commitments and contingent liabilities | ||||||||
Preferred stock, $0.10 par value: | ||||||||
Authorized – 100,000,000 shares | ||||||||
Common stock, $0.01 par value: | ||||||||
Authorized – 1,800,000,000 shares | ||||||||
Issued – 336,753,017 and 336,621,358 shares | 3 | 3 | ||||||
Additionalpaid-in capital | 3,181 | 3,187 | ||||||
Retained earnings | 15,811 | 15,196 | ||||||
Accumulated other comprehensive income (loss) | 32 | (223 | ) | |||||
19,027 | 18,163 | |||||||
Less treasury stock, at cost (123,500 shares) | (6 | ) | ||||||
Total shareholders’ equity | 19,021 | 18,163 | ||||||
Noncontrolling interests | 5,340 | 5,198 | ||||||
Total equity | 24,361 | 23,361 | ||||||
Total liabilities and equity | $ | 79,527 | $ | 76,594 | ||||
June 30, 2019 | December 31, 2018 | |||||||
(Dollar amounts in millions, except per share data) | ||||||||
Assets: | ||||||||
Investments: | ||||||||
Fixed maturities, amortized cost of $38,045 and $ 38,234 | $ | 41,663 | $ | 39,699 | ||||
Equity securities, cost of $ 1,385 and $ 1,479 | 1,367 | 1,293 | ||||||
Limited partnership investments | 2,036 | 2,424 | ||||||
Other invested assets, primarily mortgage loans | 985 | 901 | ||||||
Short term investments | 4,689 | 3,869 | ||||||
Total investments | 50,740 | 48,186 | ||||||
Cash | 440 | 405 | ||||||
Receivables | 8,144 | 7,960 | ||||||
Property, plant and equipment | 15,513 | 15,511 | ||||||
Goodwill | 768 | 665 | ||||||
Deferred non-insurance warranty acquisition expenses | 2,678 | 2,513 | ||||||
Deferred acquisition costs of insurance subsidiaries | 681 | 633 | ||||||
Other assets | 3,313 | 2,443 | ||||||
Total assets | $ | 82,277 | $ | 78,316 | ||||
Liabilities and Equity: | ||||||||
Insurance reserves: | ||||||||
Claim and claim adjustment expense | $ | 21,729 | $ | 21,984 | ||||
Future policy benefits | 11,537 | 10,597 | ||||||
Unearned premiums | 4,648 | 4,183 | ||||||
Total insurance reserves | 37,914 | 36,764 | ||||||
Payable to brokers | 576 | 42 | ||||||
Short term debt | 87 | 17 | ||||||
Long term debt | 11,456 | 11,359 | ||||||
Deferred income taxes | 1,227 | 841 | ||||||
Deferred non-insurance warranty revenue | 3,595 | 3,402 | ||||||
Other liabilities | 5,028 | 4,505 | ||||||
Total liabilities | 59,883 | 56,930 | ||||||
Commitments and contingent liabilities | ||||||||
Preferred stock, $ 0.10 par value: | ||||||||
Authorized – 100,000,000 shares | ||||||||
Common stock, $ 0.01 par value: | ||||||||
Authorized – 1,800,000,000 shares | ||||||||
Issued – 312,528,502 and312,169,189 shares | 3 | 3 | ||||||
Additional paid-in capital | 3,612 | 3,627 | ||||||
Retained earnings | 16,374 | 15,773 | ||||||
Accumulated other comprehensive income (loss) | 3 | (880 | ) | |||||
19,992 | 18,523 | |||||||
Less treasury stock, at cost ( 9,930,431 and100,000 shares) | (478 | ) | (5 | ) | ||||
Total shareholders’ equity | 19,514 | 18,518 | ||||||
Noncontrolling interests | 2,880 | 2,868 | ||||||
Total equity | 22,394 | 21,386 | ||||||
Total liabilities and equity | $ | 82,277 | $ | 78,316 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions, except per share data) | ||||||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 1,806 | $ | 1,767 | $ | 5,185 | $ | 5,196 | ||||||||
Net investment income | 557 | 561 | 1,639 | 1,570 | ||||||||||||
Investment gains (losses): | ||||||||||||||||
Other-than-temporary impairment losses | (5 | ) | (18 | ) | (9 | ) | (56 | ) | ||||||||
Other net investment gains | 21 | 63 | 102 | 74 | ||||||||||||
Total investment gains | 16 | 45 | 93 | 18 | ||||||||||||
Contract drilling revenues | 357 | 340 | 1,113 | 1,141 | ||||||||||||
Other revenues | 785 | 574 | 2,150 | 1,842 | ||||||||||||
Total | 3,521 | 3,287 | 10,180 | 9,767 | ||||||||||||
Expenses: | ||||||||||||||||
Insurance claims and policyholders’ benefits | 1,480 | 1,202 | 4,053 | 3,949 | ||||||||||||
Amortization of deferred acquisition costs | 309 | 314 | 926 | 926 | ||||||||||||
Contract drilling expenses | 198 | 187 | 598 | 598 | ||||||||||||
Other operating expenses (Note 5) | 1,047 | 898 | 2,978 | 3,416 | ||||||||||||
Interest | 223 | 130 | 504 | 403 | ||||||||||||
Total | 3,257 | 2,731 | 9,059 | 9,292 | ||||||||||||
Income before income tax | 264 | 556 | 1,121 | 475 | ||||||||||||
Income tax expense | (52 | ) | (163 | ) | (240 | ) | (171 | ) | ||||||||
Net income | 212 | 393 | 881 | 304 | ||||||||||||
Amounts attributable to noncontrolling interests | (55 | ) | (66 | ) | (198 | ) | 60 | |||||||||
Net income attributable to Loews Corporation | $ | 157 | $ | 327 | $ | 683 | $ | 364 | ||||||||
Basic net income per share | $ | 0.46 | $ | 0.97 | $ | 2.03 | $ | 1.08 | ||||||||
Diluted net income per share | $ | 0.46 | $ | 0.97 | $ | 2.02 | $ | 1.08 | ||||||||
Dividends per share | $ | 0.0625 | $ | 0.0625 | $ | 0.1875 | $ | 0.1875 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Shares of common stock | 336.91 | 337.18 | 336.90 | 338.33 | ||||||||||||
Dilutive potential shares of common stock | 0.88 | 0.44 | 0.83 | 0.28 | ||||||||||||
Total weighted average shares outstanding assuming dilution | 337.79 | 337.62 | 337.73 | 338.61 | ||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions, except per share data) | ||||||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 1,824 | $ | 1,815 | $ | 3,627 | $ | 3,600 | ||||||||
Net investment income | 551 | 551 | 1,208 | 1,057 | ||||||||||||
Investment gains (losses): | ||||||||||||||||
Other-than-temporary impairment losses | (6 | ) | (20 | ) | (6 | ) | ||||||||||
Other net investment gains (losses) | 8 | (3 | ) | 53 | 12 | |||||||||||
Total investment gains (losses) | 2 | (3 | ) | 33 | 6 | |||||||||||
Non-insurance warranty revenue | 285 | 248 | 566 | 486 | ||||||||||||
Operating revenues and other | 961 | 979 | 1,946 | 2,022 | ||||||||||||
Total | 3,623 | 3,590 | 7,380 | 7,171 | ||||||||||||
Expenses: | ||||||||||||||||
Insurance claims and policyholders’ benefits | 1,352 | 1,327 | 2,709 | 2,666 | ||||||||||||
Amortization of deferred acquisition costs | 338 | 359 | 680 | 655 | ||||||||||||
Non-insurance warranty expense | 263 | 225 | 523 | 441 | ||||||||||||
Operating expenses and other | 1,231 | 1,229 | 2,380 | 2,413 | ||||||||||||
Interest | 164 | 143 | 305 | 284 | ||||||||||||
Total | 3,348 | 3,283 | 6,597 | 6,459 | ||||||||||||
Income before income tax | 275 | 307 | 783 | 712 | ||||||||||||
Income tax expense | (50 | ) | (59 | ) | (162 | ) | (84 | ) | ||||||||
Net income | 225 | 248 | 621 | 628 | ||||||||||||
Amounts attributable to noncontrolling interests | 24 | (18 | ) | 22 | (105 | ) | ||||||||||
Net income attributable to Loews Corporation | $ | 249 | $ | 230 | $ | 643 | $ | 523 | ||||||||
Basic net income per share | $ | 0.82 | $ | 0.72 | $ | 2.10 | $ | 1.62 | ||||||||
Diluted net income per share | $ | 0.82 | $ | 0.72 | $ | 2.09 | $ | 1.61 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Shares of common stock | 303.84 | 318.87 | 306.82 | 323.30 | ||||||||||||
Dilutive potential shares of common stock | 0.70 | 0.91 | 0.62 | 0.93 | ||||||||||||
Total weighted average shares outstanding assuming dilution | 304.54 | 319.78 | 307.44 | 324.23 |
(LOSS)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Net income | $ | 212 | $ | 393 | $ | 881 | $ | 304 | ||||||||
Other comprehensive income (loss), after tax | ||||||||||||||||
Changes in: | ||||||||||||||||
Net unrealized gains (losses) on investments with other-than-temporary impairments | 1 | 3 | (3 | ) | 7 | |||||||||||
Net other unrealized gains on investments | 23 | 42 | 167 | 591 | ||||||||||||
Total unrealized gains onavailable-for-sale investments | 24 | 45 | 164 | 598 | ||||||||||||
Unrealized gains on cash flow hedges | 1 | 1 | 1 | 2 | ||||||||||||
Pension liability | 11 | 7 | 26 | 20 | ||||||||||||
Foreign currency translation | 41 | (24 | ) | 94 | (58 | ) | ||||||||||
Other comprehensive income | 77 | 29 | 285 | 562 | ||||||||||||
Comprehensive income | 289 | 422 | 1,166 | 866 | ||||||||||||
Amounts attributable to noncontrolling interests | (64 | ) | (70 | ) | (228 | ) | (1 | ) | ||||||||
Total comprehensive income attributable to Loews Corporation | $ | 225 | $ | 352 | $ | 938 | $ | 865 | ||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Net income | $ | 225 | $ | 248 | $ | 621 | $ | 628 | ||||||||
Other comprehensive income (loss), after tax | ||||||||||||||||
Changes in: | ||||||||||||||||
Net unrealized gains (losses) on investments with other-than-temporary impairments | (1 | ) | 4 | (10 | ) | |||||||||||
Net other unrealized gains (losses) on investments | 436 | (159 | ) | 962 | (588 | ) | ||||||||||
Total unrealized gains (losses) on investments | 436 | (160 | ) | 966 | (598 | ) | ||||||||||
Unrealized gains (losses) on cash flow hedges | (6 | ) | 4 | (12 | ) | 14 | ||||||||||
Pension liability | 7 | 9 | 15 | 19 | ||||||||||||
Foreign currency translation | 3 | (52 | ) | 20 | (41 | ) | ||||||||||
Other comprehensive income (loss) | 440 | (199 | ) | 989 | (606 | ) | ||||||||||
Comprehensive income | 665 | 49 | 1,610 | 22 | ||||||||||||
Amounts attributable to noncontrolling interests | (23 | ) | 2 | (84 | ) | (41 | ) | |||||||||
Total comprehensive income (loss) attributable to Loews Corporation | $ | 642 | $ | 51 | $ | 1,526 | $ | (19 | ) |
Loews Corporation Shareholders | ||||||||||||||||||||||||||||
Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Common Stock Held in Treasury | �� | Noncontrolling Interests | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Balance, January 1, 2016 | $ | 22,810 | $ | 3 | $ | 3,184 | $ | 14,731 | $ | (357 | ) | $ | - | $ | 5,249 | |||||||||||||
Net income | 304 | 364 | (60 | ) | ||||||||||||||||||||||||
Other comprehensive income | 562 | 501 | 61 | |||||||||||||||||||||||||
Dividends paid | (177 | ) | (63 | ) | (114 | ) | ||||||||||||||||||||||
Purchases of subsidiary stock from | ||||||||||||||||||||||||||||
noncontrolling interests | (9 | ) | 3 | (12 | ) | |||||||||||||||||||||||
Purchases of Loews treasury stock | (115 | ) | (115 | ) | ||||||||||||||||||||||||
Stock-based compensation | 35 | 33 | 2 | |||||||||||||||||||||||||
Other | (4 | ) | (13 | ) | (1 | ) | 10 | |||||||||||||||||||||
Balance, September 30, 2016 | $ | 23,406 | $ | 3 | $ | 3,207 | $ | 15,031 | $ | 144 | $ | (115 | ) | $ | 5,136 | |||||||||||||
Balance, January 1, 2017 | $ | 23,361 | $ | 3 | $ | 3,187 | $ | 15,196 | $ | (223 | ) | $ | - | $ | 5,198 | |||||||||||||
Net income | 881 | 683 | 198 | |||||||||||||||||||||||||
Other comprehensive income | 285 | 255 | 30 | |||||||||||||||||||||||||
Dividends paid | (180 | ) | (63 | ) | (117 | ) | ||||||||||||||||||||||
Purchases of Loews treasury stock | (6 | ) | (6 | ) | ||||||||||||||||||||||||
Stock-based compensation | 24 | (8 | ) | 32 | ||||||||||||||||||||||||
Other | (4 | ) | 2 | (5 | ) | (1 | ) | |||||||||||||||||||||
Balance, September 30, 2017 | $ | 24,361 | $ | 3 | $ | 3,181 | $ | 15,811 | $ | 32 | $ | (6 | ) | $ | 5,340 | |||||||||||||
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, April 1, 2018 | $ | 23,848 | $ | 3 | $ | 3,142 | $ | 16,321 | $ | (417 | ) | $ | (517 | ) | $ | 5,316 | |||||||||||||
Net income | 248 | 230 | 18 | ||||||||||||||||||||||||||
Other comprehensive loss | (199 | ) | (179 | ) | (20 | ) | |||||||||||||||||||||||
Dividends paid ($0.0625 per share) | (42 | ) | (20 | ) | (22 | ) | |||||||||||||||||||||||
Purchase of Boardwalk Pipeline common units | (1,715 | ) | 661 | (29 | ) | (2,347 | ) | ||||||||||||||||||||||
Purchases of Loews treasury stock | (291 | ) | (291 | ) | |||||||||||||||||||||||||
Stock-based compensation | 8 | 8 | |||||||||||||||||||||||||||
Other | 1 | (2 | ) | 1 | 2 | ||||||||||||||||||||||||
Balance, June 30, 2018 | $ | 21,858 | $ | 3 | $ | 3,809 | $ | 16,532 | $ | (625 | ) | $ | (808 | ) | $ | 2,947 | |||||||||||||
Balance, April 1, 2019 | $ | 21,902 | $ | 3 | $ | 3,607 | $ | 16,144 | $ | (390 | ) | $ | (327 | ) | $ | 2,865 | |||||||||||||
Net income | 225 | 249 | (24 | ) | |||||||||||||||||||||||||
Other comprehensive income | 440 | 393 | 47 | ||||||||||||||||||||||||||
Dividends paid ($0.0625 per share) | (29 | ) | (19 | ) | (10 | ) | |||||||||||||||||||||||
Purchases of Loews treasury stock | (151 | ) | (151 | ) | |||||||||||||||||||||||||
Purchases of subsidiary stock from noncontrolling interests | (2 | ) | (2 | ) | |||||||||||||||||||||||||
Stock-based compensation | 7 | 6 | 1 | ||||||||||||||||||||||||||
Other | 2 | (1 | ) | 3 | |||||||||||||||||||||||||
Balance, June 30, 2019 | $ | 22,394 | $ | 3 | $ | 3,612 | $ | 16,374 | $ | 3 | $ | (478 | ) | $ | 2,880 |
EQUITY
Nine Months Ended September 30 | 2017 | 2016 | ||||||
(In millions) | ||||||||
Operating Activities: | ||||||||
Net income | $ | 881 | $ | 304 | ||||
Adjustments to reconcile net income to net cash provided (used) by operating activities, net | 959 | 1,676 | ||||||
Changes in operating assets and liabilities, net: | ||||||||
Receivables | 19 | (165 | ) | |||||
Deferred acquisition costs | (34 | ) | (24 | ) | ||||
Insurance reserves | 248 | 464 | ||||||
Other assets | (85 | ) | (80 | ) | ||||
Other liabilities | (116 | ) | 9 | |||||
Trading securities | (62 | ) | (468 | ) | ||||
Net cash flow operating activities | 1,810 | 1,716 | ||||||
Investing Activities: | ||||||||
Purchases of fixed maturities | (6,877 | ) | (7,472 | ) | ||||
Proceeds from sales of fixed maturities | 4,167 | 4,239 | ||||||
Proceeds from maturities of fixed maturities | 2,635 | 2,263 | ||||||
Purchases of limited partnership investments | (85 | ) | (324 | ) | ||||
Proceeds from sales of limited partnership investments | 179 | 207 | ||||||
Purchases of property, plant and equipment | (735 | ) | (1,185 | ) | ||||
Acquisitions | (1,218 | ) | (79 | ) | ||||
Dispositions | 68 | 277 | ||||||
Change in short term investments | (85 | ) | 104 | |||||
Other, net | (136 | ) | 124 | |||||
Net cash flow investing activities | (2,087 | ) | (1,846 | ) | ||||
Financing Activities: | ||||||||
Dividends paid | (63 | ) | (63 | ) | ||||
Dividends paid to noncontrolling interests | (117 | ) | (114 | ) | ||||
Purchases of subsidiary stock from noncontrolling interests | (8 | ) | ||||||
Purchases of Loews treasury stock | (6 | ) | (115 | ) | ||||
Principal payments on debt | (2,249 | ) | (2,882 | ) | ||||
Issuance of debt | 2,808 | 3,226 | ||||||
Other, net | (16 | ) | (2 | ) | ||||
Net cash flow financing activities | 357 | 42 | ||||||
Effect of foreign exchange rate on cash | 9 | (8 | ) | |||||
Net change in cash | 89 | (96 | ) | |||||
Cash, beginning of period | 327 | 440 | ||||||
Cash, end of period | $ | 416 | $ | 344 | ||||
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, 2018, as reported | $ | 24,566 | $ | 3 | $ | 3,151 | $ | 16,096 | $ | (26 | ) | $ | (20 | ) | $ | 5,362 | |||||||||||||
Cumulative effect adjustments from changes in accounting standards | (91 | ) | (43 | ) | (28 | ) | (20 | ) | |||||||||||||||||||||
Balance, January 1, 2018, as adjusted | 24,475 | 3 | 3,151 | 16,053 | (54 | ) | (20 | ) | 5,342 | ||||||||||||||||||||
Net income | 628 | 523 | 105 | ||||||||||||||||||||||||||
Other comprehensive loss | (606 | ) | (542 | ) | (64 | ) | |||||||||||||||||||||||
Dividends paid ($0.125 per share) | (140 | ) | (40 | ) | (100 | ) | |||||||||||||||||||||||
Purchase of Boardwalk Pipeline common units | (1,715 | ) | 661 | (29 | ) | (2,347 | ) | ||||||||||||||||||||||
Purchases of Loews treasury stock | (788 | ) | (788 | ) | |||||||||||||||||||||||||
Stock-based compensation | 8 | 1 | 7 | ||||||||||||||||||||||||||
Other | (4 | ) | (4 | ) | (4 | ) | 4 | ||||||||||||||||||||||
Balance, June 30, 2018 | $ | 21,858 | $ | 3 | $ | 3,809 | $ | 16,532 | $ | (625 | ) | $ | (808 | ) | $ | 2,947 | |||||||||||||
Balance, January 1, 2019 | $ | 21,386 | $ | 3 | $ | 3,627 | $ | 15,773 | $ | (880 | ) | $ | (5 | ) | $ | 2,868 | |||||||||||||
Net income | 621 | 643 | (22 | ) | |||||||||||||||||||||||||
Other comprehensive income | 989 | 883 | 106 | ||||||||||||||||||||||||||
Dividends paid ($0.125 per share) | (116 | ) | (38 | ) | (78 | ) | |||||||||||||||||||||||
Purchases of Loews treasury stock | (473 | ) | (473 | ) | |||||||||||||||||||||||||
Purchases of subsidiary stock from noncontrolling interests | (16 | ) | (16 | ) | |||||||||||||||||||||||||
Stock-based compensation | 8 | (13 | ) | 21 | |||||||||||||||||||||||||
Other | (5 | ) | (2 | ) | (4 | ) | 1 | ||||||||||||||||||||||
Balance, June 30, 2019 | $ | 22,394 | $ | 3 | $ | 3,612 | $ | 16,374 | $ | 3 | $ | (478 | ) | $ | 2,880 |
Six Months Ended June 30 | 2019 | 2018 | ||||||
(In millions) | ||||||||
Operating Activities: | ||||||||
Net income | $ | 621 | $ | 628 | ||||
Adjustments to reconcile net income to net cash provided (used) by operating activities, net | 604 | 494 | ||||||
Changes in operating assets and liabilities, net: | ||||||||
Receivables | (79 | ) | (507 | ) | ||||
Deferred acquisition costs | (47 | ) | (43 | ) | ||||
Insurance reserves | 203 | 563 | ||||||
Other assets | (296 | ) | (151 | ) | ||||
Other liabilities | 73 | (115 | ) | |||||
Trading securities | (605 | ) | 1,282 | |||||
Net cash flow provided by operating activities | 474 | 2,151 | ||||||
Investing Activities: | ||||||||
Purchases of fixed maturities | (4,896 | ) | (5,608 | ) | ||||
Proceeds from sales of fixed maturities | 3,858 | 4,781 | ||||||
Proceeds from maturities of fixed maturities | 1,374 | 1,306 | ||||||
Purchases of limited partnership investments | (139 | ) | (73 | ) | ||||
Proceeds from sales of limited partnership investments | 559 | 94 | ||||||
Purchases of property, plant and equipment | (505 | ) | (480 | ) | ||||
Acquisitions | (256 | ) | (10 | ) | ||||
Dispositions | 136 | 2 | ||||||
Change in short term investments | 6 | (1,104 | ) | |||||
Other, net | (93 | ) | (145 | ) | ||||
Net cash flow provided by investing activities | 44 | (1,237 | ) | |||||
Financing Activities: | ||||||||
Dividends paid | (38 | ) | (40 | ) | ||||
Dividends paid to noncontrolling interests | (78 | ) | (100 | ) | ||||
Purchases of Loews treasury stock | (478 | ) | (799 | ) | ||||
Purchases of subsidiary stock from noncontrolling interests | (16 | ) | ||||||
Principal payments on debt | (1,394 | ) | (605 | ) | ||||
Issuance of debt | 1,534 | 533 | ||||||
Other, net | (15 | ) | 83 | |||||
Net cash flow used by financing activities | (485 | ) | (928 | ) | ||||
Effect of foreign exchange rate on cash | 2 | (5 | ) | |||||
Net change in cash | 35 | (19 | ) | |||||
Cash, beginning of period | 405 | 472 | ||||||
Cash, end of period | $ | 440 | $ | 453 |
Recently issued ASUs –In May of 2014, the FASB issued ASU2014-09, “Revenue from Contracts with Customers (Topic 606).” The core principle of the new accounting guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new accounting guidance provides a five-step analysis of transactions to determine when and how revenue is recognized and requires enhanced disclosures about revenue. The guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and may be adopted either retrospectively or on a modified basis, with a cumulative effect adjustment to the opening balance sheet at the date of adoption. The Company expects to adopt this updated guidance using the modified retrospective method. The standard excludes from its scope the accounting for insurance contracts, financial instruments and certain other agreements that are subject to other guidance in the FASB Accounting Standards Codification, which limits the impact of this change in accounting for the Company. Upon adoption, the Company
expects that revenue on CNA’s warranty products and services will be recognized more slowly than under the current revenue recognition pattern. The Company also expects that Other revenues and operating expenses will increase significantly for CNA’s warranty products to reflect the gross amount paid by consumers to the auto dealers that act as CNA’s agents. While the Company continues to evaluate the effect the guidance will have on its consolidated financial statements, the Company expects the adoption of the updated guidance will not have a material effect on its results of operations or financial position.
In January of 2016, the FASB issued ASU2016-01, “Financial Instruments– Overall (Subtopic825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The updated accounting guidance requires changes to the reporting model for financial instruments. The guidance is effective for interim and annual periods beginning after December 15, 2017. The Company expects the primary change to be the requirement for equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. Upon adoption, the Company will recognize an adjustment for the cumulative amount of unrealized investment gains and losses related toavailable-for-sale equity securities within the opening balances of Retained earnings and Accumulated other comprehensive income (loss). The Company expects the adoption of the updated guidance will not have a material effect on its consolidated financial statements.
In February of 2016, the FASB issued ASU2016-02, “Leases (Topic 842).” The updated guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition,The Company adopted the updated accounting guidance requires that lessors separate leaseusing the modified retrospective method. Prior period amounts have not been adjusted and nonlease components in a contractcontinue to be reported in accordance with the new revenue guidance in ASU2014-09. The updated guidance is effective for interim and annual periods beginning after December 15, 2018.previous accounting guidance. The Company is currently evaluatingutilized the package of practical expedients allowing the Company to not reassess whether any expired or existing contracts contain a lease, the classification for any expired or existing leases or the initial direct costs for any existing leases. The Company has also elected to apply an exemption for short term leases whereby leases with initial lease terms of one year or less are not recorded on the balance sheet.
leases.
The Company is currently evaluating the effect the guidance will have on its consolidated financial statements.
2. Acquisition of Consolidated Container Company
On May 22, 2017, the Company completed the previously announced acquisition of CCC Acquisition Holdings, Inc. for $1.2 billion,customer relationships, and are subject to closing adjustments. CCC Acquisition Holdings, Inc., through its wholly owned subsidiary, Consolidated Container Company LLC (“Consolidated Container”), is a rigid plastic packaging and recycled resins manufacturer that provides packaging solutions to end markets such as beverage, food and household chemicals through a network of manufacturing locations across North America.change within the respective measurement periods. The results of Consolidated Container are included in the Consolidated Condensed Financial Statements since the acquisition date in the Corporate segment. For the three months ended September 30, 2017 and for the period since the acquisition date, Consolidated Container’s revenuesacquisitions were $202 million and $293 million and net income was not significant. For the year ended December 31, 2016, Consolidated Container reported total revenues of $788 million.
The acquisition was funded
(In millions) | ||||
Cash | $ | 5 | ||
Property, plant and equipment | 391 | |||
Goodwill | 300 | |||
Other assets: | ||||
Inventory | 57 | |||
Customer relationships | 459 | |||
Trade name | 43 | |||
Other | 122 | |||
Deferred income taxes | (17 | ) | ||
Other liabilities: | ||||
Accounts payable | (52 | ) | ||
Pension liability | (27 | ) | ||
Other | (58 | ) | ||
$ | 1,223 | |||
Customer relationships were valued using an income approach, which values the intangible asset at the present value of the related incremental after tax cash flows. The customer relationships intangible asset will be amortized over a useful life of 21 years. The trade name was valued using an income approach, which values the intangible asset based on an estimate of cost savings, or a relief from royalty. The trade name will be amortized over a useful life of 10 years. Goodwill includes value associated with the assembled workforce and Consolidated Container’s future growth and profitability. The assets acquired and liabilities assumed as part of the acquisition did not result in a step up of tax basis and approximately $94 million of goodwill is deductible for tax purposes.
2019.
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Fixed maturity securities | $ | 455 | $ | 457 | $ | 1,367 | $ | 1,352 | ||||||||||||||||||||
Limited partnership investments | 67 | 91 | 206 | 98 | ||||||||||||||||||||||||
Short term investments | 5 | 3 | 13 | 8 | ||||||||||||||||||||||||
Equity securities | 1 | 1 | 4 | 8 | ||||||||||||||||||||||||
Income from trading portfolio (a) | 34 | 11 | 67 | 113 | ||||||||||||||||||||||||
Other | 10 | 12 | 26 | 34 | ||||||||||||||||||||||||
Total investment income | 572 | 575 | 1,683 | 1,613 | ||||||||||||||||||||||||
Investment expenses | (15 | ) | (14 | ) | (44 | ) | (43 | ) | ||||||||||||||||||||
Net investment income | $ | 557 | $ | 561 | $ | 1,639 | $ | 1,570 | ||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securities | $ | 455 | $ | 444 | $ | 910 | $ | 890 | ||||||||
Limited partnership investments | 43 | 60 | 124 | 108 | ||||||||||||
Short term investments | 14 | 11 | 29 | 20 | ||||||||||||
Equity securities | 16 | 12 | 46 | 22 | ||||||||||||
Income from trading portfolio (a) | 29 | 23 | 110 | 20 | ||||||||||||
Other | 12 | 17 | 26 | 28 | ||||||||||||
Total investment income | 569 | 567 | 1,245 | 1,088 | ||||||||||||
Investment expenses | (18 | ) | (16 | ) | (37 | ) | (31 | ) | ||||||||
Net investment income | $ | 551 | $ | 551 | $ | 1,208 | $ | 1,057 |
(a) | Net unrealized gains (losses) related to changes in fair value on 8 and 48 and (25 ) for the |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Fixed maturity securities | $ | 16 | $ | 47 | $ | 92 | $ | 34 | ||||||||||||||||||||
Equity securities | (3 | ) | (5 | ) | ||||||||||||||||||||||||
Derivative instruments | (1 | ) | 1 | (3 | ) | (12 | ) | |||||||||||||||||||||
Short term investments and other | 1 | 4 | 1 | |||||||||||||||||||||||||
Investment gains (a) | $ | 16 | $ | 45 | $ | 93 | $ | 18 | ||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securities | $ | (3 | ) | $ | 4 | $ | (9 | ) | $ | 22 | ||||||
Equity securities | 11 | (10 | ) | 53 | (25 | ) | ||||||||||
Derivative instruments | (6 | ) | 4 | (11 | ) | 9 | ||||||||||
Short term investments and other | (1 | ) | ||||||||||||||
Investment gains (losses) (a) | $ | 2 | $ | (3 | ) | $ | 33 | $ | 6 |
(a) | Gross |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Fixed maturity securitiesavailable-for-sale: | ||||||||||||||||||||||||||||
Corporate and other bonds | $ | 4 | $ | 14 | $ | 8 | $ | 43 | ||||||||||||||||||||
Asset-backed: | ||||||||||||||||||||||||||||
Residential mortgage-backed | 1 | 1 | 1 | |||||||||||||||||||||||||
Other asset-backed | 3 | |||||||||||||||||||||||||||
Total asset-backed | 1 | - | 1 | 4 | ||||||||||||||||||||||||
Total fixed maturitiesavailable-for-sale | 5 | 14 | 9 | 47 | ||||||||||||||||||||||||
Equity securitiesavailable-for-sale - common stock | 4 | 9 | ||||||||||||||||||||||||||
Net OTTI losses recognized in earnings | $ | 5 | $ | 18 | $ | 9 | $ | 56 | ||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securities available-for-sale: | ||||||||||||||||
Corporate and other bonds | $ | 6 | $ | 12 | $ | 5 | ||||||||||
Asset-backed | 8 | 1 | ||||||||||||||
Net OTTI losses recognized in earnings | $ | 6 | $ | - | $ | 20 | $ | 6 |
Cost or | Gross | Gross | Unrealized | |||||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | OTTI Losses | ||||||||||||||||
September 30, 2017 | Cost | Gains | Losses | Fair Value | (Gains) | |||||||||||||||
(In millions) | ||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
Corporate and other bonds | $ | 17,965 | $ | 1,645 | $ | 26 | $ | 19,584 | ||||||||||||
States, municipalities and political subdivisions | 12,462 | 1,501 | 7 | 13,956 | $ | (14 | ) | |||||||||||||
Asset-backed: | ||||||||||||||||||||
Residential mortgage-backed | 4,906 | 127 | 28 | 5,005 | (28 | ) | ||||||||||||||
Commercial mortgage-backed | 1,858 | 55 | 13 | 1,900 | ||||||||||||||||
Other asset-backed | 1,047 | 18 | 4 | 1,061 | ||||||||||||||||
Total asset-backed | 7,811 | 200 | 45 | 7,966 | (28 | ) | ||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 115 | 3 | 3 | 115 | ||||||||||||||||
Foreign government | 439 | 10 | 4 | 445 | ||||||||||||||||
Redeemable preferred stock | 18 | 2 | 20 | |||||||||||||||||
Fixed maturitiesavailable-for-sale | 38,810 | 3,361 | 85 | 42,086 | (42 | ) | ||||||||||||||
Fixed maturities trading | 420 | 2 | 1 | 421 | ||||||||||||||||
Total fixed maturities | 39,230 | 3,363 | 86 | 42,507 | (42 | ) | ||||||||||||||
Equity securities: | ||||||||||||||||||||
Common stock | 16 | 7 | 1 | 22 | ||||||||||||||||
Preferred stock | 102 | 5 | 107 | |||||||||||||||||
Equity securitiesavailable-for-sale | 118 | 12 | 1 | 129 | - | |||||||||||||||
Equity securities trading | 474 | 86 | 79 | 481 | ||||||||||||||||
Total equity securities | 592 | 98 | 80 | 610 | - | |||||||||||||||
Total | $ | 39,822 | $ | 3,461 | $ | 166 | $ | 43,117 | $ | (42 | ) | |||||||||
December 31, 2016 | ||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
Corporate and other bonds | $ | 17,711 | $ | 1,323 | $ | 76 | $ | 18,958 | $ | (1 | ) | |||||||||
States, municipalities and political subdivisions | 12,060 | 1,213 | 33 | 13,240 | (16 | ) | ||||||||||||||
Asset-backed: | ||||||||||||||||||||
Residential mortgage-backed | 5,004 | 120 | 51 | 5,073 | (28 | ) | ||||||||||||||
Commercial mortgage-backed | 2,016 | 48 | 24 | 2,040 | ||||||||||||||||
Other asset-backed | 1,022 | 8 | 5 | 1,025 | ||||||||||||||||
Total asset-backed | 8,042 | 176 | 80 | 8,138 | (28 | ) | ||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 83 | 10 | 93 | |||||||||||||||||
Foreign government | 435 | 13 | 3 | 445 | ||||||||||||||||
Redeemable preferred stock | 18 | 1 | 19 | |||||||||||||||||
Fixed maturitiesavailable-for-sale | 38,349 | 2,736 | 192 | 40,893 | (45 | ) | ||||||||||||||
Fixed maturities trading | 598 | 3 | 601 | |||||||||||||||||
Total fixed maturities | 38,947 | 2,739 | 192 | 41,494 | (45 | ) | ||||||||||||||
Equity securities: | ||||||||||||||||||||
Common stock | 13 | 6 | 19 | |||||||||||||||||
Preferred stock | 93 | 2 | 4 | 91 | ||||||||||||||||
Equity securitiesavailable-for-sale | 106 | 8 | 4 | 110 | - | |||||||||||||||
Equity securities trading | 465 | 60 | 86 | 439 | ||||||||||||||||
Total equity securities | 571 | 68 | 90 | 549 | - | |||||||||||||||
Total | $ | 39,518 | $ | 2,807 | $ | 282 | $ | 42,043 | $ | (45 | ) | |||||||||
June 30, 2019 | Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Unrealized OTTI Losses (Gains) | |||||||||||||||
(In millions) | ||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
Corporate and other bonds | $ | 19,654 | $ | 1,880 | $ | 44 | $ | 21,490 | ||||||||||||
States, municipalities and political subdivisions | 9,196 | 1,507 | 10,703 | |||||||||||||||||
Asset-backed: | ||||||||||||||||||||
Residential mortgage-backed | 4,668 | 131 | 2 | 4,797 | $ | (24 | ) | |||||||||||||
Commercial mortgage-backed | 2,032 | 93 | 4 | 2,121 | ||||||||||||||||
Other asset-backed | 1,865 | 40 | 7 | 1,898 | (2 | ) | ||||||||||||||
Total asset-backed | 8,565 | 264 | 13 | 8,816 | (26 | ) | ||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 118 | 5 | 123 | |||||||||||||||||
Foreign government | 480 | 17 | 497 | |||||||||||||||||
Redeemable preferred stock | 10 | 10 | ||||||||||||||||||
Fixed maturities available-for-sale | 38,023 | 3,673 | 57 | 41,639 | (26 | ) | ||||||||||||||
Fixed maturities trading | 22 | 2 | 24 | |||||||||||||||||
Total fixed maturity securities | $ | 38,045 | $ | 3,675 | $ | 57 | $ | 41,663 | $ | (26 | ) |
December 31, 2018 | Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Unrealized OTTI Losses (Gains) | |||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
Corporate and other bonds | $ | 18,764 | $ | 791 | $ | 395 | $ | 19,160 | ||||||||||||
States, municipalities and political subdivisions | 9,681 | 1,076 | 9 | 10,748 | ||||||||||||||||
Asset-backed: | ||||||||||||||||||||
Residential mortgage-backed | 4,815 | 68 | 57 | 4,826 | $ | (20 | ) | |||||||||||||
Commercial mortgage-backed | 2,200 | 28 | 32 | 2,196 | ||||||||||||||||
Other asset-backed | 1,975 | 11 | 24 | 1,962 | ||||||||||||||||
Total asset-backed | 8,990 | 107 | 113 | 8,984 | (20 | ) | ||||||||||||||
U.S. Treasury and obligations of government- sponsored enterprises | 156 | 3 | 159 | |||||||||||||||||
Foreign government | 480 | 5 | 4 | 481 | ||||||||||||||||
Redeemable preferred stock | 10 | 10 | ||||||||||||||||||
Fixed maturities available-for-sale | 38,081 | 1,982 | 521 | 39,542 | (20 | ) | ||||||||||||||
Fixed maturities trading | 153 | 4 | 157 | |||||||||||||||||
Total fixed maturities | $ | 38,234 | $ | 1,986 | $ | 521 | $ | 39,699 | $ | (20 | ) |
Insurance reserves is recorded, net of tax and noncontrolling interests, as a reduction of net unrealized gains through Other comprehensive income (“Shadow Adjustments”). As of SeptemberJune 30, 20172019 and December 31, 2016,2018, the net unrealized gains on investments included in AOCI were correspondingly reduced by Shadow Adjustments of $1.2$
Less than | 12 Months | |||||||||||||||||||||||
12 Months | or Longer | Total | ||||||||||||||||||||||
September 30, 2017 | 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 | $ | 1,216 | $ | 21 | $ | 91 | $ | 5 | $ | 1,307 | $ | 26 | ||||||||||||
States, municipalities and political subdivisions | 583 | 6 | 56 | 1 | 639 | 7 | ||||||||||||||||||
Asset-backed: | ||||||||||||||||||||||||
Residential mortgage-backed | 1,522 | 25 | 106 | 3 | 1,628 | 28 | ||||||||||||||||||
Commercial mortgage-backed | 378 | 6 | 138 | 7 | 516 | 13 | ||||||||||||||||||
Other asset-backed | 129 | 4 | 10 | 139 | 4 | |||||||||||||||||||
Total asset-backed | 2,029 | 35 | 254 | 10 | 2,283 | 45 | ||||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 67 | 3 | 6 | 73 | 3 | |||||||||||||||||||
Foreign government | 191 | 4 | 5 | 196 | 4 | |||||||||||||||||||
Total fixed maturity securities | 4,086 | 69 | 412 | 16 | 4,498 | 85 | ||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||
Common stock | 2 | 1 | 2 | 1 | ||||||||||||||||||||
Preferred stock | 16 | 16 | - | |||||||||||||||||||||
Total equity securities | 18 | 1 | - | - | 18 | 1 | ||||||||||||||||||
Total | $ | 4,104 | $ | 70 | $ | 412 | $ | 16 | $ | 4,516 | $ | 86 | ||||||||||||
December 31, 2016 | ||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
Corporate and other bonds | $ | 2,615 | $ | 61 | $ | 254 | $ | 15 | $ | 2,869 | $ | 76 | ||||||||||||
States, municipalities and political subdivisions | 959 | 32 | 23 | 1 | 982 | 33 | ||||||||||||||||||
Asset-backed: | ||||||||||||||||||||||||
Residential mortgage-backed | 2,136 | 44 | 201 | 7 | 2,337 | 51 | ||||||||||||||||||
Commercial mortgage-backed | 756 | 22 | 69 | 2 | 825 | 24 | ||||||||||||||||||
Other asset-backed | 398 | 5 | 24 | 422 | 5 | |||||||||||||||||||
Total asset-backed | 3,290 | 71 | 294 | 9 | 3,584 | 80 | ||||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 5 | 5 | - | |||||||||||||||||||||
Foreign government | 108 | 3 | 108 | 3 | ||||||||||||||||||||
Total fixed maturity securities | 6,977 | 167 | 571 | 25 | 7,548 | 192 | ||||||||||||||||||
Equity securities | 12 | 13 | 4 | 25 | 4 | |||||||||||||||||||
Total | $ | 6,989 | $ | 167 | $ | 584 | $ | 29 | $ | 7,573 | $ | 196 | ||||||||||||
Less than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||
June 30, 2019 | 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 | $ | 776 | $ | 22 | $ | 498 | $ | 22 | $ | 1,274 | $ | 44 | ||||||||||||
States, municipalities and political subdivisions | 19 | 2 | 21 | |||||||||||||||||||||
Asset-backed: | ||||||||||||||||||||||||
Residential mortgage-backed | 163 | 134 | 2 | 297 | 2 | |||||||||||||||||||
Commercial mortgage-backed | 58 | 2 | 69 | 2 | 127 | 4 | ||||||||||||||||||
Other asset-backed | 386 | 5 | 77 | 2 | 463 | 7 | ||||||||||||||||||
Total asset-backed | 607 | 7 | 280 | 6 | 887 | 13 | ||||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 4 | 4 | ||||||||||||||||||||||
Foreign government | 3 | 11 | 14 | |||||||||||||||||||||
Total fixed maturity securities | $ | 1,405 | $ | 29 | $ | 795 | $ | 28 | $ | 2,200 | $ | 57 | ||||||||||||
December 31, 2018 | ||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
Corporate and other bonds | $ | 8,543 | $ | 340 | $ | 825 | $ | 55 | $ | 9,368 | $ | 395 | ||||||||||||
States, municipalities and political subdivisions | 517 | 8 | 5 | 1 | 522 | 9 | ||||||||||||||||||
Asset-backed: | ||||||||||||||||||||||||
Residential mortgage-backed | 1,932 | 23 | 1,119 | 34 | 3,051 | 57 | ||||||||||||||||||
Commercial mortgage-backed | 728 | 10 | 397 | 22 | 1,125 | 32 | ||||||||||||||||||
Other asset-backed | 834 | 21 | 125 | 3 | 959 | 24 | ||||||||||||||||||
Total asset-backed | 3,494 | 54 | 1,641 | 59 | 5,135 | 113 | ||||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 21 | 19 | 40 | |||||||||||||||||||||
Foreign government | 114 | 2 | 124 | 2 | 238 | 4 | ||||||||||||||||||
Total fixed maturity securities | $ | 12,689 | $ | 404 | $ | 2,614 | $ | 117 | $ | 15,303 | $ | 521 |
2019.
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||
(In millions) | ||||||||||||||||||||
Beginning balance of credit losses on fixed maturity securities | $ | 30 | $ | 41 | $ | 36 | $ | 53 | ||||||||||||
Reductions for securities sold during the period | (2 | ) | (2 | ) | (8 | ) | (14 | ) | ||||||||||||
Reductions for securities the Company intends to sell or more likely than not will be required to sell | (1 | ) | (1 | ) | ||||||||||||||||
Ending balance of credit losses on fixed maturity securities | $ | 28 | $ | 38 | $ | 28 | $ | 38 | ||||||||||||
OCI.
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Beginning balance of credit losses on fixed maturity securities | $ | 17 | $ | 25 | $ | 18 | $ | 27 | ||||||||
Reductions for securities sold during the period | (1 | ) | (4 | ) | (2 | ) | (6 | ) | ||||||||
Ending balance of credit losses on fixed maturity securities | $ | 16 | $ | 21 | $ | 16 | $ | 21 |
September 30, 2017 | December 31, 2016 | |||||||||||||||||||
Cost or Amortized Cost | Estimated Fair Value | Cost or Amortized Cost | Estimated Fair Value | |||||||||||||||||
(In millions) | ||||||||||||||||||||
Due in one year or less | $ | 1,374 | $ | 1,404 | $ | 1,779 | $ | 1,828 | ||||||||||||
Due after one year through five years | 7,931 | 8,293 | 7,566 | 7,955 | ||||||||||||||||
Due after five years through ten years | 15,853 | 16,574 | 15,892 | 16,332 | ||||||||||||||||
Due after ten years | 13,652 | 15,815 | 13,112 | 14,778 | ||||||||||||||||
Total | $ | 38,810 | $ | 42,086 | $ | 38,349 | $ | 40,893 | ||||||||||||
June 30, 2019 | December 31, 2018 | |||||||||||||||
Cost or Amortized Cost | Estimated Fair Value | Cost or Amortized Cost | Estimated Fair Value | |||||||||||||
(In millions) | ||||||||||||||||
Due in one year or less | $ | 1,018 | $ | 1,032 | $ | 1,350 | $ | 1,359 | ||||||||
Due after one year through five years | 8,097 | 8,476 | 7,979 | 8,139 | ||||||||||||
Due after five years through ten years | 16,403 | 17,297 | 16,859 | 16,870 | ||||||||||||
Due after ten years | 12,505 | 14,834 | 11,893 | 13,174 | ||||||||||||
Total | $ | 38,023 | $ | 41,639 | $ | 38,081 | $ | 39,542 |
September 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
Contractual/ | Contractual/ | |||||||||||||||||||||||
Notional | Estimated Fair Value | Notional | Estimated Fair Value | |||||||||||||||||||||
Amount | Asset | (Liability) | Amount | Asset | (Liability) | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
With hedge designation: | ||||||||||||||||||||||||
Interest rate swaps | $ | 500 | ||||||||||||||||||||||
Without hedge designation: | ||||||||||||||||||||||||
Equity markets: | ||||||||||||||||||||||||
Options – purchased | 267 | $ | 15 | $ 223 | $ | 14 | ||||||||||||||||||
– written | 296 | $ | (8 | ) | 267 | $ | (8 | ) | ||||||||||||||||
Futures – short | 249 | (1 | ) | 225 | 1 | |||||||||||||||||||
Commodity futures – long | 39 | 42 | ||||||||||||||||||||||
Embedded derivative on funds withheld liability | 170 | (1 | ) | 174 | 3 |
June 30, 2019 | December 31, 2018 | |||||||||||||||||||||||
Contractual/ Notional | Estimated Fair Value | Contractual/ Notional | Estimated Fair Value | |||||||||||||||||||||
Amount | Asset | (Liability) | Amount | Asset | (Liability) | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
With hedge designation: | ||||||||||||||||||||||||
Interest rate swaps | $ | 540 | $ | (9 | ) | $ | 500 | $ | 11 | |||||||||||||||
Without hedge designation: | ||||||||||||||||||||||||
Equity markets: | ||||||||||||||||||||||||
Options – purchased | 303 | $ | 5 | 213 | 18 | |||||||||||||||||||
– written | 95 | (3 | ) | 239 | $ | (17 | ) | |||||||||||||||||
Futures – short | ||||||||||||||||||||||||
Commodity futures – long | 11 | 32 | ||||||||||||||||||||||
Embedded derivative on funds withheld liability | 172 | (8 | ) | 172 | 4 |
Level 1 – Quoted prices for identical instruments in active markets.
● | 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.
● | 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. |
performs an independent analysis of the inputs and assumptions used to price individual securities and (v) pricing validation, where prices received are compared to prices independently estimated by the Company.
September 30, 2017 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
Corporate and other bonds | $ | 19,465 | $ | 119 | $ | 19,584 | ||||||||||
States, municipalities and political subdivisions | 13,955 | 1 | 13,956 | |||||||||||||
Asset-backed: | ||||||||||||||||
Residential mortgage-backed | 4,829 | 176 | 5,005 | |||||||||||||
Commercial mortgage-backed | 1,876 | 24 | 1,900 | |||||||||||||
Other asset-backed | 915 | 146 | 1,061 | |||||||||||||
Total asset-backed | 7,620 | 346 | 7,966 | |||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | $ | 115 | 115 | |||||||||||||
Foreign government | 445 | 445 | ||||||||||||||
Redeemable preferred stock | 20 | 20 | ||||||||||||||
Fixed maturitiesavailable-for-sale | 135 | 41,485 | 466 | 42,086 | ||||||||||||
Fixed maturities trading | 9 | 407 | 5 | 421 | ||||||||||||
Total fixed maturities | $ | 144 | $ | 41,892 | $ | 471 | $ | 42,507 | ||||||||
Equity securitiesavailable-for-sale | $ | 110 | $ | 19 | $ | 129 | ||||||||||
Equity securities trading | 479 | 2 | 481 | |||||||||||||
Total equity securities | $ | 589 | $ | - | $ | 21 | $ | 610 | ||||||||
Short term investments | $ | 4,019 | $ | 876 | $ | 4,895 | ||||||||||
Other invested assets | 61 | 5 | 66 | |||||||||||||
Payable to brokers | (9 | ) | (9 | ) |
Fixed maturity securities: Corporate and other bonds States, municipalities and political subdivisions Asset-backed: Residential mortgage-backed Commercial mortgage-backed Other asset-backed Total asset-backed U.S. Treasury and obligations of government-sponsored enterprises Foreign government Redeemable preferred stock Fixed maturitiesavailable-for-sale Fixed maturities trading Total fixed maturities Equity securitiesavailable-for-sale Equity securities trading Total equity securities Short term investments Other invested assets Receivables Life settlement contracts Payable to brokersDecember 31, 2016 Level 1 Level 2 Level 3 Total (In millions) $ 18,828 $ 130 $ 18,958 13,239 1 13,240 4,944 129 5,073 2,027 13 2,040 968 57 1,025 7,939 199 8,138 $ 93 93 445 445 19 19 112 40,451 330 40,893 595 6 601 $ 112 $ 41,046 $ 336 $ 41,494 $ 91 $ 19 $ 110 438 1 439 $ 529 $ - $ 20 $ 549 $ 3,833 $ 853 $ 4,686 55 5 60 1 1 $ 58 58 (44 ) (44 )
tables. Corporate bonds and other includes obligations of the U.S. Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.
June 30, 2019 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
Corporate bonds and other | $ | 152 | $ | 21,630 | $ | 338 | $ | 22,120 | ||||||||
States, municipalities and political subdivisions | 10,703 | 10,703 | ||||||||||||||
Asset-backed | 8,623 | 193 | 8,816 | |||||||||||||
Fixed maturities available-for-sale | 152 | 40,956 | 531 | 41,639 | ||||||||||||
Fixed maturities trading | 20 | 4 | 24 | |||||||||||||
Total fixed maturities | $ | 152 | $ | 40,976 | $ | 535 | $ | 41,663 | ||||||||
Equity securities | $ | 715 | $ | 629 | $ | 23 | $ | 1,367 | ||||||||
Short term and other | 3,469 | 1,123 | 4,592 | |||||||||||||
Payable to brokers | (114 | ) | (9 | ) | (123 | ) | ||||||||||
December 31, 2018 | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
Corporate bonds and other | $ | 196 | $ | 19,392 | $ | 222 | $ | 19,810 | ||||||||
States, municipalities and political subdivisions | 10,748 | 10,748 | ||||||||||||||
Asset-backed | 8,787 | 197 | 8,984 | |||||||||||||
Fixed maturities available-for-sale | 196 | 38,927 | 419 | 39,542 | ||||||||||||
Fixed maturities trading | 151 | 6 | 157 | |||||||||||||
Total fixed maturities | $ | 196 | $ | 39,078 | $ | 425 | $ | 39,699 | ||||||||
Equity securities | $ | 704 | $ | 570 | $ | 19 | $ | 1,293 | ||||||||
Short term and other | 2,647 | 1,111 | 3,758 | |||||||||||||
Receivables | 11 | 11 | ||||||||||||||
Payable to brokers | (23 | ) | (23 | ) |
Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses) | Unrealized (Losses) | |||||||||||||||||||||||||||||||||||||||
2017 | Balance, July 1 | Included in Net Income (Loss) | Included in OCI | Purchases | Sales | Settlements | Transfers into Level 3 | Transfers out of Level 3 | Balance, September 30 | Liabilities Held at September 30 | ||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||||||||||
Corporate and other bonds | $ | 100 | $ | 1 | $ | 1 | $ | 13 | $ | (11 | ) | $ | 15 | $ | 119 | |||||||||||||||||||||||||
States, municipalities and political subdivisions | 1 | 1 | ||||||||||||||||||||||||||||||||||||||
Asset-backed: | ||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed | 123 | 1 | 1 | (7 | ) | 58 | 176 | |||||||||||||||||||||||||||||||||
Commercialmortgage-backed | 13 | (1 | ) | 12 | (2 | ) | 2 | 24 | ||||||||||||||||||||||||||||||||
Other asset-backed | 82 | (1 | ) | 1 | 27 | (4 | ) | 41 | 146 | |||||||||||||||||||||||||||||||
Total asset-backed | 218 | - | 1 | 39 | $ | - | (13 | ) | 101 | $ | - | 346 | $ | - | ||||||||||||||||||||||||||
Fixed maturitiesavailable-for-sale | 319 | 1 | 2 | 52 | (24 | ) | 116 | 466 | ||||||||||||||||||||||||||||||||
Fixed maturities trading | 5 | 5 | ||||||||||||||||||||||||||||||||||||||
Total fixed maturities | $ | 324 | $ | 1 | $ | 2 | $ | 52 | $ | - | $ | (24 | ) | $ | 116 | $ | - | $ | 471 | $ | - | |||||||||||||||||||
Equity securitiesavailable-for-sale | $ | 19 | $ | 19 | ||||||||||||||||||||||||||||||||||||
Equity securities trading | 1 | $ | 1 | 2 | ||||||||||||||||||||||||||||||||||||
Total equity securities | $ | 20 | $ | - | $ | - | $ | 1 | $ | - | $ | - | $ | - | $ | - | $ | 21 | $ | - | ||||||||||||||||||||
Life settlement contracts | $ | 1 | $ | (1) | �� | $ | - |
Unrealized (Losses) 3 Assets and Liabilities Fixed maturity securities: Corporate and other bonds States, municipalities and political subdivisions Asset-backed: Residential mortgage-backed Commercial mortgage-backed Other asset-backed Total asset-backed Fixed maturitiesavailable-for-sale Fixed maturities trading Total fixed maturities Equity securitiesavailable-for-sale Equity securities trading Total equity securities Life settlement contracts Derivative financial instruments, net Net Realized Gains
(Losses) and Net Change
in Unrealized Gains
(Losses) Transfers Transfers
Gains
Recognized in
Net Income
on Level2016 Balance,
July 1 Included in
Net Income Included in
OCI Purchases Sales Settlements into
Level 3 out of
Level 3 Balance,
September 30 Held at
September 30(In millions) $ 242 $ 1 $ 7 $ 16 $ (5 ) $ 261 2 (1 ) 1 134 (1 ) 5 (1 ) $ (58 ) 79 11 23 (8 ) (2 ) 24 45 34 (36 ) 43 190 - (1 ) 62 $ - (9 ) $ - (96 ) 146 $ - 434 1 6 78 (15 ) (96 ) 408 6 6 (1 ) $ 440 $ 1 $ 6 $ 78 $ - $ (15 ) $ - $ (96 ) $ 414 $ (1 ) $ 19 $ (1 ) $ 1 $ 19 $ (2 ) 2 $ (1 ) 1 (1 ) $ 21 $ (1 ) $ 1 $ (1 ) $ - $ - $ - $ - $ 20 $ (3 ) $ 67 $ 67 1 $ (1 ) -
Unrealized (Losses) Balance, January 1 Fixed maturity securities: Corporate and other bonds States, municipalities and political subdivisions Asset-backed: Residential mortgage-backed Commercial mortgage-backed Other asset-backed Total asset-backed Fixed maturitiesavailable-for-sale Fixed maturities trading Total fixed maturities Equity securitiesavailable-for-sale Equity securities trading Total equity securities Life settlement contracts Derivative financial instruments, net Net Realized Gains
(Losses) and Net Change
in Unrealized Gains
(Losses)
Gains
Recognized in
Net Income
(Loss) on Level
3 Assets and2017 Included in
Net Income
(Loss) Included in
OCI Purchases Sales Settlements Transfers
into
Level 3 Transfers
out of
Level 3 Balance,
September 30 Liabilities
Held at
September 30(In millions) $ 130 $ 1 $ 2 $ 18 $ (1) $ (36 ) $ 15 $ (10 ) $ 119 1 1 129 3 4 (18 ) 58 176 13 (1 ) 12 (2 ) 2 24 57 (2 ) 1 78 (6 ) 93 (75 ) 146 199 1 4 90 - (26 ) 153 (75 ) 346 $ - 330 2 6 108 (1) (62 ) 168 (85 ) 466 6 (1 ) 5 (1 ) $ 336 $ 1 $ 6 $ 108 $ (1) $ (62 ) $ 168 $ (85 ) $ 471 $ (1 ) $ 19 $ 2 $ 1 $ (3) $ 19 1 1 2 $ 20 $ - $ 2 $ 2 $ (3) $ - $ - $ - $ 21 $ - $ 58 $ 6 $ (59) $ (5 ) $ - - 1 (1) -
Unrealized (Losses) 3 Assets and Balance, January 1 Fixed maturity securities: Corporate and other bonds States, municipalities and political subdivisions Asset-backed: Residential mortgage-backed Commercial mortgage-backed Other asset-backed Total asset-backed Fixed maturitiesavailable-for-sale Fixed maturities trading Total fixed maturities Equity securitiesavailable-for-sale Equity securities trading Total equity securities Life settlement contracts Derivative financial instruments, net Net Realized Gains
(Losses) and Net Change
in Unrealized Gains
(Losses) Transfers Transfers
Gains
Recognized in
Net Income
on Level
Liabilities2016 Included in
Net Income Included in
OCI Purchases Sales Settlements into
Level 3 out of
Level 3 Balance,
September 30 Held at
September 30(In millions) $ 168 $ 1 $ 14 $ 163 $ (36 ) $ (15 ) $ (34 ) $ 261 2 (1 ) 1 134 2 (2 ) 15 (10 ) (60 ) 79 22 32 (17 ) $ 3 (16 ) 24 53 2 69 (25 ) (1 ) 2 (57 ) 43 209 2 - 116 (25 ) (28 ) 5 (133 ) 146 $ - 379 3 14 279 (61 ) (44 ) 5 (167 ) 408 85 5 2 (86 ) 6 3 $ 464 $ 8 $ 14 $ 281 $ (147 ) $ (44 ) $ 5 $ (167 ) $ 414 $ 3 $ 20 $ (1 ) $ 19 $ (2 ) 1 1 $ (1 ) 1 $ 21 $ - $ - $ - $ (1 ) $ - $ - $ - $ 20 $ (2 ) $ 74 $ 10 $ (17 ) $ 67 $ 2 3 (4 ) $ (2 ) $ 3 - (3 )
2018:
Unrealized | |||||||||||||||||||||||||||||||||||||||||||||
Gains | |||||||||||||||||||||||||||||||||||||||||||||
(Losses) | |||||||||||||||||||||||||||||||||||||||||||||
Unrealized | Recognized in | ||||||||||||||||||||||||||||||||||||||||||||
Net Realized | Gains | Other | |||||||||||||||||||||||||||||||||||||||||||
Investment Gains | (Losses) | Comprehensive | |||||||||||||||||||||||||||||||||||||||||||
(Losses) and Net Change | Recognized in | Income (Loss) | |||||||||||||||||||||||||||||||||||||||||||
in Unrealized Investment | Net Income | on Level 3 | |||||||||||||||||||||||||||||||||||||||||||
Gains (Losses) | (Loss) on Level 3 | Assets and | |||||||||||||||||||||||||||||||||||||||||||
Included in | Transfers | Transfers | Assets and | Liabilities | |||||||||||||||||||||||||||||||||||||||||
Balance, | Net Income | Included in | into | out of | Balance, | Liabilities Held | Held at | ||||||||||||||||||||||||||||||||||||||
2019 | April 1 | (Loss) | OCI | Purchases | Sales | Settlements | Level 3 | Level 3 | June 30 | at June 30 | June 30 | ||||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||||||||||||||||||||||
Corporate bonds and other | $ | 253 | $ | 12 | $ | 76 | $ | (2 | ) | $ | (1 | ) | $ | 338 | $ | 10 | |||||||||||||||||||||||||||||
Asset-backed | 184 | 4 | (4 | ) | $ | 40 | (31 | ) | 193 | 5 | |||||||||||||||||||||||||||||||||||
Fixed maturities available-for-sale | 437 | $ | - | 16 | 76 | $ | - | (6 | ) | 40 | (32 | ) | 531 | $ | - | 15 | |||||||||||||||||||||||||||||
Fixed maturities trading | 5 | (1 | ) | 4 | (1 | ) | |||||||||||||||||||||||||||||||||||||||
Total fixed maturities | $ | 442 | $ | (1 | ) | $ | 16 | $ | 76 | $ | - | $ | (6 | ) | $ | 40 | $ | (32 | ) | $ | 535 | $ | (1 | ) | $ | 15 | |||||||||||||||||||
Equity securities | $ | 21 | $ | 2 | $ | 23 |
Unrealized | |||||||||||||||||||||||||||||||||||||||||
Gains | |||||||||||||||||||||||||||||||||||||||||
Net Realized | (Losses) | ||||||||||||||||||||||||||||||||||||||||
Investment Gains | Recognized in | ||||||||||||||||||||||||||||||||||||||||
(Losses) and Net Change | Net Income | ||||||||||||||||||||||||||||||||||||||||
in Unrealized Investment | (Loss) on Level | ||||||||||||||||||||||||||||||||||||||||
Gains (Losses) | 3 Assets and | ||||||||||||||||||||||||||||||||||||||||
Included in | Transfers | Transfers | Liabilities | ||||||||||||||||||||||||||||||||||||||
Balance, | Net Income | Included in | into | out of | Balance, | Held at | |||||||||||||||||||||||||||||||||||
2018 | April 1 | (Loss) | OCI | Purchases | Sales | Settlements | Level 3 | Level 3 | June 30 | June 30 | |||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||||||||||||||||||
Corporate bonds and other | $ | 100 | $ | (1 | ) | $ | 2 | $ | (5 | ) | $ | (2 | ) | $ | 94 | ||||||||||||||||||||||||||
States, municipalities and political subdivisions | 1 | 1 | |||||||||||||||||||||||||||||||||||||||
Asset-backed | 279 | (1 | ) | 41 | (6 | ) | $ | 13 | $ | (53 | ) | 273 | |||||||||||||||||||||||||||||
Fixed maturities available-for-sale | 380 | $ | - | (2 | ) | 43 | (5 | ) | (8 | ) | 13 | (53 | ) | 368 | $ | - | |||||||||||||||||||||||||
Fixed maturities trading | 7 | 7 | |||||||||||||||||||||||||||||||||||||||
Total fixed maturities | $ | 387 | $ | - | $ | (2 | ) | $ | 43 | $ | (5 | ) | $ | (8 | ) | $ | 13 | $ | (53 | ) | $ | 375 | $ | - | |||||||||||||||||
Equity securities | $ | 20 | $ | (1 | ) | $ | (1 | ) | $ | 18 | $ | (1 | ) |
Unrealized | |||||||||||||||||||||||||||||||||||||||||||||
Gains | |||||||||||||||||||||||||||||||||||||||||||||
(Losses) | |||||||||||||||||||||||||||||||||||||||||||||
Unrealized | Recognized in | ||||||||||||||||||||||||||||||||||||||||||||
Net Realized | Gains (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 | ||||||||||||||||||||||||||||||||||||||
2019 | January 1 | (Loss) | OCI | Purchases | Sales | Settlements | Level 3 | Level 3 | June 30 | June 30 | June 30 | ||||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||||||||||||||||||||||
Corporate bonds and other | $ | 222 | $ | 20 | $ | 132 | $ | (4 | ) | $ | (32 | ) | $ | 338 | $ | 17 | |||||||||||||||||||||||||||||
Asset-backed | 197 | 7 | 20 | (8 | ) | $ | 45 | (68 | ) | 193 | 8 | ||||||||||||||||||||||||||||||||||
Fixed maturities available-for-sale | 419 | $ | - | 27 | 152 | $ | - | (12 | ) | 45 | (100 | ) | 531 | $ | - | 25 | |||||||||||||||||||||||||||||
Fixed maturities trading | 6 | (2 | ) | 4 | (2 | ) | |||||||||||||||||||||||||||||||||||||||
Total fixed maturities | $ | 425 | $ | (2 | ) | $ | 27 | $ | 152 | $ | - | $ | (12 | ) | $ | 45 | $ | (100 | ) | $ | 535 | $ | (2 | ) | $ | 25 | |||||||||||||||||||
Equity securities | $ | 19 | $ | 2 | $ | 2 | $ | 23 | $ | 3 |
Unrealized | |||||||||||||||||||||||||||||||||||||||||
Gains | |||||||||||||||||||||||||||||||||||||||||
Net Realized | (Losses) | ||||||||||||||||||||||||||||||||||||||||
Investment Gains | Recognized in | ||||||||||||||||||||||||||||||||||||||||
(Losses) and Net Change | Net Income | ||||||||||||||||||||||||||||||||||||||||
in Unrealized Investment | (Loss) on Level | ||||||||||||||||||||||||||||||||||||||||
Gains (Losses) | 3 Assets and | ||||||||||||||||||||||||||||||||||||||||
Included in | Transfers | Transfers | Liabilities | ||||||||||||||||||||||||||||||||||||||
Balance, | Net Income | Included in | into | out of | Balance, | Held at | |||||||||||||||||||||||||||||||||||
2018 | January 1 | (Loss) | OCI | Purchases | Sales | Settlements | Level 3 | Level 3 | June 30 | June 30 | |||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||||||||||||||||||
Corporate bonds and other | $ | 98 | $ | (1 | ) | $ | (1 | ) | $ | 2 | $ | (5 | ) | $ | (4 | ) | $ | 5 | $ | 94 | |||||||||||||||||||||
States, municipalities and political subdivisions | 1 | 1 | |||||||||||||||||||||||||||||||||||||||
Asset-backed | 335 | 7 | (6 | ) | 71 | (72 | ) | (12 | ) | 13 | $ | (63 | ) | 273 | |||||||||||||||||||||||||||
Fixed maturities available-for-sale | 434 | 6 | (7 | ) | 73 | (77 | ) | (16 | ) | 18 | (63 | ) | 368 | $ | - | ||||||||||||||||||||||||||
Fixed maturities trading | 4 | 3 | 7 | 3 | |||||||||||||||||||||||||||||||||||||
Total fixed maturities | $ | 438 | $ | 9 | $ | (7 | ) | $ | 73 | $ | (77 | ) | $ | (16 | ) | $ | 18 | $ | (63 | ) | $ | 375 | $ | 3 | |||||||||||||||||
Equity securities | $ | 22 | $ | (3 | ) | $ | (1 | ) | $ | 18 | $ | (3 | ) |
Major Category of Assets and Liabilities | Consolidated Condensed Statements of Income Line Items | |
Fixed maturity securities available-for-sale | Investment gains (losses) | |
Fixed maturity securities trading | Net investment income | |
Equity securities |
| |
|
| |
| Investment gains (losses) and Net investment income | |
Other invested assets | Investment gains (losses) and Net investment income | |
Derivative financial instruments held in a trading portfolio | Net investment income | |
Derivative financial instruments, other | Investment gains (losses) and | |
Life settlement contracts |
Operating revenues and other |
and Other Invested Assets
Other Invested Assets
Level 1 securities include exchange tradedopen-end funds valued using quoted market prices.
Life Settlement Contracts
CNA accounts for its investment in life settlement contracts using the fair value method. Historically, the fair value
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fair value.
June 30, 2019 | Estimated Fair Value | Valuation Techniques | Unobservable Inputs | Range (Weighted Average) | ||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securities | $ | 381 | Discounted cash flow | Credit spread | 1% – 5% (2% | ) | ||||||||||
December 31, 2018 | ||||||||||||||||
Fixed maturity securities | $ | 228 | Discounted cash flow | Credit spread | 1 % – 12 % (3 % | ) |
Carrying | Estimated Fair Value | |||||||||||||||||||
September 30, 2017 | Amount | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
(In millions) | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Other invested assets, primarily mortgage loans | $ | 722 | $ | 731 | $ | 731 | ||||||||||||||
Liabilities: | ||||||||||||||||||||
Short term debt | 191 | $ | 152 | 41 | 193 | |||||||||||||||
Long term debt | 11,222 | 10,316 | 1,216 | 11,532 | ||||||||||||||||
December 31, 2016 | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Other invested assets, primarily mortgage loans | $ | 591 | $ | 594 | $ | 594 | ||||||||||||||
Liabilities: | ||||||||||||||||||||
Short term debt | 107 | $ | 104 | 3 | 107 | |||||||||||||||
Long term debt | 10,655 | 10,150 | 646 | 10,796 |
The following methods and assumptions were used in estimating the fair value of these financial assets and liabilities.
Carrying | Estimated Fair Value | |||||||||||||||||||
June 30, 2019 | Amount | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
(In millions) | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Other invested assets, primarily mortgage loans | $ | 916 | $ | 936 | $ | 936 | ||||||||||||||
Liabilities: | ||||||||||||||||||||
Short term debt | 85 | $ | 8 | 76 | 84 | |||||||||||||||
Long term debt | 11,443 | 10,909 | 555 | 11,464 | ||||||||||||||||
December 31, 2018 | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Other invested assets, primarily mortgage | ||||||||||||||||||||
loans | $ | 839 | $ | 827 | $ | 827 | ||||||||||||||
Liabilities: | ||||||||||||||||||||
Short term debt | 15 | $ | 14 | 14 | ||||||||||||||||
Long term debt | 11,345 | 10,111 | 653 | 10,764 |
Fair value
Diamond Offshore
Asset Impairments
During the third quarter of 2017, Diamond Offshore evaluated six drilling rigs with indicators of impairment. Based on its assumptions and analyses, Diamond Offshore determined that the carrying values of these rigs were not impaired. If market fundamentals in the offshore oil and gas industry deteriorate further or a market recovery is delayed, additional impairment losses may be required to be recognized in future periods.
During the second quarter of 2017, Diamond Offshore evaluated seven drilling rigs with indicators of impairment. Due to the continued deterioration of market fundamentals in the contract drilling industry, as well as newly-available market projections, which indicated that a full market recovery is likely to occur further in the future than had previously been estimated, Diamond Offshore determined that the carrying values of one ultra-deepwater and one deepwater semisubmersible rig were impaired.
Diamond Offshore estimated the fair value of the rigs impaired in 2017 using an income approach, whereby the fair value of each rig was estimated based on a calculation of the rig’s future net cash flows. These calculations utilized significant unobservable inputs, including estimated proceeds that may be received on ultimate disposition of the rig, and are representative of Level 3 fair value measurements due to the significant level of estimation involved and lack of transparency as to the inputs used. During the second quarter of 2017, Diamond Offshore recorded an asset impairment charge of $72 million ($23 million after tax and noncontrolling interests), which is included in Other operating expenses on the Consolidated Condensed Statements of Income.
Diamond Offshore recorded aggregate asset impairment charges of $672 million ($263 million after tax and noncontrolling interests), which is included in Other operating expenses on the Consolidated Condensed Statements of Income for the nine months ended September 30, 2016. See Note 6 of the Consolidated Financial Statements in the Company’s Annual Report on Form10-K for the year ended December 31, 2016 for further discussion of Diamond Offshore’s 2016 asset impairments.
Boardwalk Pipeline
Sale of Assets
In May of 2017, Boardwalk Pipeline sold a processing plant and related assets, for approximately $64 million, including customary adjustments. The sale resulted in a loss of $47 million ($15 million after tax and noncontrolling interests) and is included in Other operating expenses on the Consolidated Condensed Statements of Income.
6. Claim and Claim Adjustment Expense Reserves
Nine Months Ended September 30 | 2017 | 2016 | ||||||
(In millions) | ||||||||
Reserves, beginning of year: | ||||||||
Gross | $ | 22,343 | $ | 22,663 | ||||
Ceded | 4,094 | 4,087 | ||||||
Net reserves, beginning of year | 18,249 | 18,576 | ||||||
Net incurred claim and claim adjustment expenses: | ||||||||
Provision for insured events of current year | 3,949 | 3,799 | ||||||
Decrease in provision for insured events of prior years | (284 | ) | (332 | ) | ||||
Amortization of discount | 138 | 134 | ||||||
Total net incurred (a) | 3,803 | 3,601 | ||||||
Net payments attributable to: | ||||||||
Current year events | (560 | ) | (591 | ) | ||||
Prior year events | (3,401 | ) | (3,209 | ) | ||||
Total net payments | (3,961 | ) | (3,800 | ) | ||||
Foreign currency translation adjustment and other | 110 | 39 | ||||||
Net reserves, end of period | 18,201 | 18,416 | ||||||
Ceded reserves, end of period | 4,008 | 4,256 | ||||||
Gross reserves, end of period | $ | 22,209 | $ | 22,672 | ||||
Six Months Ended June 30 | 2019 | 2018 | ||||||
(In millions) | ||||||||
Reserves, beginning of year: | ||||||||
Gross | $ | 21,984 | $ | 22,004 | ||||
Ceded | 4,019 | 3,934 | ||||||
Net reserves, beginning of year | 17,965 | 18,070 | ||||||
Net incurred claim and claim adjustment expenses: | ||||||||
Provision for insured events of current year | 2,615 | 2,552 | ||||||
Increase (decrease) in provision for insured events of prior years | (36 | ) | (112 | ) | ||||
Amortization of discount | 98 | 92 | ||||||
Total net incurred (a) | 2,677 | 2,532 | ||||||
Net payments attributable to: | ||||||||
Current year events | (315 | ) | (312 | ) | ||||
Prior year events | (2,519 | ) | (2,387 | ) | ||||
Total net payments | (2,834 | ) | (2,699 | ) | ||||
Foreign currency translation adjustment and other | 55 | (70 | ) | |||||
Net reserves, end of period | 17,863 | 17,833 | ||||||
Ceded reserves, end of period | 3,866 | 4,157 | ||||||
Gross reserves, end of period | $ | 21,729 | $ | 21,990 |
(a) | Total net incurred above does not agree to Insurance claims and policyholders’ benefits as reflected |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development | $ | (115 | ) | $ | (132 | ) | $ | (227 | ) | $ | (282 | ) | ||||
Pretax (favorable) unfavorable premium development | (19 | ) | (5 | ) | (2 | ) | (27 | ) | ||||||||
Total pretax (favorable) unfavorable net prior year development | $ | (134 | ) | $ | (137 | ) | $ | (229 | ) | $ | (309 | ) | ||||
Premium development can occur in theof $31 million and $59 million was recorded for CNA’s commercial property and casualty business when there is a change in exposure on auditable policies or when premium accruals differ from processed premium. Audits on policies usually occur in a period after the expiration date of the policy. See Note 11 for further information on the premium development for the Small Business multi-peril package product and workers’ compensation policiesoperations (“Property & Casualty Operations”) for the three and nine months ended SeptemberJune 30, 2017.
2019 and 2018 and $45 million and $98 million for the six months ended June 30, 2019 and 2018.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Medical professional liability | $ | 1 | $ | 13 | $ | 5 | $ | (17 | ) | |||||||
Other professional liability and management liability | (27 | ) | (48 | ) | (96 | ) | (98 | ) | ||||||||
Surety | (82 | ) | (63 | ) | (82 | ) | (63 | ) | ||||||||
Commercial auto | (14 | ) | (12 | ) | (40 | ) | (47 | ) | ||||||||
General liability | 7 | 14 | 6 | (38 | ) | |||||||||||
Workers’ compensation | 7 | (6 | ) | (39 | ) | 48 | ||||||||||
Other | (7 | ) | (30 | ) | 19 | (67 | ) | |||||||||
Total pretax (favorable) unfavorable development | $ | (115 | ) | $ | (132 | ) | $ | (227 | ) | $ | (282 | ) | ||||
in CNA’s Property & Casualty Operations:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Medical professional liability | $ | 15 | $ | 3 | $ | 30 | $ | 23 | ||||||||
Other professional liability and management liability | (7 | ) | (34 | ) | (19 | ) | (68 | ) | ||||||||
Surety | (15 | ) | (15 | ) | (40 | ) | (30 | ) | ||||||||
Commercial auto | (3 | ) | (8 | ) | (1 | ) | ||||||||||
General liability | 13 | 26 | (7 | ) | 18 | |||||||||||
Workers’ compensation | (7 | ) | (6 | ) | (5 | ) | (12 | ) | ||||||||
Other | (27 | ) | (33 | ) | 4 | (28 | ) | |||||||||
Total pretax (favorable) unfavorable development | $ | (31 | ) | $ | (59 | ) | $ | (45 | ) | $ | (98 | ) |
in CNA’s dentists business.
2017 and prior related to financial institutions.
Favorableyears. This was partially offset by unfavorable development for commercial auto was primarily due to lowerhigher than expected severitylarge loss experience in accident years 2015CNA’s excess and 2016, as well as a large favorable recovery on a claimumbrella business in accident year 2012.
Unfavorable development in workers’ compensation reflects the recognition of loss estimates related to favorable premium development as well as an adverse arbitration ruling related to reinsurance recoverables from older accident years.
Favorable development for other coverages reflects better than expected emergence in Canadianrun-off business in accident years 2014 and prior.
2016
2017.
Favorable development in other professional liability and management liability was primarily related to lower than expected frequency of claims and favorable outcomes on specific claims for accident years 2010 through 2014.
Favorable development in surety coverages was primarily due to lower than expected frequency of large losses in accident years 2014 and prior.
Favorable development for commercial auto was primarily due to lower than expected severities in accident years 2012 through 2015.
Unfavorable development for general liability was primarily due to an increase in reported claims prior to the closing of the three year window set forth by the Minnesota Child Victims Act in accident years 2006 and prior.
Favorable development for workers’ compensation was primarily driven by lower than expected frequencies in accident years 2009 through 2014, partially offset by the estimated impact of recent Florida court rulings in accident years 2008 through 2015.
Favorable development for other coverages was primarily due to better than expected claim frequency in commercial lines coverages provided to customers in accident years 2010 through 2015, favorable settlements on claims in accident years 2013 and prior and favorable emergence of expected losses on a specific claim relating to the December 2015 United Kingdom (“U.K.”) floods for property and marine. This favorable development was partially offset by higher than expected unfavorable large loss emergence in accident years 2014 and 2015.
Nine Months
2017
CNA’s hospitals business.
Favorable development in surety coverages was primarily due to lower than expected frequency of large losses in accident years 2015 and prior.
Favorable development for commercial auto was primarily due to lower than expected severity in accident years 2013 through 2016, as well as a large favorable recovery on a claim in accident year 2012.
Favorable development for workers’ compensation was primarily2017 related to decreases in frequency and severity in recent accident years, partially attributable to California reforms related to decreases in medical costs. This was partially offset by unfavorable development related to an adverse arbitration ruling on reinsurance recoverables from older accident years as well as the recognition of loss estimates associated with favorable premium development.
Favorable development for other coverages was primarily due to better than expected emergence in the Canadianrun-off business in accident years 2014 and prior, as well as several favorable settlements relating to large claims in the Europe Professional Indemnity portfolio.financial institutions. Additional favorable development related to betterwas in professional liability E&O reflecting lower than expected claims frequency in accident years 2014 through 2016 for property and marine. This was partially offset by unfavorable development related to higher than expectedfavorable severity in accident year 2015 arising from the management liability business and higher than expected severity in accident year 2016 for property and other and adverse large claims experience in the Hardy Political Risks portfolio, relating largely to accident year 2016 for other coverages.
2016
Favorable development for medical professional liability was primarily due to lower than expected severities for individual healthcare professionals, allied facilities and hospitals in accident years 2011 and prior. This was partially offset by unfavorable development in accident years 2012 and 2013 relatedprior.
Favorable development in other professional liability and management liability was primarily related to favorable settlements on closed claims in accident years 2011 through 2013 in professional services. Additional favorable development related to lower than expected frequency of claims and favorable outcomes on specific claims in accident years 2010 through 2014 in professional services. This was partially offset by unfavorable development related to a specific financial institutions claim in accident year 2014, higher severities in accident year 2015 and deterioration on credit crises-related claims in accident year 2009.
Favorable development in surety coverages was primarily due to lower than expected frequency of large losses in accident years 2014 and prior.
Favorable development for commercial auto was primarily due to favorable settlements on claims in accident years 2010 through 2014 and lower than expected severities in accident years 2012 through 2015.
Favorable development for general liability was primarily due to better than expected claim settlements in accident years 2012 through 2014 and better than expected severity on umbrella claims in accident years 2010 through 2013. This was partially offset by unfavorable development related to an increase in reported claims prior to the closing of the three year window set forth by the Minnesota Child Victims Act in accident years 2006 and prior.
Unfavorable development for workers’ compensation was primarily due to higher than expected severity for Defense Base Act contractors and the estimated impact of recent Florida court rulings in accident years 2008 through
2015. This was partially offset by favorable development related to lower than expected frequencies related to accident years 2009 through 2014.
Favorable development for other coverages was primarily due to better than expected claim frequency in property coverages in accident year 2015 and commercial lines coverages in accident years 2010 through 2015, better than expected loss frequency in accident years 2013 through 2015 for2015.
year 2017.
Subsequent
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Net A&EP adverse development before consideration of LPT | $ | - | $ | - | $ | 60 | $ | 200 | ||||||||
Retroactive reinsurance benefit recognized | (17 | ) | (12 | ) | (60 | ) | (94 | ) | ||||||||
Pretax impact of A&EP reserve development and the LPT | $ | (17 | ) | $ | (12 | ) | $ | - | $ | 106 | ||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Additional amounts ceded under LPT: | ||||||||||||||||
Net A&EP adverse development before consideration of LPT | $ | 113 | ||||||||||||||
Provision for uncollectible third-party reinsurance on A&EP | (16 | ) | ||||||||||||||
Total additional amounts ceded under LPT | $ | - | $ | - | $ | - | 97 | |||||||||
Retroactive reinsurance benefit recognized | (14 | ) | (15 | ) | (36 | ) | (72 | ) | ||||||||
Pretax impact of deferred retroactive reinsurance | $ | (14 | ) | $ | (15 | ) | $ | (36 | ) | $ | 25 |
its provision for uncollectible third party reinsurance.
2018 and is included within Other liabilities on the Consolidated Condensed Balance Sheets.
Year Ended December 31 | ||||
(In millions) | ||||
2019 | $ | 75 | ||
2020 | 79 | |||
2021 | 79 | |||
2022 | 68 | |||
2023 | 57 | |||
Thereafter | 344 | |||
Total | $ | 702 |
Operating | ||||
As of June 30, 2019 | Leases | |||
(In millions) | ||||
2019 (a) | $ | 53 | ||
2020 | 111 | |||
2021 | 108 | |||
2022 | 97 | |||
2023 | 86 | |||
Thereafter | 421 | |||
Total | 876 | |||
Less: discount | 174 | |||
Total lease liabilities | $ | 702 |
(a) | For the six-month period beginning July 1, 2019. |
As of June 30, 2019 | ||||
Weighted average remaining lease term | 9.6 | Years | ||
Weighted average discount rate | 4.7 | % |
Diamond Offshore
2019.
Boardwalk Pipeline
In the first quarter of 2017, Boardwalk Pipeline completed a public offering of $500$350 million aggregate principal amount of its 4.5%5.8% senior notes due July 15, 2027 andin
revolving credit facility.
OTTI Gains (Losses) | Unrealized on Investments | Cash Flow Hedges | Pension Liability | Foreign Currency Translation | Total Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Balance, July 1, 2016 | $ | 28 | $ | 838 | $ | (2 | ) | $ | (639 | ) | $ | (106 | ) | $ | 119 | |||||||||
Other comprehensive income (loss) before reclassifications, after tax of $(4), $(32), $0, $0 and $0 | 7 | 69 | (24 | ) | 52 | |||||||||||||||||||
Reclassification of (gains) losses from accumulated other | ||||||||||||||||||||||||
comprehensive income, after tax of $2, $13, $0, $(4) and $0 | (4 | ) | (27 | ) | 1 | 7 | (23 | ) | ||||||||||||||||
Other comprehensive income (loss) | 3 | 42 | 1 | 7 | (24 | ) | 29 | |||||||||||||||||
Amounts attributable to noncontrolling interests | (1 | ) | (4 | ) | (1 | ) | 2 | (4 | ) | |||||||||||||||
Balance, September 30, 2016 | $ | 30 | $ | 876 | $ | (2 | ) | $ | (632 | ) | $ | (128 | ) | $ | 144 | |||||||||
Balance, July 1, 2017 | $ | 23 | $ | 705 | $ | (2 | ) | $ | (632 | ) | $ | (130 | ) | $ | (36 | ) | ||||||||
Other comprehensive income (loss) before reclassifications, after tax of $0, $(20), $0, $0 and $0 | 1 | 35 | (2 | ) | 41 | 75 | ||||||||||||||||||
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $0, $4, $0, $(6) and $0 | (12 | ) | 3 | 11 | 2 | |||||||||||||||||||
Other comprehensive income | 1 | 23 | 1 | 11 | 41 | 77 | ||||||||||||||||||
Amounts attributable to noncontrolling interests | (3 | ) | (1 | ) | (1 | ) | (4 | ) | (9 | ) | ||||||||||||||
Balance, September 30, 2017 | $ | 24 | $ | 725 | $ | (2 | ) | $ | (622 | ) | $ | (93 | ) | $ | 32 | |||||||||
Balance, January 1, 2016 Other comprehensive income (loss) before reclassifications, after tax of $(5), $(304), $0, $0 and $0 Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $1, $12, $0, $(11) and $0 Other comprehensive income (loss) Amounts attributable to noncontrolling interests Balance, September 30, 2016 Balance, January 1, 2017 Other comprehensive income (loss) before reclassifications, after tax of $0, $(130), $0, $0 and $0 Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $1, $28, $0, $(13) and $0 Other comprehensive income (loss) Amounts attributable to noncontrolling interests Balance, September 30, 2017 OTTI
Gains
(Losses) Unrealized
Gains (Losses)
on Investments Cash Flow
Hedges Pension
Liability Foreign
Currency
Translation Total
Accumulated
Other
Comprehensive
Income (Loss)(In millions) $ 24 $ 347 $ (3 ) $ (649 ) $ (76 ) $ (357 ) 9 608 (58 ) 559 (2 ) (17 ) 2 20 3 7 591 2 20 (58 ) 562 (1 ) (62 ) (1 ) (3 ) 6 (61 ) $ 30 $ 876 $ (2 ) $ (632 ) $ (128 ) $ 144 $ 27 $ 576 $ (2 ) $ (646 ) $ (178 ) $ (223 ) 228 (3 ) 94 319 (3 ) (61 ) 4 26 (34 ) (3 ) 167 1 26 94 285 (18 ) (1 ) (2 ) (9 ) (30 ) $ 24 $ 725 $ (2 ) $ (622 ) $ (93 ) $ 32
2019:
Total | ||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
OTTI | Unrealized | Foreign | Other | |||||||||||||||||||||
Gains | Gains (Losses) | Cash Flow | Pension | Currency | Comprehensive | |||||||||||||||||||
(Losses) | on Investments | Hedges | Liability | Translation | Income (Loss) | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Balance, April 1, 2018 | $ | 18 | $ | 386 | $ | 10 | $ | (753 | ) | $ | (78 | ) | $ | (417 | ) | |||||||||
Other comprehensive income (loss) before reclassifications, after tax of $1, $45, $0, $0 and $0 | (1 | ) | (156 | ) | 4 | (52 | ) | (205 | ) | |||||||||||||||
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $0, $1, $0, $(2) and $0 | (3 | ) | 9 | 6 | ||||||||||||||||||||
Other comprehensive income (loss) | (1 | ) | (159 | ) | 4 | 9 | (52 | ) | (199 | ) | ||||||||||||||
Amounts attributable to noncontrolling interests | 17 | (2 | ) | 5 | 20 | |||||||||||||||||||
Purchase of Boardwalk Pipelines common units | (1 | ) | (28 | ) | (29 | ) | ||||||||||||||||||
Balance, June 30, 2018 | $ | 17 | $ | 244 | $ | 13 | $ | (774 | ) | $ | (125 | ) | $ | (625 | ) | |||||||||
Balance, April 1, 2019 | $ | 18 | $ | 527 | $ | (1 | ) | $ | (786 | ) | $ | (148 | ) | $ | (390 | ) | ||||||||
Other comprehensive income (loss) before reclassifications, after tax of $ (1) 114) 2 , $0 and $0 | (1 | ) | 434 | (6 | ) | 3 | 430 | |||||||||||||||||
Reclassification of losses from accumulated other comprehensive income, after tax of $ 0 , $0 , $0 , $(3) and $0 | 1 | 2 | 7 | 10 | ||||||||||||||||||||
Other comprehensive income (loss) | — | 436 | (6 | ) | 7 | 3 | 440 | |||||||||||||||||
Amounts attributable to noncontrolling interests | (46 | ) | (1 | ) | (47 | ) | ||||||||||||||||||
Balance, June 30, 2019 | $ | 18 | $ | 917 | $ | (7 | ) | $ | (780 | ) | $ | (145 | ) | $ | 3 |
Major Category of AOCI | Affected Line Item | |
OTTI gains (losses) | Investment gains (losses) | |
Unrealized gains (losses) on investments | Investment gains (losses) | |
Cash flow hedges |
Operating revenues | |
Pension liability |
Operating expenses and other |
Total | ||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
OTTI | Unrealized | Foreign | Other | |||||||||||||||||||||
Gains | Gains (Losses) | Cash Flow | Pension | Currency | Comprehensive | |||||||||||||||||||
(Losses) | on Investments | Hedges | Liability | Translation | Income (Loss) | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Balance, January 1, 2018, as reported | $ | 22 | $ | 673 | $ | - | $ | (633 | ) | $ | (88 | ) | $ | (26 | ) | |||||||||
Cumulative effect adjustment from changes in accounting standards, after tax of $0, $8, $0, $0 and $0 | 4 | 98 | (130 | ) | (28 | ) | ||||||||||||||||||
Balance, January 1, 2018, as adjusted | 26 | 771 | - | (763 | ) | (88 | ) | (54 | ) | |||||||||||||||
Other comprehensive income (loss) before reclassifications, after tax of $3, $150, $(2), $0 and $0 | (11 | ) | (570 | ) | 12 | (41 | ) | (610 | ) | |||||||||||||||
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $0, $5, $0, $(5) and $0 | 1 | (18 | ) | 2 | 19 | 4 | ||||||||||||||||||
Other comprehensive income (loss) | (10 | ) | (588 | ) | 14 | 19 | (41 | ) | (606 | ) | ||||||||||||||
Amounts attributable to noncontrolling interests | 1 | 61 | (2 | ) | 4 | 64 | ||||||||||||||||||
Purchase of Boardwalk Pipelines common units | (1 | ) | (28 | ) | (29 | ) | ||||||||||||||||||
Balance, June 30, 2018 | $ | 17 | $ | 244 | $ | 13 | $ | (774 | ) | $ | (125 | ) | $ | (625 | ) | |||||||||
Balance, January 1, 2019 | $ | 14 | $ | 57 | $ | 5 | $ | (793 | ) | $ | (163 | ) | $ | (880 | ) | |||||||||
Other comprehensive income (loss) before reclassifications, after tax of $(2), $( 254) , $4 , $0 and $0 | 3 | 955 | (12 | ) | (1 | ) | 20 | 965 | ||||||||||||||||
Re classification of losses from accumulated othercomprehensive incom e, after tax of $0 , $(1) , $0 ,$ (5) and $0 | 1 | 7 | 16 | 24 | ||||||||||||||||||||
Other comprehensive income (loss) | 4 | 962 | (12 | ) | 15 | 20 | 989 | |||||||||||||||||
Amounts attributable to noncontrolling interests | (102 | ) | (2 | ) | (2 | ) | (106 | ) | ||||||||||||||||
Balance, June 30, 2019 | $ | 18 | $ | 917 | $ | (7 | ) | $ | (780 | ) | $ | (145 | ) | $ | 3 |
|
2018.
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Non-insurance warranty services – CNA Financial | $ | 285 | $ | 248 | $ | 566 | $ | 486 | ||||||||
Contract drilling – Diamond Offshore | 216 | 268 | 450 | 564 | ||||||||||||
Transportation and storage of natural gas and NGLs and other services – Boardwalk Pipelines | 321 | 281 | 660 | 612 | ||||||||||||
Lodging and related services – Loews Hotels & Co | 185 | 200 | 365 | 383 | ||||||||||||
Rigid plastic packaging and recycled resin – Corporate | 223 | 216 | 437 | 429 | ||||||||||||
Total revenues from contracts with customers | 945 | 965 | 1,912 | 1,988 | ||||||||||||
Other revenues | 16 | 14 | 34 | 34 | ||||||||||||
Operating revenues and other | $ | 961 | $ | 979 | $ | 1,946 | $ | 2,022 |
Pension Benefits | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Service cost | $ | 2 | $ | 2 | $ | 6 | $ | 6 | ||||||||
Interest cost | 30 | 33 | 89 | 97 | ||||||||||||
Expected return on plan assets | (43 | ) | (45 | ) | (129 | ) | (133 | ) | ||||||||
Amortization of unrecognized net loss | 10 | 11 | 32 | 34 | ||||||||||||
Settlement charge | 7 | 1 | 10 | 3 | ||||||||||||
Net periodic benefit cost | $ | 6 | $ | 2 | $ | 8 | $ | 7 | ||||||||
Other Postretirement Benefits | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Service cost | $ | 1 | $ | 1 | ||||||||||||
Interest cost | $ | 1 | 1 | $ | 2 | 2 | ||||||||||
Expected return on plan assets | (1 | ) | (1 | ) | (3 | ) | (3 | ) | ||||||||
Amortization of unrecognized prior service benefit | (1 | ) | (1 | ) | (2 | ) | (3 | ) | ||||||||
Net periodic benefit cost | $ | (1 | ) | $ | - | $ | (3 | ) | $ | (3 | ) | |||||
CNA Financial
In September
Pension Benefits | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Service cost | $ | 1 | $ | 2 | $ | 3 | $ | 4 | ||||||||
Interest cost | 30 | 28 | 59 | 55 | ||||||||||||
Expected return on plan assets | (40 | ) | (45 | ) | (80 | ) | (90 | ) | ||||||||
Amortization of unrecognized net loss | 12 | 10 | 23 | 21 | ||||||||||||
Settlement charge | 2 | 3 | 2 | 7 | ||||||||||||
Net periodic (benefit) cost | $ | 5 | $ | (2 | ) | $ | 7 | $ | (3 | ) | ||||||
Other Postretirement Benefits | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Interest cost | $ | 1 | $ | 1 | ||||||||||||
Expected return on plan assets | $ | (1 | ) | $ | (1 | ) | (2 | ) | (2 | ) | ||||||
Amortization of unrecognized prior service benefit | (1 | ) | ||||||||||||||
Net periodic benefit | $ | (1 | ) | $ | (1 | ) | $ | (1 | ) | $ | (2 | ) |
Based on information currently available and CNA’s assessmentissue under advisement.
|
In addition, CNA has agreed to provide indemnification to third partyindemnified purchasers for certain losses, associated with sold business entities or assets thatsome of which are not limited by a contractual monetary amount. As of SeptemberJune 30, 2017,2019, CNA had outstanding unlimited indemnifications in connection with the sales of certain of its business entities or assets that included tax liabilities arising prior to a purchaser’s ownership of an entity or asset, defects in title at the time of sale, employee claims arising prior to closing and in some cases losses arising from certain litigation and undisclosed liabilities. Certain provisions of the indemnification agreements survive indefinitely while others survive until the applicable statutes of limitation expire, or until the agreed upon contract terms expire.
CNA Small Business Premium Rate Adjustment
In prior quarters, CNA identified rating errors related to its multi-peril package product and workers’ compensation policies within its Small Business unit and CNA determined that it would voluntarily issue premium refunds along with interest on affected policies. After the rating errors were identified, written and earned premium have been reported net of any impact from the premium rate adjustments. There was no premium development impact for the three months ended September 30, 2017 and $37 million of adverse premium development was recognized as a result of the rating errors for the nine months ended September 30, 2017. CNA’s pretax income was reduced by $1 million and $7 million for the three and nine months ended September 30, 2017 for interest due to policyholders on the premium rate adjustments.
The policyholder refunds for the multi-package product were issued in the quarter ended September 30, 2017. The estimated refund liability for the workers’ compensation policies as of September 30, 2017 was $61 million including interest. Any fines or penalties related to the foregoing are reasonably possible, but are not expected to be material to the Company’s financial statements.
2018.
Three Months Ended September 30, 2017 | CNA Financial | Diamond Offshore | Boardwalk Pipeline | Loews Hotels & Co | Corporate | Total | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Insurance premiums | $ | 1,806 | $ | 1,806 | ||||||||||||||||||||
Net investment income | 509 | $ | 48 | 557 | ||||||||||||||||||||
Investment gains | 16 | 16 | ||||||||||||||||||||||
Contract drilling revenues | $ | 357 | 357 | |||||||||||||||||||||
Other revenues | 110 | 11 | $ | 301 | $ | 162 | 201 | 785 | ||||||||||||||||
Total | 2,441 | 368 | 301 | 162 | 249 | 3,521 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Insurance claims and policyholders’ benefits | 1,480 | 1,480 | ||||||||||||||||||||||
Amortization of deferred acquisition costs | 309 | 309 | ||||||||||||||||||||||
Contract drilling expenses | 198 | 198 | ||||||||||||||||||||||
Other operating expenses | 379 | 109 | 191 | 147 | 221 | 1,047 | ||||||||||||||||||
Interest | 83 | 64 | 41 | 7 | 28 | 223 | ||||||||||||||||||
Total | 2,251 | 371 | 232 | 154 | 249 | 3,257 | ||||||||||||||||||
Income (loss) before income tax | 190 | (3 | ) | 69 | 8 | - | 264 | |||||||||||||||||
Income tax (expense) benefit | (44 | ) | 14 | (18 | ) | (4 | ) | (52) | ||||||||||||||||
Net income | 146 | 11 | 51 | 4 | - | 212 | ||||||||||||||||||
Amounts attributable to noncontrolling interests | (16 | ) | (5 | ) | (34 | ) | (55) | |||||||||||||||||
Net income attributable to Loews Corporation | $ | 130 | $ | 6 | $ | 17 | $ | 4 | $ | - | $ | 157 | ||||||||||||
Revenues: Insurance premiums Net investment income Investment gains Contract drilling revenues Other revenues Total Expenses: Insurance claims and policyholders’ benefits Amortization of deferred acquisition costs Contract drilling expenses Other operating expenses Interest Total Income (loss) before income tax Income tax (expense) benefit Net income (loss) Amounts attributable to noncontrolling interests Net income (loss) attributable to Loews CorporationThree Months Ended September 30, 2016 CNA Financial Diamond
Offshore Boardwalk
Pipeline Loews
Hotels & Co Corporate Total (In millions) $ 1,767 $ 1,767 524 $ 1 $ 36 561 45 45 340 340 97 9 $ 306 $ 161 1 574 2,433 350 306 161 37 3,287 1,202 1,202 314 314 187 187 402 108 212 151 25 898 39 19 48 6 18 130 1,957 314 260 157 43 2,731 476 36 46 4 (6 ) 556 (132 ) (22 ) (9 ) (1 ) 1 (163) 344 14 37 3 (5 ) 393 (36 ) (7 ) (23 ) (66) $ 308 $ 7 $ 14 $ 3 $ (5 ) $ 327
Revenues: Insurance premiums Net investment income Investment gains Contract drilling revenues Other revenues Total Expenses: Insurance claims and policyholders’ benefits Amortization of deferred acquisition costs Contract drilling expenses Other operating expenses Interest Total Income (loss) before income tax Income tax (expense) benefit Net income (loss) Amounts attributable to noncontrolling interests Net income (loss) attributable to Loews CorporationNine Months Ended September 30, 2017 CNA
Financial Diamond
Offshore Boardwalk
Pipeline Loews
Hotels & Co Corporate Total (In millions) $ 5,185 $ 5,185 1,529 $ 1 $ 109 1,639 93 93 1,113 1,113 329 30 $ 987 $ 510 294 2,150 7,136 1,144 987 510 403 10,180 4,053 4,053 926 926 598 598 1,086 414 646 443 389 2,978 166 119 131 20 68 504 6,231 1,131 777 463 457 9,059 905 13 210 47 (54 ) 1,121 (226 ) 35 (46 ) (23 ) 20 (240) 679 48 164 24 (34 ) 881 (71 ) (23 ) (104 ) (198) $ 608 $ 25 $ 60 $ 24 $ (34) $ 683
Revenues: Insurance premiums Net investment income Investment gains (losses) Contract drilling revenues Other revenues Total Expenses: Insurance claims and policyholders’ benefits Amortization of deferred acquisition costs Contract drilling expenses Other operating expenses Interest Total Income (loss) before income tax Income tax (expense) benefit Net income (loss) Amounts attributable to noncontrolling interests Net income (loss) attributable to Loews CorporationNine Months Ended September 30, 2016 CNA Financial Diamond
Offshore Boardwalk
Pipeline Loews
Hotels & Co Corporate Total (In millions) $ 5,196 $ 5,196 1,461 $ 1 $ 108 1,570 30 (12 ) 18 1,141 1,141 297 69 $ 961 $ 513 2 1,842 6,984 1,199 961 513 110 9,767 3,949 3,949 926 926 598 598 1,158 1,082 615 479 82 3,416 127 69 136 17 54 403 6,160 1,749 751 496 136 9,292 824 (550 ) 210 17 (26 ) 475 (203 ) 78 (44 ) (10 ) 8 (171) 621 (472 ) 166 7 (18 ) 304 (64 ) 228 (104 ) 60 $ 557 $ (244) $ 62 $ 7 $ (18) $ 364
Three Months Ended June 30, 2019 | CNA Financial | Diamond Offshore | Boardwalk Pipelines | Loews Hotels & Co | Corporate | Total | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Insurance premiums | $ | 1,824 | $ | 1,824 | ||||||||||||||||||||
Net investment income | 515 | $ | 2 | $ | 1 | $ | 33 | 551 | ||||||||||||||||
Investment gains | 2 | 2 | ||||||||||||||||||||||
Non-insurance warranty revenue | 285 | 285 | ||||||||||||||||||||||
Operating revenues and other | 4 | 222 | $ | 327 | 185 | 223 | 961 | |||||||||||||||||
Total | 2,630 | 224 | 327 | 186 | 256 | 3,623 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Insurance claims and policyholders’ benefits | 1,352 | 1,352 | ||||||||||||||||||||||
Amortization of deferred acquisition costs | 338 | 338 | ||||||||||||||||||||||
Non-insurance warranty expense | 263 | 263 | ||||||||||||||||||||||
Operating expenses and other | 279 | 335 | 209 | 163 | 245 | 1,231 | ||||||||||||||||||
Interest | 55 | 31 | 46 | 5 | 27 | 164 | ||||||||||||||||||
Total | 2,287 | 366 | 255 | 168 | 272 | 3,348 | ||||||||||||||||||
Income (loss) before income tax | 343 | (142 | ) | 72 | 18 | (16 | ) | 275 | ||||||||||||||||
Income tax (expense) benefit | (64 | ) | 36 | (19 | ) | (6 | ) | 3 | (50 | ) | ||||||||||||||
Net income (loss) | 279 | (106 | ) | 53 | 12 | (13 | ) | 225 | ||||||||||||||||
Amounts attributable to noncontrolling interests | (30 | ) | 54 | 24 | ||||||||||||||||||||
Net income (loss) attributable to Loews Corporation | $ | 249 | $ | (52 | ) | $ | 53 | $ | 12 | $ | (13 | ) | $ | 249 |
Three Months Ended June 30, 2018 | CNA Financial | Diamond Offshore | Boardwalk Pipelines | Loews Hotels & Co | Corporate | Total | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Insurance premiums | $ | 1,815 | $ | 1,815 | ||||||||||||||||||||
Net investment income | 506 | $ | 2 | $ | 1 | $ | 42 | 551 | ||||||||||||||||
Investment losses | (3 | ) | (3 | ) | ||||||||||||||||||||
Non-insurance warranty revenue | 248 | 248 | ||||||||||||||||||||||
Operating revenues and other | 8 | 269 | $ | 285 | 200 | 217 | 979 | |||||||||||||||||
Total | 2,574 | 271 | 285 | 201 | 259 | 3,590 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Insurance claims and policyholders’ benefits | 1,327 | 1,327 | ||||||||||||||||||||||
Amortization of deferred acquisition costs | 359 | 359 | ||||||||||||||||||||||
Non-insurance warranty expense | 225 | 225 | ||||||||||||||||||||||
Operating expenses and other | 299 | 320 | 203 | 169 | 238 | 1,229 | ||||||||||||||||||
Interest | 35 | 30 | 43 | 8 | 27 | 143 | ||||||||||||||||||
Total | 2,245 | 350 | 246 | 177 | 265 | 3,283 | ||||||||||||||||||
Income (loss) before income tax | 329 | (79 | ) | 39 | 24 | (6 | ) | 307 | ||||||||||||||||
Income tax (expense) benefit | (60 | ) | 10 | (2 | ) | (7 | ) | (59 | ) | |||||||||||||||
Net income (loss) | 269 | (69 | ) | 37 | 17 | (6 | ) | 248 | ||||||||||||||||
Amounts attributable to noncontrolling interests | (29 | ) | 32 | (21 | ) | (18 | ) | |||||||||||||||||
Net income (loss) attributable to Loews Corporation | $ | 240 | $ | (37 | ) | $ | 16 | $ | 17 | $ | (6 | ) | $ | 230 |
Six Months Ended June 30, 2019 | CNA Financial | Diamond Offshore | Boardwalk Pipelines | Loews Hotels & Co | Corporate | Total | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Insurance premiums | $ | 3,627 | $ | 3,627 | ||||||||||||||||||||
Net investment income | 1,086 | $ | 4 | $ | 1 | $ | 117 | 1,208 | ||||||||||||||||
Investment gains | 33 | 33 | ||||||||||||||||||||||
Non-insurance warranty revenue | 566 | 566 | ||||||||||||||||||||||
Operating revenues and other | 13 | 456 | $ | 673 | 365 | 439 | 1,946 | |||||||||||||||||
Total | 5,325 | 460 | 673 | 366 | 556 | 7,380 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Insurance claims and policyholders’ benefits | 2,709 | 2,709 | ||||||||||||||||||||||
Amortization of deferred acquisition costs | 680 | 680 | ||||||||||||||||||||||
Non-insurance warranty expense | 523 | 523 | ||||||||||||||||||||||
Operating expenses and other | 563 | 618 | 404 | 319 | 476 | 2,380 | ||||||||||||||||||
Interest | 89 | 61 | 91 | 10 | 54 | 305 | ||||||||||||||||||
Total | 4,564 | 679 | 495 | 329 | 530 | 6,597 | ||||||||||||||||||
Income (loss) before income tax | 761 | (219 | ) | 178 | 37 | 26 | 783 | |||||||||||||||||
Income tax (expense) benefit | (141 | ) | 42 | (46 | ) | (12 | ) | (5 | ) | (162 | ) | |||||||||||||
Net income (loss) | 620 | (177 | ) | 132 | 25 | 21 | 621 | |||||||||||||||||
Amounts attributable to noncontrolling interests | (66 | ) | 88 | 22 | ||||||||||||||||||||
Net income (loss) attributable to Loews Corporation | $ | 554 | $ | (89 | ) | $ | 132 | $ | 25 | $ | 21 | $ | 643 |
Six Months Ended June 30, 2018 | CNA Financial | Diamond Offshore | Boardwalk Pipelines | Loews Hotels & Co | Corporate | Total | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Insurance premiums | $ | 3,600 | $ | 3,600 | ||||||||||||||||||||
Net investment income | 996 | $ | 4 | $ | 1 | $ | 56 | 1,057 | ||||||||||||||||
Investment gains | 6 | 6 | ||||||||||||||||||||||
Non-insurance warranty revenue | 486 | 486 | ||||||||||||||||||||||
Operating revenues and other | 21 | 566 | $ | 622 | 383 | 430 | 2,022 | |||||||||||||||||
Total | 5,109 | 570 | 622 | 384 | 486 | 7,171 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Insurance claims and policyholders’ benefits | 2,666 | 2,666 | ||||||||||||||||||||||
Amortization of deferred acquisition costs | 655 | 655 | ||||||||||||||||||||||
Non-insurance warranty expense | 441 | 441 | ||||||||||||||||||||||
Operating expenses and other | 601 | 616 | 401 | 325 | 470 | 2,413 | ||||||||||||||||||
Interest | 70 | 58 | 87 | 15 | 54 | 284 | ||||||||||||||||||
Total | 4,433 | 674 | 488 | 340 | 524 | 6,459 | ||||||||||||||||||
Income (loss) before income tax | 676 | (104 | ) | 134 | 44 | �� | (38 | ) | 712 | |||||||||||||||
Income tax (expense) benefit | (115 | ) | 54 | (14 | ) | (14 | ) | 5 | (84 | ) | ||||||||||||||
Net income (loss) | 561 | (50 | ) | 120 | 30 | (33 | ) | 628 | ||||||||||||||||
Amounts attributable to noncontrolling interests | (60 | ) | 23 | (68 | ) | (105 | ) | |||||||||||||||||
Net income (loss) attributable to Loews Corporation | $ | 501 | $ | (27 | ) | $ | 52 | $ | 30 | $ | (33 | ) | $ | 523 |
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Pipeline”Pipelines”) and Loews Hotels Holding Corporation (“Loews Hotels & Co”); and ourthe Corporate segment. The results of operations of Consolidated Container Company LLC since the acquisition date(“Consolidated Container”) are included in the Corporate segment. Each of our operating subsidiaries is 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.1314 of the Consolidated Financial Statements in our Annual Report on Form2016)2018) 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.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions, except per share data) | ||||||||||||||||
CNA Financial | $ | 130 | $ | 308 | $ | 608 | $ | 557 | ||||||||
Diamond Offshore | 6 | 7 | 25 | (244 | ) | |||||||||||
Boardwalk Pipeline | 17 | 14 | 60 | 62 | ||||||||||||
Loews Hotels & Co | 4 | 3 | 24 | 7 | ||||||||||||
Corporate | (5 | ) | (34 | ) | (18 | ) | ||||||||||
Net income attributable to Loews Corporation | $ | 157 | $ | 327 | $ | 683 | $ | 364 | ||||||||
Basic net income per share | $ | 0.46 | $ | 0.97 | $ | 2.03 | $ | 1.08 | ||||||||
Diluted net income per share | $ | 0.46 | $ | 0.97 | $ | 2.02 | $ | 1.08 | ||||||||
2018:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions, except per share data) | ||||||||||||||||
CNA Financial | $ | 249 | $ | 240 | $ | 554 | $ | 501 | ||||||||
Diamond Offshore | (52 | ) | (37 | ) | (89 | ) | (27 | ) | ||||||||
Boardwalk Pipelines | 53 | 16 | 132 | 52 | ||||||||||||
Loews Hotels & Co | 12 | 17 | 25 | 30 | ||||||||||||
Corporate | (13 | ) | (6 | ) | 21 | (33 | ) | |||||||||
Net income attributable to Loews Corporation | $ | 249 | $ | 230 | $ | 643 | $ | 523 | ||||||||
Basic net income per share | $ | 0.82 | $ | 0.72 | $ | 2.10 | $ | 1.62 | ||||||||
Diluted net income per share | $ | 0.82 | $ | 0.72 | $ | 2.09 | $ | 1.61 | ||||||||
income. Net income for the ninesix months ended SeptemberJune 30, 2017 included the aggregate debt redemption loss discussed above, net catastrophe losses at CNA of $213 million in 20172019 increased as compared with $85 million in 2016, a loss on the sale of a processing facility at Boardwalk Pipeline of $15 million in 2017 and asset impairment charges at Diamond Offshore of $23 million in 2017 as compared with $267 million in 2016. Excluding these items, earnings increased $253 million mainlyprior year period due to higher earnings at CNA and Boardwalk Pipelines as well as higher Parent Company net investment income, partially offset by lower results at Diamond Offshore and Loews Hotels & Co.
Unless the context otherwise requires, references herein to net operating income (loss), net realized investment results and net income (loss) reflect amounts attributable to Loews Corporation shareholders.
Offshore.
On May 22, 2017, we completed the acquisition of CCC Acquisition Holdings, Inc. for $1.2 billion, subject to closing adjustments. CCC Acquisition Holdings, Inc., through its wholly owned subsidiary, Consolidated Container Company LLC (“Consolidated Container”), is a rigid plastic packaging and recycled resins manufacturer and provides packaging solutions to end markets such as beverage, food and household chemicals through a network of manufacturing locations across North America.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 1,806 | $ | 1,767 | $ | 5,185 | $ | 5,196 | ||||||||
Net investment income | 509 | 524 | 1,529 | 1,461 | ||||||||||||
Investment gains | 16 | 45 | 93 | 30 | ||||||||||||
Other revenues | 110 | 97 | 329 | 297 | ||||||||||||
Total | 2,441 | 2,433 | 7,136 | 6,984 | ||||||||||||
Expenses: | ||||||||||||||||
Insurance claims and policyholders’ benefits | 1,480 | 1,202 | 4,053 | 3,949 | ||||||||||||
Amortization of deferred acquisition costs | 309 | 314 | 926 | 926 | ||||||||||||
Other operating expenses | 379 | 402 | 1,086 | 1,158 | ||||||||||||
Interest | 83 | 39 | 166 | 127 | ||||||||||||
Total | 2,251 | 1,957 | 6,231 | 6,160 | ||||||||||||
Income before income tax | 190 | 476 | 905 | 824 | ||||||||||||
Income tax expense | (44 | ) | (132 | ) | (226 | ) | (203 | ) | ||||||||
Net income | 146 | 344 | 679 | 621 | ||||||||||||
Amounts attributable to noncontrolling interests | (16 | ) | (36 | ) | (71 | ) | (64 | ) | ||||||||
Net income attributable to Loews Corporation | $ | 130 | $ | 308 | $ | 608 | $ | 557 | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 1,824 | $ | 1,815 | $ | 3,627 | $ | 3,600 | ||||||||
Net investment income | 515 | 506 | 1,086 | 996 | ||||||||||||
Investment gains (losses) | 2 | (3 | ) | 33 | 6 | |||||||||||
Non-insurance warranty revenue | 285 | 248 | 566 | 486 | ||||||||||||
Other revenues | 4 | 8 | 13 | 21 | ||||||||||||
Total | 2,630 | 2,574 | 5,325 | 5,109 | ||||||||||||
Expenses: | ||||||||||||||||
Insurance claims and policyholders’ benefits | 1,352 | 1,327 | 2,709 | 2,666 | ||||||||||||
Amortization of deferred acquisition costs | 338 | 359 | 680 | 655 | ||||||||||||
Non-insurance warranty expense | 263 | 225 | 523 | 441 | ||||||||||||
Other operating expenses | 279 | 299 | 563 | 601 | ||||||||||||
Interest | 55 | 35 | 89 | 70 | ||||||||||||
Total | 2,287 | 2,245 | 4,564 | 4,433 | ||||||||||||
Income before income tax | 343 | 329 | 761 | 676 | ||||||||||||
Income tax expense | (64 | ) | (60 | ) | (141 | ) | (115 | ) | ||||||||
Net income | 279 | 269 | 620 | 561 | ||||||||||||
Amounts attributable to noncontrolling interests | (30 | ) | (29 | ) | (66 | ) | (60 | ) | ||||||||
Net income attributable to Loews Corporation | $ | 249 | $ | 240 | $ | 554 | $ | 501 | ||||||||
2018
Ninedebt.
2018
Other Insurance Operations
CNA’s core business is itscommercial property and casualty insurance operations that(“Property & Casualty Operations”) include its Specialty, Commercial and International lines of business. CNA’snon-core operations Other Insurance Operations outside of Property & Casualty Operations include its long term care business that is in
respect to CNA’s coreProperty & Casualty Operations andnon-core operations Other Insurance Operations to enhance the reader’s understanding and to provide further transparency into key drivers of CNA’s financial results.
Three Months Ended September 30, 2017 | Specialty | Commercial | International | Total | ||||||||||||
(In millions, except %) | ||||||||||||||||
Net written premiums | $ | 705 | $ | 687 | $ | 207 | $ | 1,599 | ||||||||
Net earned premiums | 703 | 741 | 226 | 1,670 | ||||||||||||
Net investment income | 134 | 161 | 13 | 308 | ||||||||||||
Net operating income (loss) | 161 | 22 | (34 | ) | 149 | |||||||||||
Net realized investment gains | 2 | 2 | 4 | 8 | ||||||||||||
Net income (loss) | 163 | 24 | (30 | ) | 157 | |||||||||||
Other performance metrics: | ||||||||||||||||
Loss and loss adjustment expense ratio | 50.8 | % | 82.4 | % | 88.4 | % | 69.9 | % | ||||||||
Expense ratio | 31.3 | 34.3 | 37.5 | 33.5 | ||||||||||||
Dividend ratio | 0.2 | 0.5 | 0.3 | |||||||||||||
Combined ratio | 82.3 | % | 117.2 | % | 125.9 | % | 103.7 | % | ||||||||
Rate | (1 | )% | 0 | % | 1 | % | 0 | % | ||||||||
Renewal premium change | 0 | 2 | 4 | 2 | ||||||||||||
Retention | 89 | 85 | 73 | 85 | ||||||||||||
New business | $ | 64 | $ | 137 | $ | 69 | $ | 270 |
(In millions, except %) Net written premiums Net earned premiums Net investment income Net operating income Net realized investment gains Net income Other performance metrics: Loss and loss adjustment expense ratio Expense ratio Dividend ratio Combined ratio Rate Renewal premium change Retention New business Net written premiums Net earned premiums Net investment income Net operating income (loss) Net realized investment gains Net income Other performance metrics: Loss and loss adjustment expense ratio Expense ratio Dividend ratio Combined ratio Rate Renewal premium change Retention New business Net written premiums Net earned premiums Net investment income Net operating income (loss) Net realized investment gains Net income Other performance metrics: Loss and loss adjustment expense ratio Expense ratio Dividend ratio Combined ratio Rate Renewal premium change Retention New businessThree Months Ended September 30, 2016 Specialty Commercial International Total $ 733 $ 684 $ 207 $ 1,624 704 719 210 1,633 140 175 13 328 175 102 18 295 5 8 4 17 180 110 22 312 46.8 % 62.2 % 55.4 % 54.7 % 32.5 37.1 37.8 35.2 0.6 0.5 0.5 79.9 % 99.8 % 93.2 % 90.4 % 0 % (3 )% (1 )% (1 )% 2 5 (1 ) 3 88 84 74 84 $ 66 $ 135 $ 67 $ 268 Nine Months Ended September 30, 2017 $ 2,100 $ 2,169 $ 664 $ 4,933 2,056 2,097 629 4,782 407 482 38 927 420 210 (7 ) 623 15 20 13 48 435 230 6 671 55.5 % 70.1 % 70.6 % 63.9 % 31.8 35.3 37.2 34.0 0.1 0.5 0.3 87.4 % 105.9 % 107.8 % 98.2 % 0 % 0 % 0 % 0 % 2 1 1 1 89 86 78 86 $ 187 $ 429 $ 207 $ 823 Nine Months Ended September 30, 2016 $ 2,108 $ 2,172 $ 637 $ 4,917 2,088 2,103 605 4,796 380 465 38 883 436 251 (1 ) 686 1 1 10 12 437 252 9 698 52.6 % 64.6 % 65.2 % 59.4 % 32.0 36.7 38.2 34.9 0.3 0.4 0.3 84.9 % 101.7 % 103.4 % 94.6 % 1 % (2 )% (1 )% (1 )% 2 4 (1 ) 2 88 84 78 85 $ 192 $ 418 $ 189 $ 799
2018:
Three Months Ended June 30, 2019 | Specialty | Commercial | International | Total | |||||||||||||
(In millions, except %) | |||||||||||||||||
Net written premiums | $ | 713 | $ | 912 | $ | 249 | $ | 1,874 | |||||||||
Net earned premiums | 688 | 763 | 243 | 1,694 | |||||||||||||
Net investment income | 134 | 154 | 15 | 303 | |||||||||||||
Core income | 161 | 120 | 17 | 298 | |||||||||||||
Other performance metrics: | |||||||||||||||||
Loss and loss adjustment expense ratio | 57.4 | % | 66.5 | % | 60.2 | % | 61.9 | % | |||||||||
Expense ratio | 33.1 | 32.6 | 37.3 | 33.4 | |||||||||||||
Dividend ratio | 0.2 | 0.6 | 0.4 | ||||||||||||||
Combined ratio | 90.7 | % | 99.7 | % | 97.5 | % | 95.7 | % | |||||||||
Rate | 4 | % | 3 | % | 7 | % | 4 | % | |||||||||
Renewal premium change | 5 | 5 | 8 | 5 | |||||||||||||
Retention | 88 | 85 | 67 | 83 | |||||||||||||
New business | $ | 97 | $ | 186 | $ | 75 | $ | 358 | |||||||||
Three Months Ended June 30, 2018 | |||||||||||||||||
Net written premiums | $ | 688 | $ | 810 | $ | 271 | $ | 1,769 | |||||||||
Net earned premiums | 683 | 753 | 248 | 1,684 | |||||||||||||
Net investment income | 130 | 157 | 15 | 302 | |||||||||||||
Core income (loss) | 183 | 143 | (7 | ) | 319 | ||||||||||||
Other performance metrics: | |||||||||||||||||
Loss and loss adjustment expense ratio | 54.6 | % | 62.4 | % | 66.8 | % | 59.9 | % | |||||||||
Expense ratio | 32.0 | 33.5 | 37.9 | 33.5 | |||||||||||||
Dividend ratio | 0.2 | 0.7 | 0.4 | ||||||||||||||
Combined ratio | 86.8 | % | 96.6 | % | 104.7 | % | 93.8 | % | |||||||||
Rate | 2 | % | 1 | % | 3 | % | 1 | % | |||||||||
Renewal premium change | 5 | 4 | 5 | 4 | |||||||||||||
Retention | 83 | 86 | 77 | 83 | |||||||||||||
New business | $ | 93 | $ | 157 | $ | 82 | $ | 332 |
Six Months Ended June 30, 2019 | Specialty | Commercial | International | Total | |||||||||||||
(In millions, except %) | |||||||||||||||||
Net written premiums | $ | 1,411 | $ | 1,761 | $ | 508 | $ | 3,680 | |||||||||
Net earned premiums | 1,349 | 1,526 | 493 | 3,368 | |||||||||||||
Net investment income | 289 | 344 | 30 | 663 | |||||||||||||
Core income | 330 | 259 | 23 | 612 | |||||||||||||
Other performance metrics: | |||||||||||||||||
Loss and loss adjustment expense ratio | 58.3 | % | 66.7 | % | 62.5 | % | 62.7 | % | |||||||||
Expense ratio | 33.0 | 33.2 | 37.2 | 33.7 | |||||||||||||
Dividend ratio | 0.2 | 0.6 | 0.4 | ||||||||||||||
Combined ratio | 91.5 | % | 100.5 | % | 99.7 | % | 96.8 | % | |||||||||
Rate | 4 | % | 2 | % | 6 | % | 3 | % | |||||||||
Renewal premium change | 4 | 4 | 3 | 4 | |||||||||||||
Retention | 89 | 85 | 67 | 83 | |||||||||||||
New business | $ | 183 | $ | 350 | $ | 155 | $ | 688 | |||||||||
Six Months Ended June 30, 2018 | |||||||||||||||||
Net written premiums | $ | 1,374 | $ | 1,642 | $ | 566 | $ | 3,582 | |||||||||
Net earned premiums | 1,355 | 1,496 | 484 | 3,335 | |||||||||||||
Net investment income | 252 | 306 | 29 | 587 | |||||||||||||
Core income | 354 | 276 | 16 | 646 | |||||||||||||
Other performance metrics: | |||||||||||||||||
Loss and loss adjustment expense ratio | 55.4 | % | 62.7 | % | 63.7 | % | 59.9 | % | |||||||||
Expense ratio | 31.6 | 33.4 | 37.1 | 33.2 | |||||||||||||
Dividend ratio | 0.2 | 0.7 | 0.4 | ||||||||||||||
Combined ratio | 87.2 | % | 96.8 | % | 100.8 | % | 93.5 | % | |||||||||
Rate | 2 | % | 1 | % | 3 | % | 2 | % | |||||||||
Renewal premium change | 5 | 5 | 5 | 5 | |||||||||||||
Retention | 84 | 85 | 81 | 84 | |||||||||||||
New business | $ | 173 | $ | 339 | $ | 175 | $ | 687 |
2018
Total net operating income decreased $146premiums in recent quarters for Commercial for the three months ended June 30, 2019. Net written premiums for Specialty increased $25 million for the three months ended SeptemberJune 30, 20172019 as compared with the 2016 period.same period in 2018 driven by higher new business, strong retention and favorable rate. The decreaseincrease in net operating incomeearned premiums was primarily due to significantly higherconsistent with the trend in net catastrophe losseswritten premiums in the current year period partially offset by improvednon-catastrophe current accident year underwriting results. Catastrophe losses were $170 million including $4 million from reinsurance reinstatement premium (after tax and noncontrolling interests)recent quarters for Specialty for the three months ended SeptemberJune 30, 2017 compared to $102019. Net written premiums for International decreased $22 million (after tax and noncontrolling interests) in the 2016 period.
Favorable net prior year development of $134 million and $137 million was recorded for the three months ended SeptemberJune 30, 2017 and 2016. For2019 as compared with the three months ended September 30, 2017 and 2016, Specialty recorded favorable2018 period. Excluding the effect of foreign currency exchange rates, net prior year development of $112written premiums decreased $11 million, for each period, Commercial recorded favorable net prior year development of $18 million and $8 million and International recorded favorable net prior year development of $4 million and $17 million. Further information on net prior year development is included in Note 6 of the Notes to Consolidated Condensed Financial Statements included under Item 1.
Specialty’s combined ratio increased 2.4 pointsor 4%, for the three months ended SeptemberJune 30, 20172019 as compared with the 2016 period. The loss ratio increased 4.0 points2018 period driven by higherthe strategic exit from certain Hardy business classes in the fourth quarter of 2018. The decrease in net catastrophe losses which were $38 million, or 5.4 points ofearned premiums was consistent with the loss ratio,trend in net written premiums in recent quarters for International for the three months ended SeptemberJune 30, 2017 as compared with $12019.
Commercial’s combined ratio increased 17.4 points for the three months ended September 30, 2017 as compared with the 2016 period. The loss ratio increased 20.2 points driven by higher net catastrophe losses partially offset by improvednon-catastrophe current accident year underwriting results. Net catastrophe losses were $173 million, or 23.9 points of the loss ratio, for the three months ended September 30, 2017, as compared with $12 million, or 1.6 points of the loss ratio, for the 2016 period. The loss ratio, excluding catastrophes and development, improved 1.2 points. The expense ratio improved 2.8 points for the three months ended September 30, 2017 as compared with the 2016 period reflecting both CNA’s ongoing efforts to improve productivity and the actions undertaken in last year’s third and fourth quarters to reduce expenses.
International’s combined ratio increased 32.7 points for the three months ended September 30, 2017 as compared with the 2016 period. The loss ratio increased 33.0 points driven by higher net catastrophe losses and lower favorable net prior year loss reserve development.
Nine Months Ended September 30, 2017 Compared to 2016
Total net written premiums increased $16 million for the ninethree months ended SeptemberJune 30, 2017 as compared with the 2016 period. Net written premiums for International increased $27 million for the nine months ended September 30, 2017 as compared with the 2016 period due to higher new business2019 and positive renewal premium change. Net written premiums for2018, Specialty decreased $8 million for the nine months ended September 30, 2017 as compared with the 2016 period driven by lower new business. Net written premiums for Commercial decreased $3 million for the nine months ended September 30, 2017 as compared with the 2016 period, due to unfavorable premium development driven by a premium rate adjustment within its Small Business unit as discussed in Note 11 to the Consolidated Condensed Financial Statements under Item 1. This was partially offset by higher new business within Middle Markets, strong retention and positive renewal premium change. The change in net earned premiums was consistent with the trend in net written premiums.
Total net operating income decreased $63 million for the nine months ended September 30, 2017 as compared with the 2016 period. The decrease in net operating income was due to significantly higherhad net catastrophe losses inof $1 million and $3 million, Commercial had net catastrophe losses of $37 million and $19 million, and International had net catastrophe losses of less than $1 million and $4 million.
Favorable net prior year development of $229$18 million and $309$44 million was recorded for the nine months ended September 30, 2017 and 2016. For the nine months ended September 30, 2017 and 2016, Specialty recorded favorable net prior year development of $176 million and $229 million. Commercial recorded favorable net prior year loss reserve development of $65$12 million and unfavorable premium development of $27 million for$13 million. For the ninethree months ended SeptemberJune 30, 2017 as compared with2019 and 2018, International recorded favorable net prior year loss reserve development of $37$1 million and favorable premium development of $7 million for the 2016 period. International recorded favorable net prior year development of $15 million and $36 million for the nine months ended September 30, 2017 and 2016.$2 million. Further information on net prior year loss reserve development is included in Note 65 of the Notes to Consolidated Condensed Financial Statements included under Item 1.
same period in 2018 driven by higher employee costs and acquisition expenses.
International’s combined ratio increased 4.4 points for the nine months ended September 30, 2017 as compared with the 2016 period. The loss ratio increased 5.4 points primarily due to lower favorableCanada, partially offset by unfavorable net prior year loss reserve development and higher net catastrophe losses. Net catastrophe losses were $60 million, or 10.3 points ofin the losscurrent year period. The expense ratio was largely consistent for the ninesix months ended SeptemberJune 30, 20172019 as compared with $28 million, or 4.7 points of the loss ratio, for the 20162018 period. The loss ratio, excluding catastrophes and development, improved 4.5 points. International’s expense ratio improved 1.0 point primarily due to higher net earned premiums.
Non-Core
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Net earned premiums | $ | 136 | $ | 134 | $ | 404 | $ | 401 | ||||||||
Net investment income | 201 | 196 | 602 | 578 | ||||||||||||
Net operating loss | (29 | ) | (14 | ) | (71 | ) | (145 | ) | ||||||||
Net realized investment gains | 2 | 10 | 8 | 4 | ||||||||||||
Net loss | (27 | ) | (4 | ) | (63 | ) | (141 | ) |
2018:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Net earned premiums | $ | 130 | $ | 131 | $ | 260 | $ | 265 | ||||||||
Net investment income | 212 | 204 | 423 | 409 | ||||||||||||
Core loss | (4 | ) | (49 | ) | - | (95 | ) |
The net2018
included under Item 1. The long term care business continuedfor the three months ended June 30, 2019 continues to produce results generallybenefit from a higher than expected number of policyholders choosing to lapse coverage or reduce benefits in lieu of premium rate increases. The favorable persistency trend in the prior year period was offset when a significant number of policies converted to a fully
Nineexpectations.
The net loss was $632018
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Core income (loss): | ||||||||||||||||
Property & Casualty Operations | $ | 298 | $ | 319 | $ | 612 | $ | 646 | ||||||||
Other Insurance Operations | (4 | ) | (49 | ) | (95 | ) | ||||||||||
Total core income | 294 | 270 | 612 | 551 | ||||||||||||
Investment gains (losses) (after tax) | 1 | (1 | ) | 24 | 7 | |||||||||||
Consolidating adjustments including purchase accounting and noncontrolling interests | (46 | ) | (29 | ) | (82 | ) | (57 | ) | ||||||||
Net income attributable to Loews Corporation | $ | 249 | $ | 240 | $ | 554 | $ | 501 | ||||||||
Overview
Overall fundamentals infloater rig class, the offshore oil and gas industry have not yet improved from those described inultra-deepwater floaters remain the Results of Operations – Diamond Offshore section of our MD&A included under Item 7 of our Annual Report on Form10-K for the year ended December 31, 2016. Volatility in oil price is attributable to multiple factors, including fluctuations in the current and expected level of global oil inventories and estimates of global oil demand, production cuts by the Organization of the Petroleum Exporting Countries (which have been extended untilmost distressed asset class, with industry-wide utilization reported at 63% at the end of the firstsecond quarter of 2018) and2019. In general, dayrates remain low compared to previous periods, as the impact of hurricanes and tropical stormsincrease in the U.S. Gulf of Mexico. In addition, some U.S. shale producers have resumed drilling and production activities due to their ability to quickly and more inexpensively bring oil reserves to production and therefore benefit from modestly-improved commodity prices. This has prevented crude oil prices from rising through typical supply and demand economicsearlier lows has not resulted in significantly higher dayrates. Industry analysts indicate that, based on historical data, utilization rates have had to a more sustainable level forincrease to the 80%-range before pricing power has shifted to the drilling contractor from the customer. Some analysts believe that the offshore exploration and development. As a result, capital spending forcontract drilling market will recover over the next two years as additional offshore exploration and development continued to decline in 2017, with annual capital spending estimated by some industry analystsprojects are expected to be upsanctioned to 20% lower than reduced 2016 capital spending levels. Ifreplace oil and gas reserves and to meet predicted growing energy demand. However, many of these market estimates are realized, it would represent three consecutive yearsexpected to be greenfield, or new oil and gas development projects for which drilling does not typically commence until the second, third or fourth year of declinedevelopment. Capital investments in offshore spending.
Someprojects will also compete with onshore shale in the U.S.
customers.
2020 and an aggregate of $0.7 billion in 2021 through 2023. Contract drilling backlog includes $38 million and $119as of July 1, 2019 excludes future gross margin commitments of $30 million for 20172019, approximately $25 million for 2020 and 2018 attributablean aggregate $75 million in 2021 through 2023, payable by a customer in the form of a guarantee of gross margin to contracted work forbe earned on future contracts or by direct payment at theOcean Valorunder a contract that Petróleo Brasileiro S.A. (“Petrobras”) has attempted to terminate, which is currently in effect end of each of the three respective periods, pursuant to terms of an injunction granted by a Brazilian court. Petrobras appealed the granting of the injunction, but in March of 2017, the court ruled against Petrobras’ appeal and upheld the injunction. As a result of the favorable ruling, both the injunction and theOcean Valorexisting contract.
Contract drilling backlog includes only firm commitments (typically represented by signed contracts) and is calculated by multiplying the contracted operating dayrate by the firm contract period. Diamond Offshore’s calculation also assumes full utilization of its drilling equipment for the contract period (excluding scheduled shipyard and survey days); however, the amount of actual revenue earned and the actual periods during which revenues are
earned will be different than the amounts and periods stated above due to various factors affecting utilization such as weather conditions and unscheduled repairs and maintenance. Contract drilling backlog excludes revenues for mobilization, demobilization, contract preparation and customer reimbursables. Changes in Diamond Offshore’s contract drilling backlog between periods are generally a function of the performance of work on term contracts, as well as the extension or modification of existing term contracts and the execution of additional contracts. In addition, under certain circumstances, Diamond Offshore’s customers may seek to terminate or renegotiate its contracts, which could adversely affect its reported backlog.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Contract drilling revenues | $ | 357 | $ | 340 | $ | 1,113 | $ | 1,141 | ||||||||
Net investment income | 1 | 1 | 1 | |||||||||||||
Investment losses | (12 | ) | ||||||||||||||
Other revenues | 11 | 9 | 30 | 69 | ||||||||||||
Total | 368 | 350 | 1,144 | 1,199 | ||||||||||||
Expenses: | ||||||||||||||||
Contract drilling expenses | 198 | 187 | 598 | 598 | ||||||||||||
Other operating expenses | ||||||||||||||||
Impairment of assets | 72 | 680 | ||||||||||||||
Other expenses | 109 | 108 | 342 | 402 | ||||||||||||
Interest | 64 | 19 | 119 | 69 | ||||||||||||
Total | 371 | 314 | 1,131 | 1,749 | ||||||||||||
Income (loss) before income tax | (3 | ) | 36 | 13 | (550 | ) | ||||||||||
Income tax (expense) benefit | 14 | (22 | ) | 35 | 78 | |||||||||||
Amounts attributable to noncontrolling interests | (5 | ) | (7 | ) | (23 | ) | 228 | |||||||||
Net income (loss) attributable to Loews Corporation | $ | 6 | $ | 7 | $ | 25 | $ | (244 | ) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Net investment income | $ | 2 | $ | 2 | $ | 4 | $ | 4 | ||||||||
Contract drilling revenues | 207 | 265 | 434 | 553 | ||||||||||||
Other revenues | 15 | 4 | 22 | 13 | ||||||||||||
Total | 224 | 271 | 460 | 570 | ||||||||||||
Expenses: | ||||||||||||||||
Contract drilling expenses | 225 | 189 | 392 | 374 | ||||||||||||
Other operating expenses | ||||||||||||||||
Impairment of assets | 27 | 27 | ||||||||||||||
Other expenses | 110 | 104 | 226 | 215 | ||||||||||||
Interest | 31 | 30 | 61 | 58 | ||||||||||||
Total | 366 | 350 | 679 | 674 | ||||||||||||
Loss before income tax | (142 | ) | (79 | ) | (219 | ) | (104) | |||||||||
Income tax benefit | 36 | 10 | 42 | 54 | ||||||||||||
Amounts attributable to noncontrolling interests | 54 | 32 | 88 | 23 | ||||||||||||
Net loss attributable to Loews Corporation | $ | (52 | ) | $ | (37 | ) | $ | (89 | ) | $ (27) | ||||||
2018
Contract drilling expense increased $11 million for the three months ended September 30, 2017 as compared with the 2016 period, primarily due to incremental operating costs for theOcean GreatWhiteof $9 million, which began operating during the first quarter of 2017, and the Ocean BlackRhino of $17 million andOcean Scepterof $5 million, both of which operated during the third quarter of 2017, compared to the third quarter of 2016 when they did not operate. These increases were partially offset by a net reduction in other rig operating and overhead costs of $20 million, primarily due to the cold stacking of theOcean Victory, the sale of six retired rigs subsequent to the third quarter of 2016 and favorable results from cost control measures that were initiated in prior periods.
Interest expense increased $45 million for the three months ended September 30, 2017 as compared with the 2016 period, primarily due to a $35 million loss related to the redemption of debt in 2017, as discussed in Note 7 of the Notes to Consolidated Condensed Financial Statements included under Item 1, and the absence of interest capitalized during construction of theOcean GreatWhite in the 2016 period of $8 million.
Net income decreased $1 million for the three months ended September 30, 2017 as compared with the 2016 period, primarily due to the changes discussed above, combined with the impact of a net income tax benefit of $14 million resulting from a mix of domestic and international earnings and losses before tax, inclusive of the loss related to the redemption of debt recognized in the third quarter of 2017.
Nine Months Ended September 30, 2017 Compared to 2016
Contract drilling revenue decreased $28 million for the nine months ended September 30, 2017 as compared with the 20162018 period, primarily due to lower average daily revenue earned by multiple rigs in the fleet, partially offset by the favorable impact of incremental revenue earning days. The decrease was driven by the absence of $40 million in demobilization revenue recognized in 2016 for theOcean Endeavor,combined withand the effect of lower dayrates earned under new contracts for both theOcean Monarchand Ocean BlackRhino, a lower dayrate being earned by theOcean Valiant under its current contract in the North Sea that commenced in the fourth quarter of 2016, the completion of the final contract for theOcean Ambassador in March of 2016 prior to the rig being sold and fewer revenue earning days, including the impact of downtime for theOcean Guardian andthe cold-stackedOcean Victory. These decreases are partially offset by incremental revenue earning days for theOcean GreatWhite and theOcean BlackRhino,which was warm-stacked for much of the prior year period, and incremental revenue earning days for active deepwater floaters.
rig maintenance. Contract drilling expense was flatincreased $36 million for the ninethree months ended SeptemberJune 30, 20172019 as compared with the 2016 period. Interest expense2018 period, primarily due to incremental amortization of previously deferred contract preparation and mobilization costs and increased $50costs for the current fleet for labor and other rig operating costs. These increases were partially offset by reduced costs for a rig which was sold in the second quarter of 2019.
Net results increased $269second quarter of 2018.
Pipelines
Each year aAgreements
Approximate projected revenues from capacity reservation and minimum bill chargesfixed fees under committed firm transportation agreements in place as of SeptemberJune 30, 2017 are2019, including agreements for transportation, storage and other services, over the remaining term of those agreements. This amount has increased by approximately $1.1 billion for 2017 and $955 million for 2018. The amount for 2018 decreased approximately $20 million from the comparable amount disclosed in the Results of Operations – Boardwalk Pipeline section of our MD&A included under Item 7 of our Annual Report on Form10-K for the year endedat December 31, 2016, due to a reduction for the Southwestern transaction, a reduction for the sale of the Flag City processing plant in May of 2017 and an increase for2018, from contracts entered into since December 31, 2016. The approximate projectedduring 2019. For Boardwalk Pipelines’ customers that are charged maximum tariff rates related to its Federal Energy Regulatory Commission regulated operating subsidiaries, the revenues expected to be earned from capacity reservation and minimum bill chargesfixed fees under committed firm agreements reflect the current tariff rate for such services for the term of the agreements, however, the tariff rates may be subject to future adjustment. The estimated revenues from fixed fees under committed firm agreements may include estimated revenues that are anticipated under executed precedent transportation agreements doesfor projects that are subject to regulatory approvals. The revenues expected to be earned from fixed fees under committed firm agreements do not include additional revenues Boardwalk PipelinePipelines has recognized and may receive
recognize under firm transportation agreements based on actual utilization of the contracted pipeline or storage capacity, any expected revenues for periods after the expiration dates of the existing agreements, execution of precedent agreements associated with growth projects or other events that occurred or will occur subsequent to SeptemberJune 30, 2017.
Partially as2019.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Other revenue, primarily operating | $ | 301 | $ | 306 | $ | 987 | $ | 961 | ||||||||
Total | 301 | 306 | 987 | 961 | ||||||||||||
Expenses: | ||||||||||||||||
Operating | 191 | 212 | 646 | 615 | ||||||||||||
Interest | 41 | 48 | 131 | 136 | ||||||||||||
Total | 232 | 260 | 777 | 751 | ||||||||||||
Income before income tax | 69 | 46 | 210 | 210 | ||||||||||||
Income tax expense | (18 | ) | (9 | ) | (46 | ) | (44 | ) | ||||||||
Amounts attributable to noncontrolling interests | (34 | ) | (23 | ) | (104 | ) | (104 | ) | ||||||||
Net income attributable to Loews Corporation | $ | 17 | $ | 14 | $ | 60 | $ | 62 | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Other revenue, primarily operating | $ 327 | $ 285 | $ 673 | $ 622 | ||||||||||||
Total | 327 | 285 | 673 | 622 | ||||||||||||
Expenses: | ||||||||||||||||
Operating | 209 | 203 | 404 | 401 | ||||||||||||
Interest | 46 | 43 | 91 | 87 | ||||||||||||
Total | 255 | 246 | 495 | 488 | ||||||||||||
Income before income tax | 72 | 39 | 178 | 134 | ||||||||||||
Income tax expense | (19 | ) | (2 | ) | (46 | ) | (14 | ) | ||||||||
Amounts attributable to noncontrolling interests | (21 | ) | (68 | ) | ||||||||||||
Net income attributable to Loews Corporation | $ 53 | $ 16 | $ 132 | $ 52 | ||||||||||||
2018
average rates.
Nineabove and the impact of the Company now owning 100% of Boardwalk Pipelines.
2018
partially offset by contract restructuring and contract expirations that were recontracted at overall lower average rates.
above and the impact of the Company now owning 100% of Boardwalk Pipelines.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Operating revenue | $ | 137 | $ | 132 | $ | 427 | $ | 426 | ||||||||
Revenues related to reimbursable expenses | 25 | 29 | 83 | 87 | ||||||||||||
Total | 162 | 161 | 510 | 513 | ||||||||||||
Expenses: | ||||||||||||||||
Operating | 124 | 120 | 375 | 372 | ||||||||||||
Reimbursable expenses | 25 | 29 | 83 | 87 | ||||||||||||
Depreciation | 15 | 17 | 46 | 47 | ||||||||||||
Equity income from joint ventures | (17 | ) | (15 | ) | (61 | ) | (27 | ) | ||||||||
Interest | 7 | 6 | 20 | 17 | ||||||||||||
Total | 154 | 157 | 463 | 496 | ||||||||||||
Income before income tax | 8 | 4 | 47 | 17 | ||||||||||||
Income tax expense | (4 | ) | (1 | ) | (23 | ) | (10 | ) | ||||||||
Net income attributable to Loews Corporation | $ | 4 | $ | 3 | $ | 24 | $ | 7 | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Operating revenue | $ 159 | $ 171 | $ 310 | $ 324 | ||||||||||||
Revenues related to reimbursable expenses | 27 | 30 | 56 | 60 | ||||||||||||
Total | 186 | 201 | 366 | 384 | ||||||||||||
Expenses: | ||||||||||||||||
Operating | 137 | 139 | 270 | 270 | ||||||||||||
Reimbursable expenses | 27 | 30 | 56 | 60 | ||||||||||||
Depreciation | 15 | 16 | 31 | 33 | ||||||||||||
Equity income from joint ventures | (16 | ) | (16 | ) | (38 | ) | (38 | ) | ||||||||
Interest | 5 | 8 | 10 | 15 | ||||||||||||
Total | 168 | 177 | 329 | 340 | ||||||||||||
Income before income tax | 18 | 24 | 37 | 44 | ||||||||||||
Income tax expense | (6 | ) | (7 | ) | (12 | ) | (14 | ) | ||||||||
Net income attributable to Loews Corporation | $ 12 | $ 17 | $ 25 | $ 30 | ||||||||||||
sale of an owned property.
2019.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Net investment income | $ | 48 | $ | 36 | $ | 109 | $ | 108 | ||||||||
Other revenues | 201 | 1 | 294 | 2 | ||||||||||||
Total | 249 | 37 | 403 | 110 | ||||||||||||
Expenses: | ||||||||||||||||
Operating | 221 | 25 | 389 | 82 | ||||||||||||
Interest | 28 | 18 | 68 | 54 | ||||||||||||
Total | 249 | 43 | 457 | 136 | ||||||||||||
Loss before income tax | - | (6 | ) | (54 | ) | (26 | ) | |||||||||
Income tax benefit | 1 | 20 | 8 | |||||||||||||
Net loss attributable to Loews Corporation | $ | - | $ | (5 | ) | $ | (34 | ) | $ | (18 | ) | |||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Net investment income | $ 33 | $ 42 | $ 117 | $ 56 | ||||||||||||
Other revenues | 223 | 217 | 439 | 430 | ||||||||||||
Total | 256 | 259 | 556 | 486 | ||||||||||||
Expenses: | ||||||||||||||||
Operating and other | 245 | 238 | 476 | 470 | ||||||||||||
Interest | 27 | 27 | 54 | 54 | ||||||||||||
Total | 272 | 265 | 530 | 524 | ||||||||||||
Income (loss) before income tax | (16 | ) | (6 | ) | 26 | (38 | ) | |||||||||
Income tax (expense) benefit | 3 | (5 | ) | 5 | ||||||||||||
Net income (loss) attributable to Loews Corporation | $ (13 | ) | $ (6 | ) | $ 21 | $ (33 | ) | |||||||||
Operatinghigher operating personnel expenses increased $196 million for the three months ended September 30, 2017 as compared with the 2016 period, primarily due to $192 million of expenses for Consolidated Container’s operations for the three months ended September 30, 2017. Operating expenses increased $307 million for the nine months ended September 30, 2017 as compared with the 2016 period, primarily due to $281 million of expenses, inclusive of expenses resulting from purchase accounting, for Consolidated Container’s operations for the period since the acquisition date. In addition, operating expenses increased due to the timing of compensation accruals and costs related to the acquisition ofat Consolidated Container, partially offset by the absence of prior year expenses related to the implementation of the 2016 Incentive Compensation Plan. Interest expense increased $10lower corporate overhead expenses.
Net results improved $5 million for the three months ended September 30, 2017 and decreased $16 million for the nine months ended September 30, 2017 as compared with the 20162018 periods primarily due to the changes discussed above.
As of October 20, 2017, there were 336,631,152 shares of Loews common stock outstanding. Depending on market and other conditions, we may purchase our shares and shares of our subsidiaries’ outstanding common stock in the open market or otherwise. During the nine months ended September 30, 2017, we purchased 0.1 million shares of Loews common stock. Wealso have an effective Registration Statement on FormS-3registration statement on file with the Securities and Exchange Commission (“SEC”) registering the future sale of an unlimited amount of our debt and equity securities.
In April We are not responsible for the liabilities and obligations of 2017, Fitch Ratings, Inc. affirmed our unsecured debt ratingsubsidiaries and there are no Parent Company guarantees.
We continue to pursue conservative financial strategies while seeking opportunities for responsible growth. $23 million.
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.
financing activities are sufficient to fund its current and expected working capital and debt obligation needs.
CNA believes that its present cash flows from operating, investing and financing activities are sufficient to fund its current and expected working capital and debt obligation needs.
For 2017, Diamond Offshore has budgeted approximately $125 million for capital expenditures.
operations, which arise during the normal course of business.
In October of 2017, S&P downgraded Diamond Offshore’s corporate credit rating to B+ fromBB- with a negative outlook. In July of 2017, Moody’s downgraded Diamond Offshore’s corporate credit rating to Ba3 with a negative outlook from Ba2 with a stable outlook. Market conditions and other factors, many of which are outside of Diamond Offshore’s control, could cause its credit ratings to be lowered. Any downgrade in Diamond Offshore’s credit ratings could adversely impact its cost of issuing additional debt and the amount of additional debt that it could issue, and could further restrict its access to capital markets and its ability to raise funds by issuing additional debt. As a consequence, Diamond Offshore may not be able to issue additional debt in amounts and/or with terms that it considers to be reasonable. One or more of these occurrences could limit Diamond Offshore’s ability to pursue other business opportunities.
agreements.
system.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
Taxable | $ | 349 | $ | 354 | $ | 1,047 | $ | 1,048 | ||||||||
Tax-exempt | 106 | 103 | 320 | 304 | ||||||||||||
Total fixed maturity securities | 455 | 457 | 1,367 | 1,352 | ||||||||||||
Limited partnership investments | 51 | 65 | 157 | 97 | ||||||||||||
Other, net of investment expense | 3 | 2 | 5 | 12 | ||||||||||||
Net investment income before tax | $ | 509 | $ | 524 | $ | 1,529 | $ | 1,461 | ||||||||
Net investment income after tax and noncontrolling interests | $ | 325 | $ | 333 | $ | 981 | $ | 940 | ||||||||
Effective income yield for the fixed maturity securities portfolio, before tax | 4.7 | % | 4.8 | % | 4.7 | % | 4.8 | % | ||||||||
Effective income yield for the fixed maturity securities portfolio, after tax | 3.4 | % | 3.4 | % | 3.4 | % | 3.4 | % |
table. Fixed income securities, as presented, include both fixed maturity securities and
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Fixed income securities: | ||||||||||||||||
Taxable fixed income securities | $ 385 | $ 354 | $ 768 | $ 704 | ||||||||||||
Tax-exempt fixed income securities | 80 | 100 | 162 | 205 | ||||||||||||
Total fixed income securities | 465 | 454 | 930 | 909 | ||||||||||||
Limited partnership and common stock investments | 43 | 42 | 139 | 73 | ||||||||||||
Other, net of investment expense | 7 | 10 | 17 | 14 | ||||||||||||
Pretax net investment income | $ 515 | $ 506 | $ 1,086 | $ 996 | ||||||||||||
Fixed income securities after tax and noncontrolling interests | $ 341 | $ 335 | $ 681 | $ 672 | ||||||||||||
Net investment income after tax and noncontrolling interests | $ 376 | $ 372 | $ 791 | $ 734 | ||||||||||||
Effective income yield for the fixed income securities portfolio, before tax | 4.8 | % | 4.7 | % | 4.8 | % | 4.7 | % | ||||||||
Effective income yield for the fixed income securities portfolio, after tax | 3.9 | % | 3.9 | % | 3.9 | % | 3.9 | % | ||||||||
Limited partnership and common stock return | 2.1 | % | 1.8 | % | 6.8 | % | 3.0 | % |
income securities. Net investment income after tax and noncontrolling interests increased $57 million for the ninesix months ended SeptemberJune 30, 2017 increased $41 million2019 as compared with the 2016 period. The increase was2018 period, driven by limited partnership investments, which returned 6.8% in 2017 as compared with 3.8% in the prior year period. Income from fixed maturity securities,
after tax and noncontrolling interests, for the nine months ended September 30, 2017 increased $13 million as compared with the 2016 period, primarily due to an increase in the invested asset base.
common stock returns.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In millions) | ||||||||||||||||
Realized investment gains (losses): | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
Corporate and other bonds | $ | 13 | $ | 18 | $ | 81 | $ | 10 | ||||||||
States, municipalities and political subdivisions | 4 | 20 | 14 | 23 | ||||||||||||
Asset-backed | (2 | ) | 5 | (7 | ) | 5 | ||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 3 | 3 | 5 | |||||||||||||
Foreign government | 1 | 1 | 1 | 3 | ||||||||||||
Total fixed maturity securities | 16 | 47 | 92 | 46 | ||||||||||||
Equity securities | (3 | ) | (5 | ) | ||||||||||||
Derivative securities | (1 | ) | 1 | (3 | ) | (12 | ) | |||||||||
Short term investments and other | 1 | 4 | 1 | |||||||||||||
Total realized investment gains | 16 | 45 | 93 | 30 | ||||||||||||
Income tax expense | (4 | ) | (15 | ) | (30 | ) | (12 | ) | ||||||||
Amounts attributable to noncontrolling interests | (2 | ) | (3 | ) | (7 | ) | (2 | ) | ||||||||
Net realized investment gains attributable to Loews Corporation | $ | 10 | $ | 27 | $ | 56 | $ | 16 | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Investment gains (losses): | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
Corporate and other bonds | $ (7 | ) | $ 9 | $ (7 | ) | $ 28 | ||||||||||
States, municipalities and political subdivisions | 4 | 6 | 12 | 26 | ||||||||||||
Asset-backed | (11 | ) | (14 | ) | (32) | |||||||||||
Total fixed maturity securities | (3 | ) | 4 | (9 | ) | 22 | ||||||||||
Non-redeemable preferred stock | 11 | (10 | ) | 53 | (25) | |||||||||||
Short term and other | (6 | ) | 3 | (11 | ) | 9 | ||||||||||
Total investment gains (losses) | 2 | (3 | ) | 33 | 6 | |||||||||||
Income tax (expense) benefit | (1 | ) | 2 | (9 | ) | 1 | ||||||||||
Amounts attributable to noncontrolling interests | (2 | ) | (1) | |||||||||||||
Net investment gains (losses) attributable to Loews Corporation | $ 1 | $ (1 | ) | $ 22 | $ 6 | |||||||||||
September 30, 2017 | December 31, 2016 | |||||||||||||||||||
Net | Net | |||||||||||||||||||
Unrealized | Unrealized | |||||||||||||||||||
Estimated | Gains | Estimated | Gains | |||||||||||||||||
Fair Value | (Losses) | Fair Value | (Losses) | |||||||||||||||||
(In millions) | ||||||||||||||||||||
U.S. Government, Government agencies and Government-sponsored enterprises | $ | 4,386 | $ | 43 | $ | 4,212 | $ | 32 | ||||||||||||
AAA | 1,899 | 143 | 1,881 | 110 | ||||||||||||||||
AA | 9,136 | 911 | 8,911 | 750 | ||||||||||||||||
A | 9,876 | 957 | 9,866 | 832 | ||||||||||||||||
BBB | 13,730 | 1,051 | 12,802 | 664 | ||||||||||||||||
Non-investment grade | 3,063 | 171 | 3,233 | 156 | ||||||||||||||||
Total | $ | 42,090 | $ | 3,276 | $ | 40,905 | $ | 2,544 | ||||||||||||
June 30, 2019 | December 31, 2018 | |||||||||||||||
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 | $ 4,336 | $ 84 | $ 4,334 | $ (24) | ||||||||||||
AAA | 3,014 | 338 | 3,027 | 245 | ||||||||||||
AA | 6,697 | 775 | 6,510 | 512 | ||||||||||||
A | 8,843 | 961 | 8,768 | 527 | ||||||||||||
BBB | 15,984 | 1,374 | 14,205 | 274 | ||||||||||||
Non-investment grade | 2,765 | 84 | 2,702 | (73) | ||||||||||||
Total | $ 41,639 | $ 3,616 | $ 39,546 | $ 1,461 | ||||||||||||
AAA rated securities included $1.2 billion and $1.3 billion of
Gross | ||||||||
Estimated | Unrealized | |||||||
September 30, 2017 | Fair Value | Losses | ||||||
(In millions) | ||||||||
U.S. Government, Government agencies and Government-sponsored enterprises | $ | 1,531 | $ | 27 | ||||
AAA | 277 | 7 | ||||||
AA | 665 | 10 | ||||||
A | 562 | 10 | ||||||
BBB | 1,015 | 21 | ||||||
Non-investment grade | 448 | 10 | ||||||
Total | $ | 4,498 | $ | 85 | ||||
June 30, 2019 | Estimated Fair Value | Gross Unrealized Losses | ||||||
(In millions) | ||||||||
U.S. Government, Government agencies and Government-sponsored enterprises | $ 256 | $ 1 | ||||||
AAA | 22 | 1 | ||||||
AA | 52 | |||||||
A | 526 | 8 | ||||||
BBB | 591 | 18 | ||||||
Non-investment grade | 753 | 29 | ||||||
Total | $ 2,200 | $ 57 | ||||||
Gross | ||||||||
Estimated | Unrealized | |||||||
September 30, 2017 | Fair Value | Losses | ||||||
(In millions) | ||||||||
Due in one year or less | $ | 53 | $ | 2 | ||||
Due after one year through five years | 742 | 16 | ||||||
Due after five years through ten years | 2,812 | 53 | ||||||
Due after ten years | 891 | 14 | ||||||
Total | $ | 4,498 | $ | 85 | ||||
June 30, 2019 | Estimated Fair Value | Gross Unrealized Losses | ||||||
(In millions) | ||||||||
Due in one year or less | $ 45 | $ 1 | ||||||
Due after one year through five years | 444 | 12 | ||||||
Due after five years through ten years | 1,477 | 27 | ||||||
Due after ten years | 234 | 17 | ||||||
Total | $ 2,200 | $ 57 |
Other Insurance Operations.
September 30, 2017 | December 31, 2016 | |||||||||||||
Effective | Effective | |||||||||||||
Estimated | Duration | Estimated | Duration | |||||||||||
Fair Value | (Years) | Fair Value | (Years) | |||||||||||
(In millions of dollars) | ||||||||||||||
Investments supportingnon-core operations | $ | 16,580 | 8.6 | $ 15,724 | 8.7 | |||||||||
Other interest sensitive investments | 26,849 | 4.4 | 26,669 | 4.6 | ||||||||||
|
| |||||||||||||
Total | $ | 43,429 | 6.0 | $ 42,393 | 6.1 | |||||||||
|
|
June 30, 2019 | December 31, 2018 | |||||||||||||||
Estimated Fair Value | Effective Duration (Years) | Estimated Fair Value | Effective Duration (Years) | |||||||||||||
(In millions of dollars) | ||||||||||||||||
Investments supporting Other Insurance Operations | $ | 17,541 | 8.9 | $ | 16,212 | 8.4 | ||||||||||
Other investments | 26,253 | 4.1 | 25,428 | 4.4 | ||||||||||||
Total | $ | 43,794 | 6.0 | $ | 41,640 | 6.0 | ||||||||||
2018.
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
(In millions) | ||||||||
Short term investments: | ||||||||
Commercial paper | $ | 658 | $ | 733 | ||||
U.S. Treasury securities | 436 | 433 | ||||||
Money market funds | 44 | 44 | ||||||
Other | 315 | 197 | ||||||
Total short term investments | $ | 1,453 | $ | 1,407 | ||||
June 30, 2019 | December 31, 2018 | |||||||
(In millions ) | ||||||||
Short term investments: | ||||||||
Commercial paper | $ 920 | $ 705 | ||||||
U.S. Treasury securities | 295 | 185 | ||||||
Other | 304 | 396 | ||||||
Total short term investments | $ 1,519 | $ 1,286 |
2019.
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) | ||||||||||||
April 1, 2019 - April 30, 2019 | 1,210,073 | $ | 49.40 | N/A | N/A | |||||||||||
May 1, 2019 - May 31, 2019 | 1,731,211 | 50.88 | N/A | N/A | ||||||||||||
June 1, 2019 - June 30, 2019 | 59,880 | 53.22 | N/A | N/A |
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Description of Exhibit | Exhibit Number | |||
31.1 | * | |||
31.2 | * | |||
32.1 | * | |||
32.2 | * | |||
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XBRL | 101.INS | * | ||
XBRL Taxonomy Extension Schema | 101.SCH | * | ||
XBRL Taxonomy Extension Calculation Linkbase | 101.CAL | * | ||
XBRL Taxonomy Extension Definition Linkbase | 101.DEF | * | ||
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XBRL Taxonomy Label Linkbase | 101.LAB | * | ||
XBRL Taxonomy Extension Presentation Linkbase | 101.PRE | * |
LOEWS CORPORATION | ||||||||
(Registrant) | ||||||||
Dated: August 5, 2019 | By: | /s/ David B. Edelson | ||||||
DAVID B. EDELSON | ||||||||
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Senior Vice President and | ||||||
Chief Financial Officer | ||||||||
(Duly authorized officer | ||||||||
and principal financial | ||||||||
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officer) |
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