2019
_____________
Delaware | 13-2646102 | |||||||
(State or other jurisdiction of | (I.R.S. Employer | |||||||
incorporation or organization) | ||||||||
Identification No.) |
Indicate
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 |
Page | |||||||
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59 | |||||
59 | |||||
59 | |||||
60 |
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 | ||||
September 30, | December 31, | |||||||
2019 | 2018 | |||||||
(Dollar amounts in millions, except per share data) | ||||||||
Assets: | ||||||||
Investments: | ||||||||
Fixed maturities, amortized cost of $38,287 and $38,234 | $ 42,489 | $ 39,699 | ||||||
Equity securities, cost of $1,315 and $1,479 | 1,317 | 1,293 | ||||||
Limited partnership investments | 2,012 | 2,424 | ||||||
Other invested assets, primarily mortgage loans | 995 | 901 | ||||||
Short term investments | 4,574 | 3,869 | ||||||
Total investments | 51,387 | 48,186 | ||||||
Cash | 442 | 405 | ||||||
Receivables | 7,622 | 7,960 | ||||||
Property, plant and equipment | 15,561 | 15,511 | ||||||
Goodwill | 772 | 665 | ||||||
Deferred non-insurance warranty acquisition expenses | 2,772 | 2,513 | ||||||
Deferred acquisition costs of insurance subsidiaries | 668 | 633 | ||||||
Other assets | 3,275 | 2,443 | ||||||
Total assets | $ 82,499 | $ 78,316 | ||||||
Liabilities and Equity: | ||||||||
Insurance reserves: | ||||||||
Claim and claim adjustment expense | $ 21,596 | $ 21,984 | ||||||
Future policy benefits | 12,305 | 10,597 | ||||||
Unearned premiums | 4,608 | 4,183 | ||||||
Total insurance reserves | 38,509 | 36,764 | ||||||
Payable to brokers | 242 | 42 | ||||||
Short term debt | 87 | 17 | ||||||
Long term debt | 11,395 | 11,359 | ||||||
Deferred income taxes | 1,141 | 841 | ||||||
Deferred non-insurance warranty revenue | 3,707 | 3,402 | ||||||
Other liabilities | 5,160 | 4,505 | ||||||
Total liabilities | 60,241 | 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 – 312,550,764 and 312,169,189 shares | 3 | 3 | ||||||
Additional paid-in capital | 3,620 | 3,627 | ||||||
Retained earnings | 16,427 | 15,773 | ||||||
Accumulated other comprehensive income (loss) | 17 | (880 | ) | |||||
20,067 | 18,523 | |||||||
Less treasury stock, at cost (13,324,637 and 100,000 shares) | (647 | ) | (5 | ) | ||||
Total shareholders’ equity | 19,420 | 18,518 | ||||||
Noncontrolling interests | 2,838 | 2,868 | ||||||
Total equity | 22,258 | 21,386 | ||||||
Total liabilities and equity | $ 82,499 | $ 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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions, except per share data) | ||||||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 1,890 | $ | 1,853 | $ | 5,517 | $ | 5,453 | ||||||||
Net investment income | 525 | 494 | 1,733 | 1,551 | ||||||||||||
Investment gains (losses): | ||||||||||||||||
Other-than-temporary impairment losses | (14 | ) | (3 | ) | (34 | ) | (9 | ) | ||||||||
Other net investment gains | 22 | 18 | 75 | 30 | ||||||||||||
Total investment gains | 8 | 15 | 41 | 21 | ||||||||||||
Non-insurance warranty revenue | 292 | 258 | 858 | 744 | ||||||||||||
Operating revenues and other | 960 | 988 | 2,906 | 3,010 | ||||||||||||
Total | 3,675 | 3,608 | 11,055 | 10,779 | ||||||||||||
Expenses: | ||||||||||||||||
Insurance claims and policyholders’ benefits | 1,614 | 1,312 | 4,323 | 3,978 | ||||||||||||
Amortization of deferred acquisition costs | 345 | 337 | 1,025 | 992 | ||||||||||||
Non-insurance warranty expense | 278 | 235 | 801 | 676 | ||||||||||||
Operating expenses and other | 1,234 | 1,224 | 3,614 | 3,637 | ||||||||||||
Interest | 144 | 146 | 449 | 430 | ||||||||||||
Total | 3,615 | 3,254 | 10,212 | 9,713 | ||||||||||||
Income before income tax | 60 | 354 | 843 | 1,066 | ||||||||||||
Income tax expense | (21 | ) | (65 | ) | (183 | ) | (149 | ) | ||||||||
Net income | 39 | 289 | 660 | 917 | ||||||||||||
Amounts attributable to noncontrolling interests | 33 | (11 | ) | 55 | (116 | ) | ||||||||||
Net income attributable to Loews Corporation | $ | 72 | $ | 278 | $ | 715 | $ | 801 | ||||||||
Basic net income per share | $ | 0.24 | $ | 0.88 | $ | 2.34 | $ | 2.50 | ||||||||
Diluted net income per share | $ | 0.24 | $ | 0.88 | $ | 2.34 | $ | 2.49 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Shares of common stock | 301.65 | 315.90 | 305.08 | 320.81 | ||||||||||||
Dilutive potential shares of common stock | 0.70 | 0.91 | 0.65 | 0.92 | ||||||||||||
Total weighted average shares outstanding assuming dilution | 302.35 | 316.81 | 305.73 | 321.73 | ||||||||||||
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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Net income | $ | 39 | $ | 289 | $ | 660 | $ | 917 | ||||||||
Other comprehensive income (loss), after tax | ||||||||||||||||
Changes in: | ||||||||||||||||
Net unrealized gains (losses) on investments with other- | (1 | ) | 4 | (11 | ) | |||||||||||
Net other unrealized gains (losses) on investments | 41 | (158 | ) | 1,003 | (746 | ) | ||||||||||
Total unrealized gains (losses) on investments | 41 | (159 | ) | 1,007 | (757 | ) | ||||||||||
Unrealized gains (losses) on cash flow hedges | (4 | ) | (16 | ) | 14 | |||||||||||
Pension liability | 10 | 8 | 25 | 27 | ||||||||||||
Foreign currency translation | (31 | ) | (11 | ) | (41 | ) | ||||||||||
Other comprehensive income (loss) | 16 | (151 | ) | 1,005 | (757 | ) | ||||||||||
Comprehensive income | 55 | 138 | 1,665 | 160 | ||||||||||||
Amounts attributable to noncontrolling interests | 31 | 7 | (53 | ) | (34 | ) | ||||||||||
Total comprehensive income attributable to Loews Corporation | $ | 86 | $ | 145 | $ | $ | 126 | |||||||||
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, July 1, 2018 | $ | 21,858 | $ | 3 | $ | 3,809 | $ | 16,532 | $ | (625 | ) | $ | (808 | ) | $ | 2,947 | ||||||||||||
Net income | 289 | 278 | 11 | |||||||||||||||||||||||||
Other comprehensive loss | (151 | ) | (133 | ) | (18 | ) | ||||||||||||||||||||||
Dividends paid ($0.0625 per share) | (30 | ) | (20 | ) | (10 | ) | ||||||||||||||||||||||
Purchases of Loews treasury stock | (88 | ) | (88 | ) | ||||||||||||||||||||||||
Stock-based compensation | 11 | 9 | 2 | |||||||||||||||||||||||||
Other | (3 | ) | (5 | ) | 2 | |||||||||||||||||||||||
Balance, September 30, 2018 | $ | 21,886 | $ | 3 | $ | 3,813 | $ | 16,790 | $ | (758 | ) | $ | (896 | ) | $ | 2,934 | ||||||||||||
Balance, July 1, 2019 | $ | 22,394 | $ | 3 | $ | 3,612 | $ | 16,374 | $ | 3 | $ | (478 | ) | $ | 2,880 | |||||||||||||
Net income | 39 | 72 | (33 | ) | ||||||||||||||||||||||||
Other comprehensive income | 16 | 14 | 2 | |||||||||||||||||||||||||
Dividends paid ($0.0625 per share) | (29 | ) | (19 | ) | (10 | ) | ||||||||||||||||||||||
Purchases of Loews treasury stock | (169 | ) | (169 | ) | ||||||||||||||||||||||||
Purchases of subsidiary stock from noncontrolling interests | (2 | ) | (2 | ) | ||||||||||||||||||||||||
Stock-based compensation | 9 | 8 | 1 | |||||||||||||||||||||||||
Balance, September 30, 2019 | $ | 22,258 | $ | 3 | $ | 3,620 | $ | 16,427 | $ | 17 | $ | (647 | ) | $ | 2,838 | |||||||||||||
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 | 917 | 801 | 116 | |||||||||||||||||||||||||
Other comprehensive loss | (757 | ) | (675 | ) | (82 | ) | ||||||||||||||||||||||
Dividends paid ($0.1875 per share) | (170 | ) | (60 | ) | (110 | ) | ||||||||||||||||||||||
Purchase of Boardwalk Pipeline s common units | (1,718 | ) | 658 | (29 | ) | (2,347 | ) | |||||||||||||||||||||
Purchases of Loews treasury stock | (876 | ) | (876 | ) | ||||||||||||||||||||||||
Stock-based compensation | 19 | 10 | 9 | |||||||||||||||||||||||||
Other | (4 | ) | (6 | ) | (4 | ) | 6 | |||||||||||||||||||||
Balance, September 30, 2018 | $ | 21,886 | $ | 3 | $ | 3,813 | $ | 16,790 | $ | (758 | ) | $ | (896 | ) | $ | 2,934 | ||||||||||||
Balance, January 1, 2019 | $ | 21,386 | $ | 3 | $ | 3,627 | $ | 15,773 | $ | (880 | ) | $ | (5 | ) | $ | 2,868 | ||||||||||||
Net income | 660 | 715 | (55 | ) | ||||||||||||||||||||||||
Other comprehensive income | 1,005 | 897 | 108 | |||||||||||||||||||||||||
Dividends paid ($0.1875 per share) | (145 | ) | (57 | ) | (88 | ) | ||||||||||||||||||||||
Purchases of Loews treasury stock | (642 | ) | (642 | ) | ||||||||||||||||||||||||
Purchases of subsidiary stock from noncontrolling interests | (18 | ) | (18 | ) | ||||||||||||||||||||||||
Stock-based compensation | 17 | (5 | ) | 22 | ||||||||||||||||||||||||
Other | (5 | ) | (2 | ) | (4 | ) | 1 | |||||||||||||||||||||
Balance, September 30, 2019 | $ | 22,258 | $ | 3 | $ | 3,620 | $ | 16,427 | $ | 17 | $ | (647 | ) | $ | 2,838 | |||||||||||||
Nine Months Ended September 30 | 2019 | 2018 | ||||||
(In millions) | ||||||||
Operating Activities: | ||||||||
Net income | $ | 660 | $ | 917 | ||||
Adjustments to reconcile net income to net cash provided (used) by operating activities, net | 747 | 1,121 | ||||||
Changes in operating assets and liabilities, net: | ||||||||
Receivables | 179 | 18 | ||||||
Deferred acquisition costs | (37 | ) | (24 | ) | ||||
Insurance reserves | 337 | 108 | ||||||
Other assets | (386 | ) | (169 | ) | ||||
Other liabilities | 315 | (75 | ) | |||||
Trading securities | (544 | ) | 1,499 | |||||
Net cash flow provided by operating activities | 1,271 | 3,395 | ||||||
Investing Activities: | ||||||||
Purchases of fixed maturities | (7,053 | ) | (8,244 | ) | ||||
Proceeds from sales of fixed maturities | 4,872 | 6,622 | ||||||
Proceeds from maturities of fixed maturities | 2,116 | 1,838 | ||||||
Purchases of limited partnership investments | (167 | ) | (381 | ) | ||||
Proceeds from sales of limited partnership investments | 680 | 382 | ||||||
Purchases of property, plant and equipment | (743 | ) | (731 | ) | ||||
Acquisitions | (257 | ) | (14 | ) | ||||
Dispositions | 137 | 110 | ||||||
Change in short term investments | 26 | (126 | ) | |||||
Other, net | (95 | ) | (173 | ) | ||||
Net cash flow used by investing activities | (484 | ) | (717 | ) | ||||
Financing Activities: | ||||||||
Dividends paid | (57 | ) | (60 | ) | ||||
Dividends paid to noncontrolling interests | (88 | ) | (110 | ) | ||||
Purchases of Loews treasury stock | (643 | ) | (889 | ) | ||||
Purchases of subsidiary stock from noncontrolling interests | (18 | ) | ||||||
Purchase of Boardwalk Pipeline s common units | (1,504 | ) | ||||||
Principal payments on debt | (1,796 | ) | (780 | ) | ||||
Issuance of debt | 1,870 | 693 | ||||||
Other, net | (15 | ) | 75 | |||||
Net cash flow used by financing activities | (747 | ) | (2,575 | ) | ||||
Effect of foreign exchange rate on cash | (3 | ) | (4 | ) | ||||
Net change in cash | 37 | 99 | ||||||
Cash, beginning of period | 405 | 472 | ||||||
Cash, end of period | $ | 442 | $ | 571 | ||||
2018.
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, but does not expect the impact to be material.
2. Acquisition of2019, Consolidated Container Company
On May 22, 2017, the Company completed the previously announced acquisitionpaid approximately $260 million to complete
approximately $106 million of goodwill and approximately $90 million of intangible assets, primarily related to customer relationships, and are subject to change within the respective measurement periods. The acquisition wasacquisitions were funded with approximately $620$250 million of parent company cash and debt financing proceeds at Consolidated Container, of $600 million, as discussed in Note 7. The following table summarizes the preliminary allocation7, and available cash.
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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securities | $ | 452 | $ | 449 | $ | 1,362 | $ | 1,339 | ||||||||
Limited partnership investments | 16 | 34 | 140 | 142 | ||||||||||||
Short term investments | 13 | 10 | 42 | 30 | ||||||||||||
Equity securities | 16 | 10 | 62 | 32 | ||||||||||||
Income ( from trading portfolio (a)loss ) | 34 | (7 | ) | 144 | 13 | |||||||||||
Other | 13 | 12 | 39 | 40 | ||||||||||||
Total investment income | 544 | 508 | 1,789 | 1,596 | ||||||||||||
Investment expenses | (19 | ) | (14 | ) | (56 | ) | (45 | ) | ||||||||
Net investment income | $ | 525 | $ | 494 | $ | 1,733 | $ | 1,551 | ||||||||
(a) | Net unrealized gains (losses) related to changes in fair value on |
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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securities | $ | 3 | $ | 10 | $ | (6 | ) | $ | 32 | |||||||
Equity securities | 7 | 2 | 60 | (23 | ) | |||||||||||
Derivative instruments | (2 | ) | 1 | (13 | ) | 10 | ||||||||||
Short term investments and other | 2 | 2 | ||||||||||||||
Investment gains (a) | $ | 8 | $ | 15 | $ | 41 | $ | 21 | ||||||||
(a) | Gross During the three and nine months ended September 30, 2019, $7 and $60 of Net investment gains were recognized due to the change in fair value of non-redeemable preferred stock still held as of September 30, 2019. During the three and nine months ended September 30, 2018, $2 of Net investment gains and $23 of Net investment losses were recognized due to the change in fair value ofnon-redeemable preferred stock still held as of September 30, 2018. |
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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securities available-for-sale: | ||||||||||||||||
$ | 12 | $ | 1 | $ | 24 | $ | 6 | |||||||||
2 | 2 | 10 | 3 | |||||||||||||
Net OTTI losses recognized in earnings | $ | 14 | $ | 3 | $ | 34 | $ | 9 | ||||||||
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 | ) | |||||||||
September 30, 2019 | Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Unrealized OTTI Losses (Gains) | ||||||||||||||||
(In millions) | |||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||
$ | 19,806 | $ | 2,263 | $ | 42 | $ | 22,027 | ||||||||||||||
9,154 | 1,641 | 10,795 | |||||||||||||||||||
Residential mortgage-backed | 4,718 | 157 | 1 | 4,874 | $ | (23 | ) | ||||||||||||||
Commercial mortgage-backed | 2,066 | 117 | 3 | 2,180 | 1 | ||||||||||||||||
Other asset-backed | 1,884 | 46 | 4 | 1,926 | (3 | ) | |||||||||||||||
8,668 | 320 | 8 | 8,980 | (25 | ) | ||||||||||||||||
124 | 7 | 131 | |||||||||||||||||||
491 | 20 | 511 | |||||||||||||||||||
10 | 10 | ||||||||||||||||||||
Fixed maturities available-for-sale | 38,253 | 4,251 | 50 | 42,454 | (25 | ) | |||||||||||||||
Fixed maturities trading | 34 | 1 | 35 | ||||||||||||||||||
Total fixed maturity securities | $ | 38,287 | $ | 4,252 | $ | 50 | $ | 42,489 | $ | (25 | ) | ||||||||||
December 31, 2018 | |||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||
$ | 18,764 | $ | 791 | $ | 395 | $ | 19,160 | ||||||||||||||
9,681 | 1,076 | 9 | 10,748 | ||||||||||||||||||
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 | |||||||||||||||||
8,990 | 107 | 113 | 8,984 | (20 | ) | ||||||||||||||||
156 | 3 | 159 | |||||||||||||||||||
480 | 5 | 4 | 481 | ||||||||||||||||||
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 September 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$2.0 billion and $909$964 million (after tax and noncontrolling interests).
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 | |||||||||||||||||||||||
September 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: | |||||||||||||||||||||||||
$ | 890 | $ | 26 | $ | 200 | $ | 16 | $ | 1,090 | $ | 42 | ||||||||||||||
20 | 2 | 22 | |||||||||||||||||||||||
Residential mortgage-backed | 150 | 38 | 1 | 188 | 1 | ||||||||||||||||||||
Commercial mortgage-backed | 83 | 2 | 26 | 1 | 109 | 3 | |||||||||||||||||||
Other asset-backed | 416 | 3 | 6 | 1 | 422 | 4 | |||||||||||||||||||
649 | 5 | 70 | 3 | 719 | 8 | ||||||||||||||||||||
14 | 4 | 18 | |||||||||||||||||||||||
17 | 2 | 19 | |||||||||||||||||||||||
Total fixed maturity securities | $ | 1,590 | $ | 31 | $ | 278 | $ | 19 | $ | 1,868 | $ | 50 | |||||||||||||
December 31, 2018 | |||||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||
$ | 8,543 | $ | 340 | $ | 825 | $ | 55 | $ | 9,368 | $ | 395 | ||||||||||||||
517 | 8 | 5 | 1 | 522 | 9 | ||||||||||||||||||||
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 | |||||||||||||||||||
3,494 | 54 | 1,641 | 59 | 5,135 | 113 | ||||||||||||||||||||
21 | 19 | 40 | |||||||||||||||||||||||
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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Beginning balance of credit losses on fixed maturity securities | $ | 16 | $ | 21 | $ | 18 | $ | 27 | ||||||||
Reductions for securities sold during the period | (2 | ) | (2 | ) | (8 | ) | ||||||||||
Ending balance of credit losses on fixed maturity securities | $ | 16 | $ | 19 | $ | 16 | $ | 19 | ||||||||
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 | ||||||||||||
September 30, 2019 | December 31, 2018 | |||||||||||||||
Cost or | Estimated | Cost or | Estimated | |||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
Cost | Value | Cost | Value | |||||||||||||
(In millions) | ||||||||||||||||
Due in one year or less | $ | 1,071 | $ | 1,091 | $ | 1,350 | $ | 1,359 | ||||||||
Due after one year through five years | 10,992 | 11,470 | 7,979 | 8,139 | ||||||||||||
Due after five years through ten years | 13,694 | 14,711 | 16,859 | 16,870 | ||||||||||||
Due after ten years | 12,496 | 15,182 | 11,893 | 13,174 | ||||||||||||
Total | $ | 38,253 | $ | 42,454 | $ | 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 |
September 30, 2019 | December 31, 2018 | |||||||||||||||||||||||
Contractual/ | Contractual/ | |||||||||||||||||||||||
Notional | Estimated Fair Value | Notional | Estimated Fair Value | |||||||||||||||||||||
Amount | Asset | (Liability) | Amount | Asset | (Liability) | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
With hedge designation: | ||||||||||||||||||||||||
Interest rate swaps | $ | 715 | $ | (13 | ) | $ | 500 | $ | 11 | |||||||||||||||
Without hedge designation: | ||||||||||||||||||||||||
Equity markets: | ||||||||||||||||||||||||
Options – purchased | 150 | $ | 4 | 213 | 18 | |||||||||||||||||||
– written | 98 | (3 | ) | 239 | $ | (17 | ) | |||||||||||||||||
Commodity futures – long | 32 | |||||||||||||||||||||||
Embedded derivative on funds withheld liability | 170 | (9 | ) | 172 | 4 |
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.
September 30, 2019 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
Corporate bonds and other | $ | 161 | $ | 22,090 | $ | 428 | $ | 22,679 | ||||||||
States, municipalities and political subdivisions | 10,795 | 10,795 | ||||||||||||||
Asset-backed | 8,784 | 196 | 8,980 | |||||||||||||
Fixed maturities available-for-sale | 161 | 41,669 | 624 | 42,454 | ||||||||||||
Fixed maturities trading | 31 | 4 | 35 | |||||||||||||
Total fixed maturities | $ | 161 | $ | 41,700 | $ | 628 | $ | 42,489 | ||||||||
Equity securities | $ | 641 | $ | 653 | $ | 23 | $ | 1,317 | ||||||||
Short term and other | 3,306 | 1,163 | 4,469 | |||||||||||||
Payable to brokers | (30 | ) | (14 | ) | (44 | ) | ||||||||||
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:
Net Realized Investment Gains (Losses) and Net Change in Unrealized Investment Gains (Losses) | Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and | Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and | ||||||||||||||||||||||||||||||||||||||||||
2019 | Balance, July 1 | Included in Net Income (Loss) | Included OCI | Purchases | Sales | Settlements | Transfers into Level 3 | Transfers out of Level 3 | Balance, September 30 | Liabilities Held at September 30 | Liabilities Held at September 30 | |||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||||||||||||||
Corporate bonds and other | $ | 338 | $ | 14 | $ | 79 | $ | (3 | ) | $ | 428 | $ | 14 | |||||||||||||||||||||||||||||||
Asset-backed | 193 | 1 | 22 | (4 | ) | $ | (16 | ) | 196 | 2 | ||||||||||||||||||||||||||||||||||
Fixed maturities available-for-sale | 531 | $ | - | 15 | 101 | $ | - | (7 | ) | $ | - | (16 | ) | 624 | $ | - | 16 | |||||||||||||||||||||||||||
Fixed maturities trading | 4 | 4 | ||||||||||||||||||||||||||||||||||||||||||
Total fixed maturities | $ | 535 | $ | - | $ | 15 | $ | 101 | $ | - | $ | (7 | ) | $ | - | $ | (16 | ) | $ | 628 | $ | - | $ | 16 | ||||||||||||||||||||
Equity securities | $ | 23 | $ | 23 |
Net Realized Investment Gains (Losses) and Net Change in Unrealized Investment Gains (Losses) | Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and | Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and | ||||||||||||||||||||||||||||||||||||||||||
2018 | 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 | Liabilities Held at September 30 | |||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||||||||||||||
Corporate bonds and other | $ | 94 | $ | 67 | $ | (3 | ) | $ | 30 | $ | 188 | |||||||||||||||||||||||||||||||||
States, subdivisions | 1 | (1 | ) | - | ||||||||||||||||||||||||||||||||||||||||
Asset-backed | 273 | $ | (2 | ) | 55 | (25 | ) | 29 | $ | (32 | ) | 298 | $ | (2 | ) | $ | 1 | |||||||||||||||||||||||||||
Fixed maturities available-for-sale | 368 | (2 | ) | $ | - | 122 | $ | - | (29 | ) | 59 | (32 | ) | 486 | (2 | ) | 1 | |||||||||||||||||||||||||||
Fixed maturities | 7 | (1 | ) | 6 | ||||||||||||||||||||||||||||||||||||||||
Total fixed maturities | $ | 375 | $ | (2 | ) | $ | - | $ | 122 | $ | (1 | ) | $ | (29 | ) | $ | 59 | $ | (32 | ) | $ | 492 | $ | (2 | ) | $ | 1 | |||||||||||||||||
Equity securities | $ | 18 | $ | 1 | $ | 19 | $ | 1 |
Net Realized Investment Gains (Losses) and Net Change in Unrealized Investment Gains (Losses) | Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and | Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and | ||||||||||||||||||||||||||||||||||||||||||
2019 | Balance, January 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 | Liabilities Held at September 30 | |||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||
Fixed maturity | ||||||||||||||||||||||||||||||||||||||||||||
Corporate bonds and other | $ | 222 | $ | 34 | $ | 211 | $ | (7 | ) | $ | (32 | ) | $ | 428 | $ | 29 | ||||||||||||||||||||||||||||
Asset-backed | 197 | 8 | 42 | (12 | ) | $ | 45 | (84 | ) | 196 | 9 | |||||||||||||||||||||||||||||||||
Fixed maturities available-for-sale | 419 | $ | - | 42 | 253 | $ | - | (19 | ) | 45 | (116 | ) | 624 | $ | - | 38 | ||||||||||||||||||||||||||||
Fixed maturities trading | 6 | (2 | ) | 4 | (2 | ) | ||||||||||||||||||||||||||||||||||||||
Total fixed maturities | $ | 425 | $ | (2 | ) | $ | 42 | $ | 253 | $ | - | $ | (19 | ) | $ | 45 | $ | (116 | ) | $ | 628 | $ | (2 | ) | $ | 38 | ||||||||||||||||||
Equity securities | $ | 19 | $ | 2 | $ | 2 | $ | 23 | $ | 2 |
Unrealized | ||||||||||||||||||||||||||||||||||||||||||||
Gains | ||||||||||||||||||||||||||||||||||||||||||||
Unrealized | (Losses) | |||||||||||||||||||||||||||||||||||||||||||
Gains | Recognized in | |||||||||||||||||||||||||||||||||||||||||||
(Losses) | Other | |||||||||||||||||||||||||||||||||||||||||||
Net Realized 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 | ||||||||||||||||||||||||||||||||||||||||||
2018 | Balance, January 1 | Included in Net (Loss) | Included in OCI | Purchases | Sales | Settlements | Transfers into Level 3 | Transfers out of Level 3 | Balance, September 30 | Liabilities Held at September 30 | Liabilities Held at September 30 | |||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||||||||||||||
Corporate bonds and other | $ | 98 | $ | (1 | ) | $ | (1 | ) | $ | 69 | $ | (5 | ) | $ | (7 | ) | $ | 35 | $ | 188 | $ | (2 | ) | |||||||||||||||||||||
States, municipalities and political subdivisions | 1 | (1 | ) | - | ||||||||||||||||||||||||||||||||||||||||
Asset-backed | 335 | 5 | (6 | ) | 126 | (72 | ) | (37 | ) | 42 | $ | (95 | ) | 298 | $ | (2 | ) | (2 | ) | |||||||||||||||||||||||||
Fixed maturities available-for-sale | 434 | 4 | (7 | ) | 195 | (77 | ) | (45 | ) | 77 | (95 | ) | 486 | (2 | ) | (4 | ) | |||||||||||||||||||||||||||
Fixed maturities trading | 4 | 3 | (1 | ) | 6 | 2 | ||||||||||||||||||||||||||||||||||||||
Total fixed maturities | $ | 438 | $ | 7 | $ | (7 | ) | $ | 195 | $ | (78 | ) | $ | (45 | ) | $ | 77 | $ | (95 | ) | $ | 492 | $ | - | $ | (4 | ) | |||||||||||||||||
Equity securities | $ | 22 | $ | (2 | ) | $ | (1 | ) | $ | 19 | $ | (2 | ) |
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.
September 30, 2019 | Estimated Fair Value | Valuation Techniques | Unobservable Inputs | Range (Weighted Average) | ||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securities | $ | 496 | Discounted cash flow | Credit spread | 1% – | |||||||||||
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 | |||||||||||||||||||
September 30, 2019 | Amount | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
(In millions) | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Other invested assets, primarily mortgage loans | $ | 923 | $ | 950 | | $ | 950 | |||||||||||||
Liabilities: | ||||||||||||||||||||
Short term debt | 85 | $ | 9 | 76 | 85 | |||||||||||||||
Long term debt | 11,383 | 10,638 | 595 | 11,233 | ||||||||||||||||
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 | ||||
Nine Months Ended September 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 | 3,968 | 3,866 | ||||||
Increase (decrease) in provision for insured events of prior years | (65 | ) | (173 | ) | ||||
Amortization of discount | 143 | 136 | ||||||
Total net incurred (a) | 4,046 | 3,829 | ||||||
Net payments attributable to: | ||||||||
Current year events | (599 | ) | (658 | ) | ||||
Prior year events | (3,547 | ) | (3,415 | ) | ||||
Total net payments | (4,146 | ) | (4,073 | ) | ||||
Foreign currency translation adjustment and other | 29 | (80 | ) | |||||
Net reserves, end of period | 17,894 | 17,746 | ||||||
Ceded reserves, end of period | 3,702 | 3,858 | ||||||
Gross reserves, end of period | $ | 21,596 | $ | 21,604 | ||||
(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 the property of
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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Medical professional liability | $ | 29 | $ | 15 | $ | 59 | $ | 38 | | |||||||
Other professional liability and management liability | (18 | ) | (45 | ) | (37 | ) | (113 | ) | ||||||||
Surety | (43 | ) | (20 | ) | (83 | ) | (50 | ) | ||||||||
Commercial auto | (16 | ) | 1 | (24 | ) | |||||||||||
General liability | 43 | (5 | ) | 36 | 13 | |||||||||||
Workers’ compensation | 7 | (2 | ) | 2 | (14 | ) | ||||||||||
Other | 14 | (6 | ) | 18 | (34 | ) | ||||||||||
Total pretax (favorable) unfavorable development | $ | 16 | $ | (62 | ) | $ | (29 | ) | $ | (160 | ) | |||||
2017
Favorable development in other professional and management liability was primarily due to lower than expected claim frequency in accident years 2012 through 2015, primarily for professional liability products.
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 2015 and 2016, as well as a large favorable recovery on a claim in accident year 2012.
Favorable development for other coverages reflects better than expected emergence in Canadianrun-off business in accident years 2014 and prior.
2016
Unfavorable development for medical professional liability was primarily due to higher than expected indemnity severity in accident years 2016 through 2018 in CNA’s aging services business.
through 2017.
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 onindividual claims in accident years 2013 and prior in financial institutions.
Nine Months
higher than expected severity in accident year 2017
in CNA’s dentists business.
Favorable developmentand 2017 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 primarily 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-offCNA’s hospitals business in accident years 2014 and prior, as well as several favorable settlements relating to large claims in the Europe Professional Indemnity portfolio. Additional favorable development related to better than expected frequency in accident years 2014 through 2016 for property and marine. This was partially offset by unfavorable development related to higher than expected 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 related to higher than expected large loss emergence in hospitals and higher than expected frequency and severity in aging services in accident years 2014 and 2015 in CNA’s aging services business.
through 2017.
Favorable development in surety coverages was primarily due to lower than expected claim frequency of large lossesfor accident years 2013 through 2017 related to financial institutions and professional liability errors and omissions (“E&O”)
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 toloss emergence for accident years 2009 through 2014.
2017 and prior.
year 2017, for property and increased severity in accident year 2017 related to professional indemnity.
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 | Nine Months Ended | |||||||||||||||
September 30, | September 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 | (7 | ) | (12 | ) | (43 | ) | (84 | ) | ||||||||
Pretax impact of deferred retroactive reinsurance | $ | (7 | ) | $ | (12 | ) | $ | (43 | ) | $ | 13 | |||||
its provision for uncollectible third party reinsurance.
2018 and is included within Other liabilities on the Consolidated Condensed Balance Sheets.
7. Debt
has the ability to increase policy premiums, subject to state regulatory approval.
Year Ended December 31 | ||||
(In millions) | ||||
2019 | $ | 75 | ||
2020 | 79 | |||
2021 | 79 | |||
2022 | 68 | |||
2023 | 57 | |||
Thereafter | 344 | |||
Total | $ | 702 | ||
Operating | ||||
As of September 30, 2019 | Leases | |||
(In millions) | ||||
2019 (a) | $ | 25 | ||
2020 | 111 | |||
2021 | 109 | |||
2022 | 98 | |||
2023 | 87 | |||
Thereafter | 435 | |||
Total | 865 | |||
Less: discount | 171 | |||
Total lease liabilities | $ | 694 | ||
(a) | For the three-month period beginning October 1, 2019. |
As of September 30, 2019 | |||||
Weighted average remaining lease term | 9.5 | 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 $500outstanding $350 million aggregate principal amount of
Consolidated Container
In the second quarter of 2017,2019, Consolidated Container entered into a credit agreement providing for a $605$250 million term loan and a five year $125 million asset based lending facility (“ABL facility”) in conjunction with the acquisitionacquisitions discussed in Note 2. The term loan is a variable rate facility which bears interest at a floating rate equal to the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 3.5%, subject to a 1.0% floor. The term loan and matures on May 22, 2024 and requires annual principal amortizationJune 14, 2026.
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, July 1, 2018 | $ | 17 | $ | 244 | $ | 13 | $ | (774 | ) | $ | (125 | ) | $ | (625 | ) | |||||||||
Other comprehensive income (loss) before reclassifications, after tax of $0, $40, $(2), $0 and $0 | (1 | ) | (148 | ) | (149 | ) | ||||||||||||||||||
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $0, $2, $0, $(1) and $0 | (10 | ) | 8 | (2 | ) | |||||||||||||||||||
Other comprehensive income (loss) | (1 | ) | (158 | ) | - | 8 | - | (151 | ) | |||||||||||||||
Amounts attributable to noncontrolling interests | 17 | 1 | 18 | |||||||||||||||||||||
Balance, September 30, 2018 | $ | 16 | $ | 103 | $ | 13 | $ | (765 | ) | $ | (125 | ) | $ | (758 | ) | |||||||||
Balance, July 1, 2019 | $ | 18 | $ | 917 | $ | (7 | ) | $ | (780 | ) | $ | (145 | ) | $ | 3 | |||||||||
Other comprehensive income (loss) before reclassifications, after tax of $0, $(11), $1, $0 and $0 | 44 | (4 | ) | (31 | ) | 9 | ||||||||||||||||||
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $0, $0, $0, $(2) and $0 | (3 | ) | 10 | 7 | ||||||||||||||||||||
Other comprehensive income (loss) | - | 41 | (4 | ) | 10 | (31 | ) | 16 | ||||||||||||||||
Amounts attributable to noncontrolling interests | (5 | ) | 3 | (2 | ) | |||||||||||||||||||
Balance, September 30, 2019 | $ | 18 | $ | 953 | $ | (11 | ) | $ | (770 | ) | $ | (173 | ) | $ | 17 | |||||||||
Total | ||||||||||||||||||||||||
OTTI Gains | Unrealized Gains | Cash Flow | Pension | Foreign Currency | Accumulated Other 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, $190, $(4), $0 and $0 | (12 | ) | (718 | ) | 12 | (41 | ) | (759 | ) | |||||||||||||||
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $0 , $7, $0, $(6) and $0 | 1 | (28 | ) | 2 | 27 | 2 | ||||||||||||||||||
Other comprehensive income (loss) | (11 | ) | (746 | ) | 14 | 27 | (41 | ) | (757 | ) | ||||||||||||||
Amounts attributable to noncontrolling interests | 1 | 78 | (1 | ) | 4 | 82 | ||||||||||||||||||
Purchase of Boardwalk Pipelines common units | (1 | ) | (28 | ) | (29 | ) | ||||||||||||||||||
Balance, September 30, 2018 | $ | 16 | $ | 103 | $ | 13 | $ | (765 | ) | $ | (125 | ) | $ | (758 | ) | |||||||||
Balance, January 1, 2019 | $ | 14 | $ | 57 | $ | 5 | $ | (793 | ) | $ | (163 | ) | $ | (880 | ) | |||||||||
Other comprehensive income (loss) before reclassifications, after tax of $(2), $(265), $5, $0 and $0 | 3 | 999 | (16 | ) | (1 | ) | (11 | ) | 974 | |||||||||||||||
Reclassification of losses from accumulated other comprehensive income, after tax of $0, $(1), $0, $(7) and $0 | 1 | 4 | 26 | 31 | ||||||||||||||||||||
Other comprehensive income (loss) | 4 | 1,003 | (16 | ) | 25 | (11 | ) | 1,005 | ||||||||||||||||
Amounts attributable to noncontrolling interests | (107 | ) | (2 | ) | 1 | (108 | ) | |||||||||||||||||
Balance, September 30, 2019 | $ | 18 | $ | 953 | $ | (11 | ) | $ | (770 | ) | $ | (173 | ) | $ | 17 | |||||||||
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 |
|
2018.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Non-insurance warranty services – CNA Financial | $ | | $ | | $ | 858 | | $ | 744 | |||||||
Contract drilling – Diamond Offshore | 254 | 287 | 704 | 851 | ||||||||||||
Transportation and storage of natural gas and NGLs and other services – Boardwalk Pipelines | 287 | 274 | 947 | 886 | ||||||||||||
Lodging and related services – Loews Hotels & Co | 147 | 167 | 512 | 550 | ||||||||||||
Rigid plastic packaging and recycled resin – Corporate | 252 | 223 | 689 | 652 | ||||||||||||
Total revenues from contracts with customers | 940 | 951 | 2,852 | 2,939 | ||||||||||||
Other revenues | 20 | 37 | 54 | 71 | ||||||||||||
Operating revenues and other | $ | 960 | | $ | 988 | $ | 2,906 | $ | 3,010 | |||||||
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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Service cost | $ | 2 | $ | 2 | $ | 5 | $ | 6 | ||||||||
Interest cost | 29 | 27 | 88 | 82 | ||||||||||||
Expected return on plan assets | (39 | ) | (44 | ) | (119 | ) | (134 | ) | ||||||||
Amortization of unrecognized net loss | 10 | 11 | 33 | 32 | ||||||||||||
Settlement charge | 1 | 3 | 7 | |||||||||||||
Curtailment gain | (1 | ) | (1 | ) | ||||||||||||
Net periodic (benefit) cost | $ | 2 | $ | (4 | ) | $ | 9 | $ | (7 | ) | ||||||
Other Postretirement Benefits | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2019 | 2018 | 2018 | ||||||||||||||
(In millions) | ||||||||||||||||
Interest cost | $ | 1 | $ | 1 | $ | 2 | $ | 2 | ||||||||
Expected return on plan assets | (1 | ) | (2 | ) | (3 | ) | ||||||||||
Amortization of unrecognized prior service benefit | (1 | ) | (2 | ) | ||||||||||||
Amortization of unrecognized net gain | (1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
Net periodic (benefit) cost | $ | - | $ | (2 | ) | $ | (1 | ) | $ | (4 | ) | |||||
|
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 September 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
CNA | Diamond | Boardwalk | Loews | |||||||||||||||||||||
Three Months Ended September 30, 2019 | Financial | Offshore | Pipelines | Hotels & Co | Corporate | Total | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Insurance premiums | $ | 1,890 | $ | 1,890 | ||||||||||||||||||||
Net investment income | 487 | $ | 2 | $ | 36 | 525 | ||||||||||||||||||
Investment gains | 8 | 8 | ||||||||||||||||||||||
Non-insurance warranty revenue | 292 | 292 | ||||||||||||||||||||||
Operating revenues and other | 9 | 249 | $ | 296 | $ | 156 | 250 | 960 | ||||||||||||||||
Total | 2,686 | 251 | 296 | 156 | 286 | 3,675 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Insurance claims and policyholders’ benefits | 1,614 | 1,614 | ||||||||||||||||||||||
Amortization of deferred acquisition costs | 345 | 345 | ||||||||||||||||||||||
Non-insurance warranty expense | 278 | 278 | ||||||||||||||||||||||
Operating expenses and other | 291 | 322 | 212 | 145 | 264 | 1,234 | ||||||||||||||||||
Interest | 31 | 31 | 45 | 6 | 31 | 144 | ||||||||||||||||||
Total | 2,559 | 353 | 257 | 151 | 295 | 3,615 | ||||||||||||||||||
Income (loss) before income tax | 127 | (102 | ) | 39 | 5 | (9 | ) | 60 | ||||||||||||||||
Income tax (expense) benefit | (20 | ) | 10 | (10 | ) | (2 | ) | 1 | (21 | ) | ||||||||||||||
Net income (loss) | 107 | (92 | ) | 29 | 3 | (8 | ) | 39 | ||||||||||||||||
Amounts attributable to noncontrolling interests | (11 | ) | 44 | 33 | ||||||||||||||||||||
Net income (loss) attributable to Loews Corporation | $ | 96 | $ | (48 | ) | $ | 29 | $ | 3 | $ | (8 | ) | $ | 72 | ||||||||||
CNA | Diamond | Boardwalk | Loews | |||||||||||||||||||||
Three Months Ended September 30, 2018 | Financial | Offshore | Pipelines | Hotels & Co | Corporate | Total | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Insurance premiums | $ | 1,853 | $ | 1,853 | ||||||||||||||||||||
Net investment income | 487 | $ | 2 | $ | 5 | 494 | ||||||||||||||||||
Investment gains | 15 | 15 | ||||||||||||||||||||||
Non-insurance warranty revenue | 258 | 258 | ||||||||||||||||||||||
Operating revenues and other | 9 | 287 | $ | 279 | $ | 190 | 223 | 988 | ||||||||||||||||
Total | 2,622 | 289 | 279 | 190 | 228 | 3,608 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Insurance claims and policyholders’ benefits | 1,312 | 1,312 | ||||||||||||||||||||||
Amortization of deferred acquisition costs | 337 | 337 | ||||||||||||||||||||||
Non-insurance warranty expense | 235 | 235 | ||||||||||||||||||||||
Operating expenses and other | 303 | 311 | 197 | 169 | 244 | 1,224 | ||||||||||||||||||
Interest | 34 | 34 | 44 | 7 | 27 | 146 | ||||||||||||||||||
Total | 2,221 | 345 | 241 | 176 | 271 | 3,254 | ||||||||||||||||||
Income (loss) before income tax | 401 | (56 | ) | 38 | 14 | (43 | ) | 354 | ||||||||||||||||
Income tax (expense) benefit | (66 | ) | 5 | (10 | ) | (3 | ) | 9 | (65 | ) | ||||||||||||||
Net income (loss) | 335 | (51 | ) | 28 | 11 | (34 | ) | 289 | ||||||||||||||||
Amounts attributable to noncontrolling interests | (35 | ) | 24 | (11 | ) | |||||||||||||||||||
Net income (loss) attributable to Loews Corporation | $ | 300 | $ | (27 | ) | $ | 28 | $ | 11 | $ | (34 | ) | $ | 278 | ||||||||||
CNA | Diamond | Boardwalk | Loews | |||||||||||||||||||||
Nine Months Ended September 30, 2019 | Financial | Offshore | Pipelines | Hotels & Co | Corporate | Total | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Insurance premiums | $ | 5,517 | $ | 5,517 | ||||||||||||||||||||
Net investment income | 1,573 | $ | 6 | $ | 1 | $ | 153 | 1,733 | ||||||||||||||||
Investment gains | 41 | 41 | ||||||||||||||||||||||
Non-insurance warranty revenue | 858 | 858 | ||||||||||||||||||||||
Operating revenues and other | 22 | 705 | $ | 969 | 521 | 689 | 2,906 | |||||||||||||||||
Total | 8,011 | 711 | 969 | 522 | 842 | 11,055 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Insurance claims and policyholders’ benefits | 4,323 | 4,323 | ||||||||||||||||||||||
Amortization of deferred acquisition costs | 1,025 | 1,025 | ||||||||||||||||||||||
Non-insurance warranty expense | 801 | 801 | ||||||||||||||||||||||
Operating expenses and other | 854 | 940 | 616 | 464 | 740 | 3,614 | ||||||||||||||||||
Interest | 120 | 92 | 136 | 16 | 85 | 449 | ||||||||||||||||||
Total | 7,123 | 1,032 | 752 | 480 | 825 | 10,212 | ||||||||||||||||||
Income (loss) before income tax | 888 | (321 | ) | 217 | 42 | 17 | 843 | |||||||||||||||||
Income tax (expense) benefit | (161 | ) | 52 | (56 | ) | (14 | ) | (4 | ) | (183 | ) | |||||||||||||
Net income (loss) | 727 | (269 | ) | 161 | 28 | 13 | 660 | |||||||||||||||||
Amounts attributable to noncontrolling interests | (77 | ) | 132 | 55 | ||||||||||||||||||||
Net income (loss) attributable to Loews Corporation | $ | 650 | $ | (137 | ) | $ | 161 | $ | 28 | $ | 13 | $ | 715 | |||||||||||
CNA | Diamond | Boardwalk | Loews | |||||||||||||||||||||
Nine Months Ended September 30, 2018 | Financial | Offshore | Pipelines | Hotels & Co | Corporate | Total | ||||||||||||||||||
(In milli o ns) | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Insurance premiums | $ | 5,453 | $ | 5,453 | ||||||||||||||||||||
Net investment income | 1,483 | $ | 6 | $ | 1 | $ | 61 | 1,551 | ||||||||||||||||
Investment gains | 21 | 21 | ||||||||||||||||||||||
Non-insurance warranty revenue | 744 | 744 | ||||||||||||||||||||||
Operating revenues and other | 30 | 853 | $ | 901 | 573 | 653 | 3,010 | |||||||||||||||||
Total | 7,731 | 859 | 901 | 574 | 714 | 10,779 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Insurance claims and policyholders’ benefits | 3,978 | 3,978 | ||||||||||||||||||||||
Amortization of deferred acquisition costs | 992 | 992 | ||||||||||||||||||||||
Non-insurance warranty expense | 676 | 676 | ||||||||||||||||||||||
Operating expenses and other | 904 | 927 | 598 | 494 | 714 | 3,637 | ||||||||||||||||||
Interest | 104 | 92 | 131 | 22 | 81 | 430 | ||||||||||||||||||
Total | 6,654 | 1,019 | 729 | 516 | 795 | 9,713 | ||||||||||||||||||
Income (loss) before income tax | 1,077 | (160 | ) | 172 | 58 | (81 | ) | 1,066 | ||||||||||||||||
Income tax (expense) benefit | (181 | ) | 59 | (24 | ) | (17 | ) | 14 | (149 | ) | ||||||||||||||
Net income (loss) | 896 | (101 | ) | 148 | 41 | (67 | ) | 917 | ||||||||||||||||
Amounts attributable to noncontrolling interests | (95 | ) | 47 | (68 | ) | (116 | ) | |||||||||||||||||
Net income (loss) attributable to Loews Corporation | $ | 801 | $ | (54 | ) | $ | 80 | $ | 41 | $ | (67 | ) | $ | 801 | ||||||||||
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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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions, except per share data) | ||||||||||||||||
CNA Financial | $ | 96 | $ | 300 | $ | 650 | $ | 801 | ||||||||
Diamond Offshore | (48 | ) | (27 | ) | (137 | ) | (54 | ) | ||||||||
Boardwalk Pipelines | 29 | 28 | 161 | 80 | ||||||||||||
Loews Hotels & Co | 3 | 11 | 28 | 41 | ||||||||||||
Corporate | (8 | ) | (34 | ) | 13 | (67 | ) | |||||||||
Net income attributable to Loews Corporation | $ | 72 | $ | 278 | $ | 715 | $ | 801 | ||||||||
Basic net income per share | $ | 0.24 | $ | 0.88 | $ | 2.34 | $ | 2.50 | ||||||||
Diluted net income per share | $ | 0.24 | $ | 0.88 | $ | 2.34 | $ | 2.49 | ||||||||
Net incomeincome.
Unless the context otherwise requires, references herein tohigher parent company net operating income (loss), net realized investment results and net income (loss) reflect amounts attributable to Loews Corporation shareholders.
income.
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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 1,890 | $ | 1,853 | $ | 5,517 | $ | 5,453 | ||||||||
Net investment income | 487 | 487 | 1,573 | 1,483 | ||||||||||||
Investment gains | 8 | 15 | 41 | 21 | ||||||||||||
Non-insurance warranty revenue | 292 | 258 | 858 | 744 | ||||||||||||
Other revenues | 9 | 9 | 22 | 30 | ||||||||||||
Total | 2,686 | 2,622 | 8,011 | 7,731 | ||||||||||||
Expenses: | ||||||||||||||||
Insurance claims and policyholders’ benefits | 1,614 | 1,312 | 4,323 | 3,978 | ||||||||||||
Amortization of deferred acquisition costs | 345 | 337 | 1,025 | 992 | ||||||||||||
Non-insurance warranty expense | 278 | 235 | 801 | 676 | ||||||||||||
Other operating expenses | 291 | 303 | 854 | 904 | ||||||||||||
Interest | 31 | 34 | 120 | 104 | ||||||||||||
Total | 2,559 | 2,221 | 7,123 | 6,654 | ||||||||||||
Income before income tax | 127 | 401 | 888 | 1,077 | ||||||||||||
Income tax expense | (20 | ) | (66 | ) | (161 | ) | (181 | ) | ||||||||
Net income | 107 | 335 | 727 | 896 | ||||||||||||
Amounts attributable to noncontrolling interests | (11 | ) | (35 | ) | (77 | ) | (95 | ) | ||||||||
Net income attributable to Loews Corporation | $ | 96 | $ | 300 | $ | 650 | $ | 801 | ||||||||
2018
period.
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.
Gross written premiums, excluding third party captives, excludes business which is mostly ceded to third party captives, including business related to large warranty programs.
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 September 30, 2019 | Specialty | Commercial | International | Total | |||||||||||||
(In millions, except %) | |||||||||||||||||
Gross written premiums | $ | 1,766 | $ | 860 | $ | 226 | $ | 2,852 | |||||||||
Gross written premiums excluding third party captives | 778 | 852 | 226 | 1,856 | |||||||||||||
Net written premiums | 732 | 775 | 201 | 1,708 | |||||||||||||
Net earned premiums | 712 | 813 | 236 | 1,761 | |||||||||||||
Net investment income | 121 | 136 | 17 | 274 | |||||||||||||
Core income (loss) | 153 | 97 | (9 | ) | 241 | ||||||||||||
Other performance metrics: | |||||||||||||||||
Loss and loss adjustment expense ratio | 57.8 | % | 69.3 | % | 69.4 | % | 64.7 | % | |||||||||
Expense ratio | 31.8 | 31.7 | 38.0 | 32.5 | |||||||||||||
Dividend ratio | 0.2 | 0.6 | 0.4 | ||||||||||||||
Combined ratio | 89.8 | % | 101.6 | % | 107.4 | % | 97.6 | % | |||||||||
Rate | 6 | % | 4 | % | 10 | % | 6 | % | |||||||||
Renewal premium change | 8 | 5 | 6 | 6 | |||||||||||||
Retention | 87 | 84 | 71 | 83 | |||||||||||||
New business | $ | 91 | $ | 173 | $ | 52 | $ | 316 | |||||||||
Three Months Ended September 30, 2018 | |||||||||||||||||
Gross written premiums | $ | 1,715 | $ | 758 | $ | 230 | $ | 2,703 | |||||||||
Gross written premiums excluding third party captives | 714 | 756 | 230 | 1,700 | |||||||||||||
Net written premiums | 688 | 697 | 196 | 1,581 | |||||||||||||
Net earned premiums | 684 | 782 | 255 | 1,721 | |||||||||||||
Net investment income | 124 | 144 | 14 | 282 | |||||||||||||
Core income | 177 | 127 | 1 | 305 | |||||||||||||
Other performance metrics: | |||||||||||||||||
Loss and loss adjustment expense ratio | 54.5 | % | 63.5 | % | 67.6 | % | 60.5 | % | |||||||||
Expense ratio | 32.3 | 33.2 | 36.3 | 33.3 | |||||||||||||
Dividend ratio | 0.2 | 0.7 | 0.4 | ||||||||||||||
Combined ratio | 87.0 | % | 97.4 | % | 103.9 | % | 94.2 | % | |||||||||
Rate | 2 | % | 2 | % | 4 | % | 2 | % | |||||||||
Renewal premium change | 5 | 4 | 8 | 5 | |||||||||||||
Retention | 85 | 84 | 72 | 83 | |||||||||||||
New business | $ | 93 | $ | 122 | $ | 71 | $ | 286 |
Nine Months Ended September 30, 2019 | Specialty | Commercial | International | Total | |||||||||||||
(In millions, except %) | |||||||||||||||||
Gross written premiums | $ | 5,191 | $ | 2,825 | $ | 837 | $ | 8,853 | |||||||||
Gross written premiums excluding third party captives | 2,263 | 2,742 | 837 | 5,842 | |||||||||||||
Net written premiums | 2,143 | 2,536 | 709 | 5,388 | |||||||||||||
Net earned premiums | 2,061 | 2,339 | 729 | 5,129 | |||||||||||||
Net investment income | 410 | 480 | 47 | 937 | |||||||||||||
Core income | 483 | 356 | 14 | 853 | |||||||||||||
Other performance metrics: | |||||||||||||||||
Loss and loss adjustment expense ratio | 58.1 | % | 67.6 | % | 64.7 | % | 63.4 | % | |||||||||
Expense ratio | 32.6 | 32.7 | 37.5 | 33.3 | |||||||||||||
Dividend ratio | 0.2 | 0.6 | 0.4 | ||||||||||||||
Combined ratio | 90.9 | % | 100.9 | % | 102.2 | % | 97.1 | % | |||||||||
Rate | 4 | % | 3 | % | 7 | % | 4 | % | |||||||||
Renewal premium change | 6 | 4 | 5 | 5 | |||||||||||||
Retention | 88 | 86 | 69 | 83 | |||||||||||||
New business | $ | 274 | $ | 522 | $ | 207 | $ | 1,003 | |||||||||
Nine Months Ended September 30, 2018 | |||||||||||||||||
Gross written premiums | $ | 5,222 | $ | 2,563 | $ | 884 | $ | 8,669 | |||||||||
Gross written premiums excluding third party captives | 2,130 | 2,483 | 884 | 5,497 | |||||||||||||
Net written premiums | 2,062 | 2,339 | 762 | 5,163 | |||||||||||||
Net earned premiums | 2,039 | 2,278 | 739 | 5,056 | |||||||||||||
Net investment income | 376 | 450 | 43 | 869 | |||||||||||||
Core income | 531 | 403 | 17 | 951 | |||||||||||||
Other performance metrics: | |||||||||||||||||
Loss and loss adjustment expense ratio | 55.1 | % | 63.0 | % | 65.0 | % | 60.1 | % | |||||||||
Expense ratio | 31.8 | 33.3 | 36.8 | 33.2 | |||||||||||||
Dividend ratio | 0.2 | 0.7 | 0.4 | ||||||||||||||
Combined ratio | 87.1 | % | 97.0 | % | 101.8 | % | 93.7 | % | |||||||||
Rate | 2 | % | 1 | % | 3 | % | 2 | % | |||||||||
Renewal premium change | 5 | 5 | 6 | 5 | |||||||||||||
Retention | 84 | 85 | 79 | 84 | |||||||||||||
New business | $ | 266 | $ | 462 | $ | 247 | $ | 975 |
2018
Total net operating income decreased $146premiums in recent quarters for Commercial for the three months ended September 30, 2019.
Favorabletiming of ceded reinsurance contract renewals. The decrease in net earned premiums was consistent with the trend in net written premiums in recent quarters for International for the three months ended September 30, 2019.
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, 20172019 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 combined2018 period. The loss ratio increased 32.73.3 points primarily due to lower favorable net prior year loss reserve development. The expense ratio improved 0.5 points for the three months ended September 30, 20172019 as compared with the 2016same period in 2018 driven by a favorable acquisition ratio.
increased 1.7 points for the three months ended September 30, 2019 as compared with the 2018 period driven by lower net earned premiums.
2018
Total net operating income decreased $63premiums in recent quarters for Commercial for the nine months ended September 30, 2019.
$22 million, Commercial had net catastrophe losses of $102 million and $73 million and International had net catastrophe losses of $10 million and $11 million.
Commercial’s combined The loss ratio improved 0.3 points, driven by improved current accident year underwriting results largely offset by unfavorable net prior year loss reserve development in the current year period. The expense ratio increased 4.20.7 points for the nine months ended September 30, 20172019 as compared with the 2016 period. The loss ratio increased 5.5 points primarily2018 period driven by higher net catastrophe losses which were $235 million, or 11.1 points of the loss ratio, for the nine months ended September 30, 2017, as compared with $95 million, or 4.6 points of the loss ratio, for the 2016 period. The loss ratio, excluding catastrophes and development, improved 0.9 points. Excluding the impact of the Small Business premium rate adjustment the expense ratio improved 2.6 points 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 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 favorable net prior year loss reserve development and higher net catastrophe losses. Net catastrophe losses were $60 million, or 10.3 points of the loss ratio, for the nine months ended September 30, 2017 as compared with $28 million, or 4.7 points of the loss ratio, for the 2016 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Net earned premiums | $ | 130 | $ | 133 | $ | 390 | $ | 398 | ||||||||
Net investment income | 213 | 205 | 636 | 614 | ||||||||||||
Core income (loss) | (139 | ) | 12 | (139 | ) | (83 | ) |
The net2018
included under Item 1. The long term care business continuedclaim reserves resulting from the annual claim experience study. The favorable claim reserve development was primarily due to produce results generallylower claim severity than anticipated in line with the 2015 reset assumptions.
reserve estimates. Core income for the three months ended September 30, 2018 included a $24 million reduction in long term care claim reserves resulting from the 2018 annual claim experience study.
The net2018
Overview
Overall fundamentals in the offshore oil and gas industry have not yet improved from those described in the Results of Operations – Diamond OffshoreInsurance Reserves section of our MD&A included under Item 7 of our Annual Report on Form2016. Volatility2018 for further information on the reserving process.
(In millions) | ||||
Long term care active life reserve - change in estimated reserve margin | ||||
September 30, 2018 estimated margin | $ | 182 | ||
Changes in underlying discount rate assumptions | (280 | ) | ||
Changes in underlying morbidity assumptions | 32 | |||
Changes in underlying persistency assumptions and inforce policy inventory | (234 | ) | ||
Changes in underlying premium rate action assumptions | 58 | |||
Changes in underlying expense and other assumptions | 26 | |||
September 30, 2019 Premium Deficiency | $ | (216 | ) | |
September 30, 2019 | Estimated Reduction to Pretax Income | |||
(In millions) | ||||
Hypothetical revisions | ||||
Morbidity: | ||||
5% increase in morbidity | $ | 664 | ||
10% increase in morbidity | 1,329 | |||
Persistency: | ||||
5% decrease in active life mortality and lapse | $ | 208 | ||
10% decrease in active life mortality and lapse | 427 | |||
Discount rates: | ||||
50 basis point decline in new money interest rates | $ | 309 | ||
100 basis point decline in new money interest rates | 675 | |||
Premium rate actions: | ||||
25% decrease in anticipated future premium rate increases | $ | 58 | ||
50% decrease in anticipated future premium rate increases | 115 |
September 30, 2019 | Claim and claim adjustment expenses | Future policy benefits | Total | |||||||||
(In millions) | ||||||||||||
Long term care | $ | 2,840 | $ | 9,415 | $ | 12,255 | ||||||
Structured settlement annuities | 519 | 519 | ||||||||||
Other | 13 | 13 | ||||||||||
Total | 3,372 | 9,415 | 12,787 | |||||||||
Shadow adjustments (a) | 168 | 2,664 | 2,832 | |||||||||
Ceded reserves (b) | 167 | 226 | 393 | |||||||||
Total gross reserves | $ | 3,707 | $ | 12,305 | $ | 16,012 | ||||||
December 31, 2018 | ||||||||||||
Long term care | $ | 2,761 | $ | 9,113 | $ | 11,874 | ||||||
Structured settlement annuities | 530 | 530 | ||||||||||
Other | 14 | 14 | ||||||||||
Total | 3,305 | 9,113 | 12,418 | |||||||||
Shadow adjustments (a) | 115 | 1,250 | 1,365 | |||||||||
Ceded reserves (b) | 181 | 234 | 415 | |||||||||
Total gross reserves | $ | 3,601 | $ | 10,597 | $ | 14,198 | ||||||
(a) | To the extent that unrealized gains on fixed income securities supporting long term care products and annuity contracts would result in a premium deficiency if those gains were realized, an increase in Insurance reserves is recorded, after tax and noncontrolling interests, as a reduction of net unrealized gains through Other comprehensive income (loss) (“Shadow Adjustments”). |
(b) | Ceded reserves relate to claim or policy reserves fully reinsured in connection with a sale or exit from the underlying business. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Core income (loss): | ||||||||||||||||
Property & Casualty Operations | $ | 241 | $ | 305 | $ | 853 | $ | 951 | ||||||||
Other Insurance Operations | (139 | ) | 12 | (139 | ) | (83 | ) | |||||||||
Total core income | 102 | 317 | 714 | 868 | ||||||||||||
Investment gains (after tax) | 6 | 12 | 30 | 19 | ||||||||||||
Consolidating adjustments including purchase accounting and noncontrolling interests | (12 | ) | (29 | ) | (94 | ) | (86 | ) | ||||||||
Net income attributable to Loews Corporation | $ | 96 | $ | 300 | $ | 650 | $ | 801 | ||||||||
Some industry analysts have predicted that the downturn is leveling off; however, theremains oversupplied, providing for a challenging offshore drilling market has been slow to recover and is not yet atin the recovery stage. Customer inquiries and new tenders have increased during 2017, compared to 2016, but are for offshore drilling opportunities in 2018 and beyond. Competition among offshore drillers remains intense as rig supply exceeds demand, despite the cold stacking and retirement or scrapping of over 100 rigs since 2014. Additionally, based on industry data asnear term. As of the date of this Report, more thanreport, industry analysts report that there are approximately 80 stacked or uncontracted floaters and approximately 30 floater rigsnewbuild floaters currently remain on order, withunder construction that are scheduled deliveries from 2017for delivery during the remainder of 2019 through 2021. The majority of2022. Of these rigs are notunder construction, some industry analysts report that only one rig is currently contracted for future work,work. In addition, during the next twelve months, approximately 70 contracted floaters are estimated to be rolling off their current contracts, which will further increases competition. Some industry analysts have predictedadd to the over-supply of floaters.
lower overall well costs to the benefit of its customers.
2021 through 2024. Contract drilling backlog includes $38 million and $119as of October 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 grantingexisting 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Net investment income | $ | 2 | $ | 2 | $ | 6 | $ | 6 | ||||||||
Contract drilling revenues | 242 | 281 | 676 | 834 | ||||||||||||
Other revenues | 7 | 6 | 29 | 19 | ||||||||||||
Total | 251 | 289 | 711 | 859 | ||||||||||||
Expenses: | ||||||||||||||||
Contract drilling expenses | 202 | 188 | 594 | 562 | ||||||||||||
Other operating expenses | ||||||||||||||||
Impairment of assets | 27 | |||||||||||||||
Other expenses | 120 | 123 | 346 | 338 | ||||||||||||
Interest | 31 | 34 | 92 | 92 | ||||||||||||
Total | 353 | 345 | 1,032 | 1,019 | ||||||||||||
Loss before income tax | (102 | ) | (56 | ) | (321 | ) | (160 | ) | ||||||||
Income tax benefit | 10 | 5 | 52 | 59 | ||||||||||||
Amounts attributable to noncontrolling interests | 44 | 24 | 132 | 47 | ||||||||||||
Net loss attributable to Loews Corporation | $ | (48 | ) | $ | (27 | ) | $ | (137 | ) | $ | (54 | ) | ||||
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 inreflecting 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 with 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 inafter 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 for theOcean Guardian andthe cold-stackedOcean Victory. These decreases are2018 period. This decrease was partially offset by the effect of incremental revenue earning days, for theOcean GreatWhitedue to fewer
rigs. Contract drilling expense was flatincreased $14 million for the ninethree months ended September 30, 20172019 as compared with the 20162018 period, primarily due to increased costs for repairs and maintenance and other rig operating costs, partially offset by the absence of costs for a rig which was sold in the second quarter of 2019.
Net resultsfewer revenue earning days. Contract drilling expense increased $269$32 million for the nine months ended September 30, 20172019 as compared with the 20162018 period, primarily due to a lower impairment loss recognizedincremental amortization of previously deferred contract preparation and mobilization costs and increased rig operating costs for the current fleet. These increases were partially offset by reduced costs for the rig that was sold in the 2017 periodsecond quarter of $232019 and lower fuel costs for the current fleet.
Pipelines
Each year aAgreements
Approximate projected revenues from capacity reservation and minimum bill chargesfixed fees under committed firm transportation agreements in place as of September 30, 2017 are $1.12019, including agreements for transportation, storage and other services, over the remaining term of those agreements. This amount has increased by approximately $1.2 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 or execution of precedent agreements associated with growth projects or other events that occurred or will occur subsequent to September 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Other revenue, primarily operating | $ | 296 | $ | 279 | $ | 969 | $ | 901 | ||||||||
Total | 296 | 279 | 969 | 901 | ||||||||||||
Expenses: | ||||||||||||||||
Operating | 212 | 197 | 616 | 598 | ||||||||||||
Interest | 45 | 44 | 136 | 131 | ||||||||||||
Total | 257 | 241 | 752 | 729 | ||||||||||||
Income before income tax | 39 | 38 | 217 | 172 | ||||||||||||
Income tax expense | (10 | ) | (10 | ) | (56 | ) | (24 | ) | ||||||||
Amounts attributable to noncontrolling interests | (68 | ) | ||||||||||||||
Net income attributable to Loews Corporation | $ | 29 | $ | 28 | $ | 161 | $ | 80 | ||||||||
2018
average rates.
2018
partially offset by contract restructuring and contract expirations that were recontracted at overall lower average rates.
above and the impact of the Company owning 100% of Boardwalk Pipelines, which increased from 51% with the purchase of Boardwalk Pipelines common units on July 18, 2018.
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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Operating revenue | $ | 127 | $ | 148 | $ | 437 | $ | 472 | ||||||||
Gain on sale of owned hotel | 23 | 23 | ||||||||||||||
Revenues related to reimbursable expenses | 29 | 19 | 85 | 79 | ||||||||||||
Total | 156 | 190 | 522 | 574 | ||||||||||||
Expenses: | ||||||||||||||||
Operating | 113 | 129 | 372 | 399 | ||||||||||||
Asset impairments at owned hotels | 22 | 11 | 22 | |||||||||||||
Reimbursable expenses | 29 | 19 | 85 | 79 | ||||||||||||
Depreciation | 14 | 16 | 45 | 49 | ||||||||||||
Equity income from joint ventures | (11 | ) | (17 | ) | (49 | ) | (55 | ) | ||||||||
Interest | 6 | 7 | 16 | 22 | ||||||||||||
Total | 151 | 176 | 480 | 516 | ||||||||||||
Income before income tax | 5 | 14 | 42 | 58 | ||||||||||||
Income tax expense | (2 | ) | (3 | ) | (14 | ) | (17 | ) | ||||||||
Net income attributable to Loews Corporation | $ | 3 | $ | 11 | $ | 28 | $ | 41 | ||||||||
Equity income from joint ventures increased $2services provided to customers by a third party vendor.
Net income increased $1 million and $17$22 million for the three and nine months ended September 30, 20172018 reflect reductions in the carrying value of two owned properties.
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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Net investment income | $ | 36 | $ | 5 | $ | 153 | $ | 61 | ||||||||
Other revenues | 250 | 223 | 689 | 653 | ||||||||||||
Total | 286 | 228 | 842 | 714 | ||||||||||||
Expenses: | ||||||||||||||||
Operating and other | 264 | 244 | 740 | 714 | ||||||||||||
Interest | 31 | 27 | 85 | 81 | ||||||||||||
Total | 295 | 271 | 825 | 795 | ||||||||||||
Income (loss) before income tax | (9 | ) | (43 | ) | 17 | (81 | ) | |||||||||
Income tax (expense) benefit | 1 | 9 | (4 | ) | 14 | |||||||||||
Net income (loss) attributable to Loews Corporation | $ | (8 | ) | $ | (34 | ) | $ | 13 | $ | (67 | ) | |||||
Other revenues increased $200$31 million and $292$92 million for the three and nine months ended September 30, 20172019 as compared with the 20162018 periods primarily due to $202 million and $293 millionimproved performance of revenue from Consolidated Container’s operations forequity based investments in the three months ended September 30, 2017 and for the period since the acquisition date.
Operating 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 of Consolidated Container,Parent Company trading portfolio, partially offset by the absencelower income from limited partnership investments as a result of prior year expenses related to the implementation of the 2016 Incentive Compensation Plan. Interest expenselower invested balances.
Net results improved $5and $43 million forrelated to acquisitions in 2019. For the three months ended September 30, 20172019 as compared with the 2018 period, the increase in revenues was partially offset by the pass-through effect of lower year-over-year resin prices. Consolidated Container’s contracts generally provide for resin price changes to be passed through to its customers on a short-term lag, generally about one month. When a pass-through occurs, revenues and decreased $16expenses generally change by the same amount so that Consolidated Container’s gross margin returns to the same level as prior to the change in prices.
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. $90 million. As of October 25, 2019, there were 297,438,996 shares of Loews common stock outstanding.
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,agreements.
control at the time Diamond Offshore seeks such access.
In the third quarters of 2017 and 2016, Boardwalk Pipeline declared and paid quarterly distributions to its common unitholders of record of $0.10 per common unit and an amount to the general partner on behalf of its 2% general partner interest. In October of 2017, Boardwalk Pipeline declared a quarterly cash distribution to unitholders of record of $0.10 per common unit.
As of September 30, 2017, Boardwalk Pipeline had $285 million of outstanding borrowings under its revolving credit facility. In July of 2017, Boardwalk Pipeline extended the maturity date of its revolving credit facility by one year to May 26, 2022. Boardwalk Pipeline has in place a subordinated loan agreement with a subsidiary of the Company under which it could borrow up to $300 million until December 31, 2018. As of October 27, 2017, Boardwalk Pipeline had no outstanding borrowings under the subordinated loan agreement.
receivables.
of outstanding borrowings under its credit facility. Boardwalk PipelinePipelines anticipates that its existing capital resources, including its revolving credit facility subordinated loan agreement and cash flows from operating activities, will be adequate to fund its operations for 2017.2019. Boardwalk PipelinePipelines may seek to access the capitaldebt markets to fund some or all capital expenditures for growth projects, acquisitions or for general businesscorporate purposes. Boardwalk Pipeline’s abilityPipelines has an effective shelf registration statement under which it may publicly issue debt securities, warrants or rights from time to accesstime.
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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Fixed income securities: | ||||||||||||||||
Taxable fixed income securities | $ | 383 | $ | 366 | $ | 1,151 | $ | 1,070 | ||||||||
Tax-exempt fixed income securities | 79 | 93 | 241 | 298 | ||||||||||||
Total fixed income securities | 462 | 459 | 1,392 | 1,368 | ||||||||||||
Limited partnership and common stock investments | 18 | 23 | 157 | 96 | ||||||||||||
Other, net of investment expense | 7 | 5 | 24 | 19 | ||||||||||||
Pretax net investment income | $ | 487 | $ | 487 | $ | 1,573 | $ | 1,483 | ||||||||
Fixed income securities after tax and noncontrolling interests | $ | 337 | $ | 338 | $ | 1,018 | $ | 1,010 | ||||||||
Net investment income after tax and noncontrolling interests | $ | 356 | $ | 357 | $ | 1,147 | $ | 1,091 | ||||||||
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 | 0.9 | % | 0.9 | % | 7.7 | % | 4.0 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(In millions) | ||||||||||||||||
Investment gains (losses): | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
Corporate and other bonds | $ | 7 | $ | 8 | $ | 36 | ||||||||||
States, municipalities and political subdivisions | 1 | 9 | $ | 13 | 35 | |||||||||||
Asset-backed | (5 | ) | (7 | ) | (19 | ) | (39 | ) | ||||||||
Total fixed maturity securities | 3 | 10 | (6 | ) | 32 | |||||||||||
Non-redeemable preferred stock | 7 | 2 | 60 | (23 | ) | |||||||||||
Short term and other | (2 | ) | 3 | (13 | ) | 12 | ||||||||||
Total investment gains | 8 | 15 | 41 | 21 | ||||||||||||
Income tax (expense) | (2 | ) | (3 | ) | (11 | ) | (2 | ) | ||||||||
Amounts attributable to noncontrolling interests | (1 | ) | (1 | ) | (3 | ) | (2 | ) | ||||||||
Net investment gains attributable to Loews Corporation | $ | 5 | $ | 11 | $ | 27 | $ | 17 | ||||||||
earnings.
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.
Net Realized Investment Gains (Losses)
The componentsfair value of CNA’s Net realized investment gains (losses) are presented in the following table:
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 | ||||||||
Net realized investment gains decreased $17 million for the three months ended September 30, 2017 as compared with the 2016 period, driven by lower net realized gains on sales of securities
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 | ||||||||||||
September 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 | $ | 4,432 | $ | 114 | $ | 4,334 | $ | (24 | ) | |||||||
AAA | 3,057 | 360 | 3,027 | 245 | ||||||||||||
AA | 6,731 | 860 | 6,510 | 512 | ||||||||||||
A | 9,040 | 1,112 | 8,768 | 527 | ||||||||||||
BBB | 16,718 | 1,670 | 14,205 | 274 | ||||||||||||
Non-investment grade | 2,481 | 85 | 2,702 | (73 | ) | |||||||||||
Total | $ | 42,459 | $ | 4,201 | $ | 39,546 | $ | 1,461 | ||||||||
AAA rated securities included $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 | ||||
September 30, 2019 | Estimated Fair Value | Gross Unrealized Losses | ||||||
(In millions) | ||||||||
U.S. Government, Government agencies and Government-sponsored enterprises | $ | 171 | $ | 1 | ||||
AAA | 35 | 1 | ||||||
AA | 29 | |||||||
A | 456 | 4 | ||||||
BBB | 568 | 12 | ||||||
Non-investment grade | 609 | 32 | ||||||
Total | $ | 1,868 | $ | 50 | ||||
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 | ||||
September 30, 2019 | Estimated Fair Value | Gross Unrealized Losses | ||||||
(In millions) | ||||||||
Due in one year or less | $ | 27 | ||||||
Due after one year through five years | 377 | $ | 12 | |||||
Due after five years through ten years | 1,127 | 22 | ||||||
Due after ten years | 337 | 16 | ||||||
Total | $ | 1,868 | $ | 50 | ||||
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 | |||||||||
|
|
September 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 | $ | 18,003 | 9.0 | $ | 16,212 | 8.4 | ||||||||||
Other investments | 26,655 | 4.1 | 25,428 | 4.4 | ||||||||||||
Total | $ | 44,658 | 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 | ||||
September 30, 2019 | December 31, 2018 | |||||||
(In millions ) | ||||||||
Short term investments: | ||||||||
Commercial paper | $ 1,004 | $ 705 | ||||||
U.S. Treasury securities | 256 | 185 | ||||||
Other | 234 | 396 | ||||||
Total short term investments | $ 1,494 | $ 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) | ||||||||||||
July 1, 2019 - July 31, 2019 | 341,240 | $ 54.18 | N/A | N/A | ||||||||||||
August 1, 2019 - August 31, 2019 | 1,620,985 | 48.55 | N/A | N/A | ||||||||||||
September 1, 2019 - September 30, 2019 | 1,431,981 | 49.78 | 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 * | |||
Inline XBRL Taxonomy Extension Schema | 101.SCH * | |||
Inline XBRL Taxonomy Extension Calculation Linkbase | 101.CAL * | |||
Inline XBRL Taxonomy Extension Definition Linkbase | 101.DEF * | |||
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Inline XBRL Taxonomy Label Linkbase | 101.LAB * | |||
Inline XBRL Taxonomy Extension Presentation Linkbase | 101.PRE * | |||
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | 104* |
LOEWS CORPORATION | ||||||||
(Registrant) | ||||||||
Dated: October 28, 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) |
62