UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

10-Q

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~

2019

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From ____________ to

_____________

Commission File Number

1-6541

LOEWS CORPORATION

(Exact name of registrant as specified in its charter)


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

667 Madison Avenue, New York, N.Y. 10065-8087

(Address of principal executive offices) (Zip Code)

(212)

521-2000

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

~~Indicate~~

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


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

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


		~~Yes~~ X				No

Yes

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation

S-T (§

(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).


		~~Yes~~ X		No		~~Not Applicable~~

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

Large accelerated filer

Accelerated filer

___

Non-accelerated

filer

___

Smaller reporting company

___

Emerging growth company

___

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act).

Yes

As of October

, 2019, there were

297,438,996 shares of the registrant’s common stock outstanding.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)

      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

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited)

   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

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

   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-

than-temporary impairments

(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

$

1,612

$
126

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF EQUITY

(Unaudited)

   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

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF ~~CASH FLOWS~~

EQUITY

(Unaudited)

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

See accompanying Notes to Consolidated Condensed Financial Statements.

Table of Contents

Loews Corporation and Subsidiaries

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

Loews Corporation is a holding company. Its subsidiaries are engaged in the following lines of business: commercial property and casualty insurance (CNA Financial Corporation (“CNA”), aan 89% owned subsidiary); the operation of offshore oil and gas drilling rigs (Diamond Offshore Drilling, Inc. (“Diamond Offshore”), a 53% owned subsidiary); transportation and storage of natural gas and natural gas liquids (Boardwalk Pipeline Partners, LP (“Boardwalk ~~Pipeline”~~Pipelines”), a ~~51%~~wholly owned subsidiary); the operation of a chain of hotels (Loews Hotels Holding Corporation (“Loews Hotels & Co”), a wholly owned subsidiary); and the manufacture of rigid plastic packaging solutions (Consolidated Container Company LLC (“Consolidated Container”), a 99% owned subsidiary). Unless the context otherwise requires, the terms “Company,” “Loews” and “Registrant” as used herein mean Loews Corporation excluding its subsidiaries and the term “Net income ~~(loss)~~ attributable to Loews Corporation” as used herein means Net income ~~(loss)~~ attributable to Loews Corporation shareholders.

In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018 and results of operations, ~~and~~ comprehensive income and changes in shareholders’ equity for the three and nine months ended September 30, ~~2017~~2019 and ~~2016 and changes in shareholders’ equity~~2018 and cash flows for the nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018. Net income ~~(loss)~~ for the third quarter and first nine months of each of the years is not necessarily indicative of net income ~~(loss)~~ for that entire year. These Consolidated Condensed Financial Statements should be read in conjunction with the Consolidated Financial Statements in the Company’s Annual Report on Form

10-K

for the year ended December 31, ~~2016.~~

2018.

The Company presents basic and diluted net income ~~(loss)~~ per share on the Consolidated Condensed Statements of Income. Basic net income ~~(loss)~~ per share excludes dilution and is computed by dividing net income ~~(loss)~~ attributable to common stock by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. ~~0.4 million and 3.3 million~~There were no shares ~~for the three months ended September 30, 2017 and 2016 and 0.4 million and 4.7 million shares for the nine months ended September 30, 2017 and 2016~~ attributable to employee stock-based compensation awards ~~were not included in~~excluded from the diluted weighted average shares outstanding amounts for the three and nine months ended September 30, 2019 and 2018 because the effect would have been antidilutive.

Accounting changes

–In ~~March~~February of 2016, the Financial Accounting Standards Board (“FASB”) issued ~~Accounting Standard Update~~ASU

2016-02,

“Leases (Topic 842)” (“~~ASU”~~ASU

2016-02”)~~2016-09,~~ “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The updated accounting guidance simplifies the accounting for share-based payment award transactions, including income tax consequences and classification on the statement of cash flows. As of.

Effective January 1, ~~2017,~~2019, the Company adopted the updated accounting guidance and began recognizing excess tax benefits or deficiencies on vesting or settlement of awards as an income tax benefit or expense within net income and the related cash flows classified within operating activities. The change impacted the amount and timing of income tax expense recognition as well as the calculation of diluted earnings per share. The accounting change did not have a material effect on the consolidated financial statements.

~~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 to~~available-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 lease~~using the modified retrospective method. Prior period amounts have not been adjusted and ~~nonlease components in a contract~~continue 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 evaluating~~utilized 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.

For leases where we are a lessee we have elected to account for lease and

non-lease

components as a single lease component, except subsea equipment leases. For leases where we are a lessor we have elected to combine the lease and

non-lease

components of our offshore drilling contracts, if certain conditions are met, and account for the combined component in accordance with the accounting treatment for the predominant component of the contract.

At adoption, the cumulative effect adjustment increased Other assets and Other liabilities by $642 million reflecting operating lease right of use assets, lease liabilities and the ~~guidance will have~~derecognition of deferred rent related primarily to lease agreements for office space and machinery and equipment. Subsequent to the adoption of ASU

2016-02,

Other assets and Other liabilities were adjusted to $3.1 billion and $5.1 billion as of January 1, 2019, as compared to $2.4 billion and $4.5 billion as of December 31, 2018. See Note 6 for additional information on ~~its consolidated financial statements.~~

leases.

Recently issued ASUs

– In June of 2016, the FASB issued ASU

2016-13, ~~“Financial~~

“Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The updated accounting guidance requires changes to the recognition of credit losses on financial instruments not accounted for at fair value through net income. The guidance is effective for interim and annual periods beginning after December 15, 2019. The ~~Company is currently evaluating the effect the~~ guidance will be applied using the modified retrospective method with a cumulative effect adjustment to beginning retained earnings. A prospective transition method is required for debt securities that have ~~on its consolidated financial statements, and expects~~recognized an other-than-temporary impairment prior to the effective date. The primary changes towill be the use of the expected credit loss model for ~~the~~

Table of Contents

mortgage ~~loan portfolio~~loans, reinsurance and ~~reinsurance~~insurance receivables and other financing receivables and the ~~presentation~~use of ~~credit losses within~~ the~~available-for-sale~~ ~~fixed maturities portfolio through an~~ allowance method rather than ~~as a direct write-down.~~the write-down method for credit losses within the

available-for-sale

fixed maturities portfolio. The expected credit loss model will require a financial asset to be presented at the net amount expected to be collected. Under the allowance method for

available-for-sale

debt securities, the Company will record reversals of credit losses if the estimate of credit losses declines.

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.

The Company is currently in the process of evaluating existing impairment methodology, developing models to comply with the new guidance and accumulating the necessary internal and external information required to measure credit losses under the expected credit loss model. The Company is implementing changes to the information systems to assist with the accounting, including the recording of the allowance. The Company is also evaluating additional changes to processes to meet the reporting and disclosure requirements of the new guidance.

In ~~October~~August of ~~2016,~~2018, the FASB issued ASU~~2016-16,~~ ~~“Income Taxes~~

2018-12,

“Financial Services – Insurance (Topic ~~740)~~944): ~~Intra-Entity Transfers of Assets Other Than Inventory.~~Targeted Improvements to the Accounting for Long-Duration Contracts.” The updated accounting guidance ~~amends~~requires changes to the ~~accounting for~~measurement and disclosure of long-duration contracts. The guidance requires entities to update annually cash flow assumptions, including morbidity and persistency, and update quarterly discount rate assumptions using an upper-medium grade fixed-income instrument yield. The effect of changes in cash flow assumptions will be recorded in Net income and the effect of changes in discount rate assumptions will be recorded in Other comprehensive income ~~tax consequences of intra-entity transfers of assets other than inventory.~~ (“OCI”).

This guidance is effective for interim and annual ~~reporting~~ periods beginning after December 15, ~~2017.~~2020; however, the FASB has

approved

a one year deferral of the effective date. The guidance requires restatement of prior periods presented and early adoption is permitted. The Company is currently evaluating the method and timing of adoption and the effect the updated guidance will have on its ~~historical intra-group transactions~~consolidated financial statements. The annual updating of cash flow assumptions is expected to increase income statement volatility. The quarterly change in the discount rate is expected to increase volatility in the Company’s Shareholders’ equity, but that will be somewhat mitigated because Shadow Adjustments are eliminated under the new guidance. See Note 3 for further information on Shadow Adjustments. While the ~~possible effect~~requirements of the ~~updated guidance. The Company expects to adopt this updated~~new guidance ~~using~~represent a material change from existing accounting guidance, the ~~modified retrospective approach with a cumulative effect adjustment to~~underlying economics of CNA’s business and related cash flows

are

unchanged.

. Acquisitions and Divestiture

Consolidated Container

During the ~~opening balance~~first nine months of ~~Retained earnings with an offset to a deferred income tax liability.~~

~~2. Acquisition of~~2019, Consolidated Container ~~Company~~

~~On May 22, 2017, the Company completed the previously announced acquisition~~paid approximately $260 million to complete

three

acquisitions 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 manufacturers located in the U.S. and ~~recycled resins manufacturer that provides~~Canada, including the acquisition on June 14, 2019 of Tri State Distribution, Inc., a retail pharmaceutical packaging solutions to end markets such as beverage, food and household chemicals through a network of manufacturing locations across North America. The results of Consolidated Container are included in the Consolidated Condensed Financial Statements since the acquisition date in the Corporate segment.provider. For the three

and nine

months ended September 30, ~~2017 and~~2019 revenues for the ~~period~~ three acquisitions

since ~~the~~ acquisition ~~date, Consolidated Container’s revenues~~

were ~~$202~~$35 million and ~~$293~~$43 million and

net ~~income was~~

results were not significant. ~~For~~The preliminary allocation of the ~~year ended December 31, 2016, Consolidated Container reported total revenues~~purchase prices for the three acquisitions resulted in the recognition of ~~$788 million.~~

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 was~~acquisitions 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 allocation~~7, and available cash.

Loews Hotels & Co

Loews Hotels & Co sold an owned hotel for approximately $127 million in May of ~~the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value as~~2019.

Table of the acquisition date and is subject to change within the measurement period. The primary areas that are not yet finalized relate to working capital at closing and determination of tax bases of net assets acquired.

(In millions)
Cash
   $ 5
Property, plant and equipment
   391
Goodwill
   300
Other assets:

Inventory
   57
Customer relationships
   459
Trade name
   43
Other
   122
Deferred income taxes
   (17 )
Other liabilities:

Accounts payable
   (52 )
Pension liability
   (27 )
Other
   (58 )
   $     1,223

Customer relationships were valued using an income approach, which values the intangible asset at the present value of the related incremental after tax cash flows. The customer relationships intangible asset will be amortized over a useful life of 21 years. The trade name was valued using an income approach, which values the intangible asset based on an estimate of cost savings, or a relief from royalty. The trade name will be amortized over a useful life of 10 years. Goodwill includes value associated with the assembled workforce and Consolidated Container’s future growth and profitability. The assets acquired and liabilities assumed as part of the acquisition did not result in a step up of tax basis and approximately $94 million of goodwill is deductible for tax purposes.

Contents

3. Investments

Net investment income is as follows:

   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 ( loss ) from trading portfolio (a)		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 ~~trading~~ securities still held were ~~$22~~$17 and $8$(23) for the three months ended September 30, ~~2017~~2019 and ~~2016~~2018 and ~~$35~~$55 and ~~$63~~$(66) for the nine months ended September 30, ~~2017~~2019 and ~~2016.~~

2018.

Investment gains (losses) are as follows:

   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 ~~realized~~investment gains on

available-for-sale

securities were $34 and ~~$68~~$42 for the three months ended September 30, ~~2017~~2019 and ~~2016~~2018 and ~~$140~~$98 and ~~$157~~$148 for the nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018. Gross ~~realized~~investment losses on

available-for-sale

securities were ~~$18~~$31 and ~~$24~~$32 for the three months ended September 30, ~~2017~~2019 and ~~2016~~2018 and ~~$48~~$104 and ~~$128~~$116 for the nine months ended September 30, ~~2017~~2019 and ~~2016.~~

2018.

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 of

non-redeemable

preferred stock still held as of September 30, 2018

The components of other-than-temporary impairment (“OTTI”) losses recognized in earnings by asset type are as follows:

   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:
Corporate and other bonds	$	12	$	1	$	24	$	6
Asset-backed		2		2		10		3
Net OTTI losses recognized in earnings	$	14	$	3	$	34	$	9

Table of Contents

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

   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:
Corporate and other bonds	$	19,806	$	2,263	$	42	$	22,027
States, municipalities and political subdivisions		9,154		1,641				10,795
Asset-backed:
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	)
Total asset-backed		8,668		320		8		8,980		(25	)
U.S. Treasury and obligations of government-sponsored enterprises		124		7				131
Foreign government		491		20				511
Redeemable preferred stock		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:
Corporate and other bonds	$	18,764	$	791	$	395	$	19,160
States, municipalities and political subdivisions		9,681		1,076		9		10,748
Asset-backed:
Residential mortgage-backed		4,815		68		57		4,826	$	(20	)
Commercial mortgage-backed		2,200		28		32		2,196
Other asset-backed		1,975		11		24		1,962
Total asset-backed		8,990		107		113		8,984		(20	)
U.S. Treasury and obligations of government-sponsored enterprises		156		3				159
Foreign government		480		5		4		481
Redeemable preferred stock		10						10
Fixed maturities available-for-sale		38,081		1,982		521		39,542		(20	)
Fixed maturities trading		153		4				157
Total fixed maturities	$	38,234	$	1,986	$	521	$	39,699	$	(20	)

The net unrealized gains on

ailable for sale

investments included in the tables above are recorded as a component of Accumulated other comprehensive income (“AOCI”). When presented in AOCI, these amounts are net of tax and noncontrolling interests and any required Shadow Adjustments. To the extent that unrealized gains on fixed income securities supporting ~~certain~~ long term care products and structured settlements not funded by annuities would result in a premium deficiency if those gains were realized, a related increase in

Insurance reserves is recorded, net of tax and noncontrolling interests, as a reduction of net unrealized gains through Other comprehensive income (“Shadow Adjustments”). As of September 30, ~~2017~~2019 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).

Table of Contents

The

available-for-sale

securities in a gross unrealized loss position are as follows:

   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:
Corporate and other bonds	$	890	$	26	$	200	$	16	$	1,090	$	42
States, municipalities and political subdivisions		20				2				22
Asset-backed:
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
Total asset-backed		649		5		70		3		719		8
U.S. Treasury and obligations of government-sponsored enterprises		14				4				18
Foreign government		17				2				19
Total fixed maturity securities	$	1,590	$	31	$	278	$	19	$	1,868	$	50


December 31, 2018

Fixed maturity securities:
Corporate and other bonds	$	8,543	$	340	$	825	$	55	$	9,368	$	395
States, municipalities and political subdivisions		517		8		5		1		522		9
Asset-backed:
Residential mortgage-backed		1,932		23		1,119		34		3,051		57
Commercial mortgage-backed		728		10		397		22		1,125		32
Other asset-backed		834		21		125		3		959		24
Total asset-backed		3,494		54		1,641		59		5,135		113
U.S. Treasury and obligations of government-sponsored enterprises		21				19				40
Foreign government		114		2		124		2		238		4
Total fixed maturity securities	$	12,689	$	404	$	2,614	$	117	$	15,303	$	521

Based on current facts and circumstances, the Company believes the unrealized losses presented in the September 30, ~~2017~~2019 securities in a gross unrealized loss position table above are not indicative of the ultimate collectibility of the current amortized cost of the securities, but rather are attributable to changes in interest rates, credit spreads and other factors. The Company has no current intent to sell securities with unrealized losses, nor is it more likely than not that it will be required to sell prior to recovery of amortized cost; accordingly, the Company has determined that there are no0 additional OTTI losses to be recorded as of September 30, ~~2017.~~

2019.

The following table presents the activity related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held as of September 30, ~~2017~~2019 and ~~2016~~2018 for which a portion of an OTTI loss was recognized in ~~Other comprehensive income.~~

   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

Contractual Maturity

The following table presents

available-for-sale

fixed maturity securities by contractual maturity.

      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

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

Derivative Financial Instruments

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

      September 30, 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

4. Fair Value

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

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

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

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

Assets and liabilities measured at fair value on a recurring basis are ~~presented~~summarized in the following ~~tables:~~

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 )

December 31, 2016      Level 1    Level 2      Level 3      Total
(In millions)
Fixed maturity securities:

Corporate and other bonds
        $   18,828      $ 130      $   18,958
States, municipalities and political subdivisions
        13,239      1      13,240
Asset-backed:

Residential mortgage-backed
        4,944      129      5,073
Commercial mortgage-backed
        2,027      13      2,040
Other asset-backed
        968      57      1,025
Total asset-backed
        7,939      199      8,138
U.S. Treasury and obligations of government-sponsored enterprises
     $ 93              93
Foreign government
        445           445
Redeemable preferred stock
     19              19
Fixed maturitiesavailable-for-sale
     112    40,451      330      40,893
Fixed maturities trading
        595      6      601
Total fixed maturities
     $ 112    $ 41,046      $ 336      $ 41,494

Equity securitiesavailable-for-sale
     $ 91         $ 19      $ 110
Equity securities trading
     438         1      439
Total equity securities
     $ 529    $ -      $ 20      $ 549

Short term investments
     $     3,833    $ 853           $ 4,686
Other invested assets
     55    5           60
Receivables
     1              1
Life settlement contracts
             $ 58      58
Payable to brokers
     (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	)

Table of Contents

The following tables present reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, ~~2017~~2019 and ~~2016:~~

      Net Realized Gains
(Losses) and Net Change
in Unrealized Gains
(Losses)
Unrealized
Gains
(Losses)
Recognized in
Net Income
(Loss) on Level
3 Assets and
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) ��          $ -

      Net Realized Gains
(Losses) and Net Change
in Unrealized Gains
(Losses)    Transfers    Transfers
Unrealized
Gains
(Losses)
Recognized in
Net Income
on Level
3 Assets and
Liabilities
2016    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)
Fixed maturity securities:

Corporate and other bonds
   $ 242    $ 1 $ 7 $ 16    $ (5 )    $ 261
States, municipalities and political subdivisions
   2       (1 )    1
Asset-backed:

Residential mortgage-backed
   134    (1 ) 5    (1 )    $ (58 ) 79
Commercial mortgage-backed
   11    23    (8 )    (2 ) 24
Other asset-backed
   45    34       (36 ) 43
Total asset-backed
   190    - (1 ) 62 $ -    (9 ) $ -    (96 ) 146          $ -
Fixed maturitiesavailable-for-sale
   434    1 6 78    (15 )    (96 ) 408
Fixed maturities trading
   6          6          (1 )
Total fixed maturities
   $ 440    $ 1 $ 6 $         78 $ -    $ (15 ) $ -    $ (96 ) $ 414          $ (1 )

Equity securitiesavailable-for-sale
   $ 19    $ (1 ) $ 1       $ 19          $ (2 )
Equity securities trading
   2    $ (1 )       1          (1 )
Total equity securities
   $ 21    $ (1 ) $ 1 $ (1 ) $         -    $ - $ -    $ - $ 20          $ (3 )

Life settlement contracts
   $ 67          $ 67
Derivative financial instruments, net
   1    $ (1 )       -

      Net Realized Gains
(Losses) and Net Change
in Unrealized Gains
(Losses)
Unrealized
Gains
(Losses)
Recognized in
Net Income
(Loss) on Level
3 Assets and
2017
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
(In millions)
Fixed maturity securities:

Corporate and other bonds
   $ 130    $ 1 $ 2 $ 18    $     (1)    $ (36 ) $ 15    $ (10 ) $ 119
States, municipalities and political subdivisions
   1             1
Asset-backed:

Residential mortgage-backed
   129    3 4       (18 ) 58    176
Commercial mortgage-backed
   13    (1 ) 12       (2 ) 2    24
Other asset-backed
   57    (2 ) 1 78       (6 ) 93    (75 ) 146
Total asset-backed
   199    1 4 90        -    (26 ) 153    (75 ) 346              $ -
Fixed maturitiesavailable-for-sale
   330    2 6 108        (1)    (62 ) 168    (85 ) 466
Fixed maturities trading
   6    (1 )          5          (1 )
Total fixed maturities
   $ 336    $ 1 $ 6 $ 108    $     (1)    $ (62 ) $ 168    $ (85 ) $ 471              $ (1 )

Equity securitiesavailable-for-sale
   $ 19    $ 2 $ 1    $     (3)       $ 19
Equity securities trading
   1    1          2
Total equity securities
   $ 20    $ - $ 2 $ 2    $     (3)    $ - $ -    $ - $ 21              $ -

Life settlement contracts
   $ 58    $ 6    $     (59)    $ (5 )    $ -
Derivative financial instruments, net
   -    1        (1)       -

      Net Realized Gains
(Losses) and Net Change
in Unrealized Gains
(Losses)    Transfers    Transfers
Unrealized
Gains
(Losses)
Recognized in
Net Income
on Level
3 Assets and
Liabilities
2016
Balance,
January 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)
Fixed maturity securities:

Corporate and other bonds
   $ 168    $ 1 $ 14 $ 163    $ (36 ) $ (15 )    $ (34 ) $ 261
States, municipalities and political subdivisions
   2       (1 )    1
Asset-backed:

Residential mortgage-backed
   134    2 (2 ) 15    (10 )    (60 ) 79
Commercial mortgage-backed
   22    32    (17 ) $ 3    (16 ) 24
Other asset-backed
   53    2 69    (25 ) (1 ) 2    (57 ) 43
Total asset-backed
   209    2 - 116    (25 ) (28 ) 5    (133 ) 146          $ -
Fixed maturitiesavailable-for-sale
   379    3 14 279    (61 ) (44 ) 5    (167 ) 408
Fixed maturities trading
   85    5 2    (86 )    6          3
Total fixed maturities
   $ 464    $ 8 $ 14 $ 281    $   (147 ) $ (44 ) $ 5    $ (167 ) $ 414          $ 3

Equity securitiesavailable-for-sale
   $ 20    $ (1 )       $ 19          $ (2 )
Equity securities trading
   1    1    $ (1 )    1
Total equity securities
   $ 21    $ - $ - $ -    $ (1 ) $ - $ -    $ - $ 20          $ (2 )

Life settlement contracts
   $ 74    $ 10    $ (17 )    $ 67          $ 2
Derivative financial instruments, net
   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 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	$	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

Table of Contents


																											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 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	$	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	)

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


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~~available-for-sale~~		~~Investment gains (losses)~~
~~Equity securities trading~~		~~Net investment income~~
~~Other invested assets~~		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 ~~Other~~Operating revenues and other
Life settlement contracts		~~Other~~ Operating revenues and other

Table of Contents

Securities may be transferred in or out of levels within the fair value hierarchy based on the availability of observable market information and quoted prices used to determine the fair value of the security. The availability of observable market information and quoted prices varies based on market conditions and trading volume. During the three and nine months ended September 30, 2017 and 2016 there were no transfers between Level 1 and Level 2. The Company’s policy is to recognize transfers between levels at the beginning of quarterly reporting periods.

Valuation Methodologies and Inputs

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

Fixed Maturity Securities

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

Equity Securities

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

Derivative Financial Instruments

Exchange traded derivatives are valued using quoted market prices and are classified within Level 1 of the fair value hierarchy. Level 2 derivatives primarily include currency forwards valued using observable market forward rates.

Over-the-counter

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

Short Term ~~Investments~~

and Other Invested Assets

Securities that are actively traded or have quoted prices are classified as Level 1. These securities include money market funds, treasury bills and ~~treasury bills.~~exchange traded

open-end

funds valued using quoted market prices. Level 2 primarily includes commercial paper, for which all inputs are market observable. Fixed maturity securities purchased within one year of maturity are classified consistent with fixed maturity securities discussed above. Short term investments as presented in the tables above differ from the amounts presented in the Consolidated Condensed Balance Sheets because certain short term investments, such as time deposits, are not measured at fair value.

~~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~~

Table of life settlement contracts was determined as the present value of the anticipated death benefits less anticipated premium payments based on contract terms that are distinct for each insured, as well as CNA’s own assumptions for mortality, premium expense and the rate of return that a buyer would require on the contracts.

The entire portfolio of life settlement contracts was determined to be held for sale as of December 31, 2016 as CNA reached an agreement on terms to sell the portfolio. As such, CNA adjusted the fair value to the estimated sales proceeds less cost to sell. The definitive Purchase and Sale Agreement (“PSA”) related to the portfolio was executed on March 7, 2017 (“sale date”). In connection therewith, the life settlement contracts and related sale proceeds were placed in escrow until the buyer was recognized as the owner and beneficiary of each individual life settlement contract by the life insurance company that issued the policy. All of the contracts have been released from escrow as of September 30, 2017. CNA derecognized the released contracts and recorded the consideration, including a note receivable, which is payable over three years and is carried at amortized cost less any valuation allowance. The note receivable of $45 million is included within Other assets on the September 30, 2017 Consolidated Condensed Balance Sheet and interest income is accreted to the principal balance of the note.

The fair value of CNA’s investments in life settlement contracts were $0 million and $58 million as of September 30, 2017 and December 31, 2016, and are included in Other assets on the Consolidated Condensed Balance Sheets. Despite the sale, the contracts were classified as Level 3 as there is not an active market for life settlement contracts. The cash receipts and payments related to the life settlement contracts prior to the sale date are included in operating activities on the Consolidated Condensed Statements of Cash Flows. Cash receipts related to the sale of the life settlement contracts as well as principal payments on the note receivable are included in investing activities.

Contents

Significant Unobservable Inputs

The following tables present quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurement of Level 3 assets. Valuations for assets and liabilities not presented in the tables below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of unobservable inputs from these broker quotes is neither provided nor reasonably available to the Company. The ~~valuation of life settlement contracts was~~weighted average rate is calculated based on ~~the terms of the sale of the contracts to a third party; therefore the contracts are not included in the tables below.~~


~~September 30, 2017~~	~~Estimated~~ ~~Fair Value~~	~~Valuation~~ ~~Techniques~~	~~Unobservable~~ ~~Inputs~~	~~Range~~ ~~(Weighted~~ ~~Average)~~
	~~(In millions)~~

~~Fixed maturity securities~~	~~$ 139~~	~~Discounted~~ ~~cash flow~~	~~Credit spread~~		~~1% – 12% (3%)~~

~~December 31, 2016~~

~~Fixed maturity securities~~	~~$ 106~~	~~Discounted~~ ~~cash flow~~	~~Credit spread~~		~~2% – 40% (4%)~~

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% –

6% (2%)

December 31, 2018

Fixed maturity securities

228

Discounted cash flow

Credit spread

1% – 12% (3%)

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

Financial Assets and Liabilities Not Measured at Fair Value

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

   Carrying    Estimated Fair Value
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

The fair values of mortgage loans, included in Other invested assets, were based on the present value of the expected future cash flows discounted at the current interest rate for similar financial instruments, adjusted for specific loan risk.

~~Fair value~~

Table of debt was based on observable market prices when available. When observable market prices were not available, the fair value of debt was based on observable market prices of comparable instruments adjusted for differences between the observed instruments and the instruments being valued or is estimated using discounted cash flow analyses, based on current incremental borrowing rates for similar types of borrowing arrangements.

Contents

5. ~~Property, Plant and Equipment~~

~~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 Form~~10-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

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

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

Catastrophes are an inherent risk of the property and casualty insurance business and have contributed to material

period-to-period

fluctuations in CNA’s results of operations and/or equity. CNA reported catastrophe losses, net of reinsurance, of ~~$269~~$32 million and ~~$16~~$46 million for the three months ended September 30, ~~2017~~2019 and ~~2016~~2018 and ~~$342~~$128 million and ~~$137~~$106 million for the nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018. Net catastrophe losses for the three and nine months ended September 30, 2017 included $149 million related to Hurricane Harvey, $95 million related to Hurricane Irma and $20 million related to Hurricane Maria. The remaining catastrophe losses in ~~2017~~ 2019

d 2018

related primarily to U.S. weather-related events. Catastrophe-related reinsurance reinstatement premium was $6 million for the three and nine months ended September 30, 2017. Catastrophe losses in 2016 resulted primarily from U.S. weather-related events and the Fort McMurray wildfires.

Liability for Unpaid Claim and Claim Adjustment Expenses ~~Rollforward~~

The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of~~non-core~~ ~~operations.~~

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

Other Insurance Operations.


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 inon the Consolidated Condensed Statements of Income due to amounts related to retroactive reinsurance deferred gain accounting, uncollectible reinsurance and loss deductible receivables and benefit expenses related to future policy benefits, which are not reflected in the table above.

Table of Contents

Net Prior Year Development

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

CNA’s commercial property and ~~discussion present~~casualty operations (“Property & Casualty Operations”) recorded unfavorable net prior year ~~development:~~

   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

$16 million

and casualty business when there is a change in exposure on auditable policies or when premium accruals differ from processed premium. Audits on policies usually occur in a period after the expiration date

fav

orable net prior year development of ~~the policy. See Note 11 for further information on the premium development for the Small Business multi-peril package product and workers’ compensation policies~~

$62 million for the three months ended

September 30, 2019 and 2018, and favorable net prior year development

million and $

160

million for the nine months ended September 30, ~~2017.~~

2019 and 2018

The following table and discussion present details of the net prior year claim and ~~allocated~~ claim adjustment expense reserve development ~~(“development”):~~

   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
)

Three Months

~~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.~~

2019

Unfavorable development in workers’ compensation reflects the recognition of loss estimates related to favorable premium development as well as an adverse arbitration ruling related to reinsurance recoverables from older accident years.

~~Favorable development for other coverages reflects better than expected emergence in Canadianrun-off~~ ~~business in accident years 2014 and prior.~~

~~2016~~

~~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.

Favorable development in other professional liability and management liability was due to lower than expected large claim losses in recent accident years in CNA’s public company directors and officers liability (“D&O”) business.

Favorable development in surety was due to lower than expected frequency for accident years 2015 through 2018.

Favorable development in commercial auto was primarily due to a decline in bodily injury frequency in accident year 2018 and continued lower than expected severity across accident years 2013 through 2016.

Unfavorable development in general liability was primarily due to higher than expected emergence in mass tort related to accident years 2009 and prior, 2015 and 2016.

Unfavorable development in other was primarily due to higher than expected severity in aging services related to auto liability coverages.

2018

Unfavorable development in medical professional liability was primarily driven by higher than expected frequency and severity in aging services in accident years 2014 and 2015 in aging services. Increased claims on a specific hospital policy in accident years 2014 and 2015 was also an unfavorable contributor, although more than offset by favorable development relative to expectations in accident years 2013 and prior.

through 2017.

Favorable development in other professional liability and management liability was primarily ~~related to lower than expected frequency of claims and~~driven by favorable outcomes on ~~specific claims for accident years 2010 through 2014.~~

~~Favorable development in surety coverages was primarily due to lower than expected frequency of large losses in accident years 2014 and prior.~~

~~Favorable development for commercial auto was primarily due to lower than expected severities in accident years 2012 through 2015.~~

Unfavorable development for general liability was primarily due to an increase in reported claims prior to the closing of the three year window set forth by the Minnesota Child Victims Act in accident years 2006 and prior.

Favorable development for workers’ compensation was primarily driven by lower than expected frequencies in accident years 2009 through 2014, partially offset by the estimated impact of recent Florida court rulings in accident years 2008 through 2015.

Favorable development for other coverages was primarily due to better than expected claim frequency in commercial lines coverages provided to customers in accident years 2010 through 2015, favorable settlements onindividual claims in accident years 2013 and prior in financial institutions.

Favorable development in surety was due to continued lower than expected loss emergence for accident years 2017 and ~~favorable emergence~~prior.

Table of ~~expected losses on a specific claim relating~~Contents

Nine Months

2019

Unfavorable development in medical professional liability was primarily due to ~~the December 2015 United Kingdom (“U.K.”) floods for property and marine. This favorable development was partially offset by~~ higher than expected ~~unfavorable large loss emergence~~indemnity severity in accident years ~~2014~~2016 through 2018 in CNA’s aging services business, higher than expected severity in accident year 2013 in CNA’s allied healthcare business, unfavorable outcomes on individual claims and ~~2015.~~

~~Nine Months~~

higher than expected severity in accident year 2017

in CNA’s dentists business.

Favorable development in other professional liability and management liability was primarily due to ~~favorable settlements on closed claims and a lower frequency of large losses for accident years 2011 through 2016 for professional and management liability,~~ lower than expected claim frequency and favorable outcomes on individual claims in accident years ~~2012 through 2015~~2017 and prior related to financial institutions and lower than expected large claim losses in recent accident years in CNA’s public company D&O business.

Favorable development in surety was due to lower than expected frequency for accident years 2018 and prior.

Unfavorable development in general liability was primarily due to higher than expected emergence in mass tort as well as higher than expected large loss experience in CNA’s excess and umbrella business in accident year 2017.

Unfavorable development in other was primarily due to higher than expected severity in aging services related to auto liability coverages and higher than expected claims in Hardy on 2018 accident year catastrophes in property partially offset by favorable development in casualty driven by lower than expected large losses and claim severity in accident years 2014 and prior in Hardy and Europe.

2018

Unfavorable development

medical professional liability ~~and lower~~was primarily due to higher than expected severity in accident years 2014 ~~through 2016 for professional liability.~~

~~Favorable development~~and 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-off~~CNA’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 other professional liability and management liability was primarily related to favorable settlements on closed claims in accident years 2011 through 2013 in professional services. Additional favorable development related to lower than expected frequency of claims and favorable outcomes on specific claims in accident years 2010 through 2014 in professional services. This was partially offset by unfavorable development related to a specific financial institutions claim in accident year 2014, higher severities in accident year 2015 and deterioration on credit crises-related claims in accident year 2009.

~~Favorable development in surety coverages was primarily~~ due to lower than expected claim frequency ~~of large losses~~for accident years 2013 through 2017 related to financial institutions and professional liability errors and omissions (“E&O”)

avorable severity for accident years 2012 and prior related to professional liability E&O, and favorable outcomes on individual claims in financial institutions in accident years ~~2014~~2013 and prior.

Favorable development ~~for commercial auto~~

surety was ~~primarily~~ due ~~to favorable settlements on claims in accident years 2010 through 2014 and lower than expected severities in accident years 2012 through 2015.~~

Favorable development for general liability was primarily due to better than expected claim settlements in accident years 2012 through 2014 and better than expected severity on umbrella claims in accident years 2010 through 2013. This was partially offset by unfavorable development related to an increase in reported claims prior to the closing of the three year window set forth by the Minnesota Child Victims Act in accident years 2006 and prior.

Unfavorable development for workers’ compensation was primarily due to higher than expected severity for Defense Base Act contractors and the estimated impact of recent Florida court rulings in accident years 2008 through

~~2015. This was partially offset by favorable development related~~ to lower than expected ~~frequencies related to~~loss emergence for accident years ~~2009 through 2014.~~

2017 and prior.

Favorable development for other coverages was ~~primarily~~ due to lower than expected claim severity in catastrophes in accident year 2017 for property, better than expected ~~claim~~ frequency in ~~property coverages~~the liability portion of the package business in ~~accident year 2015~~Canada and ~~commercial lines coverages~~general liability in ~~accident years 2010 through 2015,~~Europe for casualty, better than expected large loss frequency in the energy book in recent accident years for energy and marine and lower than expected frequency in accident years ~~2013 through~~ 2015 ~~for property and other, favorable settlements on claims in accident years 2013~~ and prior ~~better than expected severity~~related to healthcare in ~~accident years 2013~~Europe for healthcare and prior for liability, favorable emergence of expected losses on a specific claim relating to the December 2015 U.K. floods for property and marine and better than expected severity in accident years 2011 through 2015 for auto liability.technology. This favorable development was partially offset by unfavorable development driven by higher than expected severity ~~from a 2015 catastrophe event for property and other~~in Canada and higher than expected ~~large loss emergence~~frequency in Hardy, both in accident ~~years 2011 through 2015.~~

year 2017, for property and increased severity in accident year 2017 related to professional indemnity.

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

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

~~Subsequent~~

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

The following table presents the impact of the loss portfolio transfer on the Consolidated Condensed Statements of Income.

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

CNA intends to complete its annual A&EP reserve review in the fourth quarter of 2019 and maintain this timing for all future annual A&EP reserve reviews. CNA completed A&EP reserve reviews in both the first and fourth quarters of 2018. Based upon CNA’s ~~annual~~2018 first quarter A&EP reserve review, net unfavorable prior year development of ~~$60 million and $200~~$113 million was recognized before consideration of cessions to the LPT for the nine months ended September 30, ~~2017 and 2016.~~2018. The ~~2017~~2018 unfavorable development was driven by modestly higher anticipated payouts on claims from known sources of asbestos exposure. The 2016 unfavorable development was driven by an increase in anticipated future expenses associated with determination of coverage, higher anticipated payouts associated with a limited number of historical accounts having significant asbestos exposures and higher than ~~expected severity~~anticipated defense costs on ~~pollution claims. While this unfavorable development was ceded to NICO under the LPT, CNA’s reported earnings~~direct asbestos and environmental accounts and paid losses on assumed reinsurance exposures. Additionally, in ~~both periods were negatively affected due to the application~~2018, CNA released a portion of ~~retroactive reinsurance accounting.~~

its provision for uncollectible third party reinsurance.

As of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, the cumulative amounts ceded under the LPT were ~~$2.9 billion and $2.8~~$3.1 billion. The unrecognized deferred retroactive reinsurance benefit was ~~$334~~$331 million and $374 million as of September 30, ~~2017~~2019 and December 31, ~~2016.~~

2018 and is included within Other liabilities on the Consolidated Condensed Balance Sheets.

NICO established a collateral trust account as security for its obligations to CNA. The fair value of the collateral trust account was ~~$2.9~~$3.3 billion and ~~$2.8~~$2.7 billion as of September 30, ~~2017~~2019 and December 31, ~~2016.~~2018. In addition, Berkshire Hathaway Inc. guaranteed the payment obligations of NICO up to the aggregate reinsurance limit as well as certain of NICO’s performance obligations under the trust agreement. NICO is responsible for claims handling and billing and collection from third-party reinsurers related to the majority of CNA’s A&EP claims.

~~7. Debt~~

Long Term Care Policyholder Reserves

CNA’s operations include its run-off long term care business as well as structured settlement obligations not funded by annuities related to certain property and casualty claimants. Long term care policies provide benefits for nursing homes, assisted living facilities and home health care subject to various daily and lifetime caps. Generally, policyholders must continue to make periodic premium payments to keep the policy in force and CNA ~~Financial~~

has the ability to increase policy premiums, subject to state regulatory approval.

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

Table of Contents

CNA’s most recent annual long term care claim experience study was completed in the third quarter of 2019 and resulted in a $56 million pretax reduction in claim and claim adjustment expense reserves primarily due to lower claim severity than anticipated in the reserve estimates. CNA’s 2018 annual long term care claim experience study was completed in the third quarter of 2018 and resulted in a $31 million pretax reduction in claim and claim adjustment expense reserves.

Future policy benefit reserves represent the active life reserves related to CNA’s long term care policies which are the present value of expected future benefit payments and expenses less expected future premium. The determination of these reserves is fundamental to CNA’s financial results and requires management to make estimates and assumptions about expected investment and policyholder experience over the life of the contract. Since many of these contracts may be in force for several decades, these assumptions are subject to significant estimation risk.

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

Annually, management assesses the adequacy of its long term care future policy benefit reserves by performing a gross premium valuation (“GPV”) to determine if there is a premium deficiency. Management also uses the GPV process to evaluate the adequacy of its claim and claim adjustment expense reserves for structured settlement obligations. Under the GPV, management estimates required reserves using best estimate assumptions as of the date of the assessment without provisions for adverse deviation. The GPV required reserves are then compared to the existing recorded reserves. If the GPV required reserves are greater than the existing recorded reserves, the existing assumptions are unlocked and future policy benefit reserves are increased to the greater amount. Any such increase is reflected in the Company’s results of operations in the period in which the need for such adjustment is determined. Periodically, management engages independent third parties to assess the appropriateness of its best estimate assumptions. The most recent third party assessment, performed earlier this year, validated the assumption setting process and confirmed the best estimate assumptions appropriately reflected the experience data at that time.

In the third quarter of ~~2017,~~2019, CNA performed the GPV for the long term care future policy benefit reserves. This GPV indicated a premium deficiency primarily driven by lower discount rate assumptions.

Recognition of the premium deficiency resulted in a

$216

million pretax increase in policyholders’ benefits reflected in the Company’s results of operations.

6. Leases

The Company’s lease agreements primarily cover office facilities and machinery and equipment and expire at various dates. The Company’s leases are predominantly operating leases, which are included in Other assets and Other liabilities on the Consolidated Condensed Balance Sheet. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants.

Operating lease right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company utilizes its incremental borrowing rate. The Company’s operating lease right of use asset was $612 million and the Company’s operating lease liability was $694 million at September 30, 2019.

Operating lease cost was $31 million and $90 million, variable lease cost was $5 million and $14 million and short term lease cost was $1 million and $5 million for the three and nine months ended September 30, 2019. Cash paid for amounts included in operating lease liabilities was $28 million and $87 million for the three and nine months ended September 30, 2019.

The table below presents the future minimum lease payments to be made under

non-cancelable

operating leases as of December 31, 2018:


Year Ended December 31
(In millions)
2019	$	75
2020		79
2021		79
2022		68
2023		57
Thereafter		344
Total	$	702

The table below presents the maturities of lease liabilities:


	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.

The table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating the operating lease asset and liability.


As of September 30, 2019

Weighted average remaining lease term	9.5	Years
Weighted average discount rate	4.7	%

7. Debt

CNA Financial

In May of 2019, CNA completed a public offering of $500 million aggregate principal amount of its ~~3.5%~~3.9% senior notes due ~~August 15, 2027~~May 1, 2029 and used ~~a portion of~~ the net proceeds to redeem the entire ~~$350~~$500 million outstanding aggregate principal ~~amount~~balance of its ~~7.4%~~5.9% senior notes due ~~November~~August 15, ~~2019.~~2020. The redemption of the ~~$350~~$500 million senior notes resulted in a loss of ~~$42~~$21 million ($2415 million after tax and noncontrolling interests) and is included in Interest expense on the Consolidated Condensed Statements of Income for the ~~three and~~ nine months ended September 30, ~~2017.~~

~~Diamond Offshore~~

2019.

Boardwalk Pipelines

In ~~the third quarter~~May of ~~2017, Diamond Offshore~~2019, Boardwalk Pipelines completed a public offering of $500 million aggregate principal amount of its ~~7.9% senior notes due August 15, 2025 and used the net proceeds together with cash on hand to redeem the entire $500 million outstanding principal amount of its 5.9%~~4.8% senior notes due May ~~1, 2019. The redemption of this debt resulted in a loss of $35 million ($11 million after tax and noncontrolling interests) and is included in Interest expense on~~3, 2029.

he proceeds were used

retire the ~~Consolidated Condensed Statements of Income for the three and nine months ended September 30, 2017.~~

~~Boardwalk Pipeline~~

~~In the first quarter of 2017, Boardwalk Pipeline completed a public offering of $500~~outstanding $350 million aggregate principal amount of

Boardwalk

Pipeline

’

5.8

% senior

notes at maturity and reduce outstanding borrowings under its ~~4.5% senior notes due July 15, 2027 and used the net proceeds to repay the entire $275 million outstanding principal amount~~revolving credit facility.

Consolidated Container

In June of ~~its 6.3% senior notes due August 15, 2017 and to fund growth capital expenditures.~~

~~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 ~~acquisition~~acquisitions 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 amortization~~June 14, 2026.

Table of 1.0% of the original loan amount beginning December 31, 2017. Consolidated Container recorded approximately $19 million of debt issuance costs, which will be amortized over the terms of the facilities. Consolidated Container entered into interest rate swaps for a notional amount of $500 million to hedge its cash flow exposure to the variable rate debt. These swaps effectively fix the interest rate on the hedged portion of the term loan at approximately 5.6%. As of September 30, 2017, Consolidated Container had no borrowings outstanding under its ABL facility.

Contents

8. Shareholders’ Equity

Accumulated other comprehensive income (loss)

The tables below present the changes in AOCI by component for the three and nine months ended September 30, ~~2016~~2018 and ~~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)
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

      OTTI
Gains
(Losses) Unrealized
Gains (Losses)
on Investments Cash Flow
Hedges Pension
Liability Foreign
Currency
Translation Total
Accumulated
Other
Comprehensive
Income (Loss)
(In millions)
Balance, January 1, 2016
   $ 24 $ 347 $ (3 ) $ (649 ) $ (76 ) $ (357 )
Other comprehensive income (loss) before reclassifications, after tax of $(5), $(304), $0, $0 and $0
   9 608 (58 ) 559
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $1, $12, $0, $(11) and $0
   (2 ) (17 ) 2 20 3
Other comprehensive income (loss)
   7 591 2 20 (58 ) 562
Amounts attributable to noncontrolling interests
   (1 ) (62 ) (1 ) (3 ) 6 (61 )
Balance, September 30, 2016
   $ 30 $ 876 $ (2 ) $ (632 ) $ (128 ) $ 144

Balance, January 1, 2017
   $ 27 $ 576 $ (2 ) $ (646 ) $ (178 ) $ (223 )
Other comprehensive income (loss) before reclassifications, after tax of $0, $(130), $0, $0 and $0
   228 (3 ) 94 319
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $1, $28, $0, $(13) and $0
   (3 ) (61 ) 4 26 (34 )
Other comprehensive income (loss)
   (3 ) 167 1 26 94 285
Amounts attributable to noncontrolling interests
   (18 ) (1 ) (2 ) (9 ) (30 )
Balance, September 30, 2017
   $ 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

Table of Contents


																Total
	OTTI Gains			Unrealized Gains (Losses)			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

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


Major Category of AOCI		Affected Line Item
OTTI gains (losses)		~~Affected Line Item~~

~~OTTI gains (losses)~~		Investment gains (losses)
Unrealized gains (losses) on investments		Investment gains (losses)
Cash flow hedges		~~Other~~ Operating revenues ~~Interest expense~~ and ~~Contract drilling~~other and Operating expenses and other
Pension liability		~~Other operating~~ Operating expenses and other

Table of Contents

Treasury Stock

The Company repurchased ~~0.1~~13.2 million and ~~3.0~~17.4 million shares of Loews common stock at an aggregate ~~costs~~cost of $6$642 million and ~~$115~~$876 million during the nine months ended September 30, ~~2017~~2019 and ~~2016.~~

9.	~~Benefit Plans~~

2018.

9. Revenue from Contracts with Customers

Disaggregation of revenues

–

Revenue from contracts with customers, other than insurance premiums, is reported as

Non-insurance

warranty revenue and within Operating revenues and other on the Consolidated Condensed Statements of Income.

The following table presents revenues from contracts with customers disaggregated by revenue type along with the reportable segment and a reconciliation to Operating revenues and other as reported in Note 13:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
(In millions)
Non-insurance warranty services – CNA Financial	$	292	$	258	$	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

Receivables from contracts with customers

– As of September 30, 2019 and December 31, 2018, receivables from contracts with customers were approximately $428 million and $434 million and are included within Receivables on the Consolidated Condensed Balance Sheets

Deferred revenue

– As of September 30, 2019 and December 31, 2018, deferred revenue resulting from contracts with customers was approximately $3.8 billion and $3.5 billion and is primarily related to Deferred

non-insurance

warranty revenue as reported on the Consolidated Condensed Balance Sheets. Approximately $778 million and $685 million of revenues recognized during the nine months ended September 30, 2019 and 2018 were included in deferred revenue as of December 31, 2018 and 2017.

Performance obligations

– As of September 30, 2019, approximately $13.1 billion of estimated operating revenues is expected to be recognized in the future related to outstanding performance obligations. The balance relates primarily to revenues for transportation and storage of natural gas and NGLs at Boardwalk Pipelines and

non-insurance

warranty services at CNA. Approximately $0.6 billion will be recognized during the remaining three months of 2019, $2.1 billion in 2020 and the remainder in following years. The actual timing of recognition may vary due to factors outside of the Company’s control. The Company has elected to exclude variable consideration related entirely to wholly unsatisfied performance obligations and contracts where revenue is recognized based upon the right to invoice the customer. Therefore, the estimated operating revenues exclude contract drilling dayrate revenue at Diamond Offshore and interruptible service contract revenue at Boardwalk Pipelines.

Table of Contents

10. Benefit Plans

The Company and its subsidiaries have several

non-contributory

defined benefit plans and postretirement benefit plans covering eligible employees and retirees.

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

   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 )

~~10. Legal Proceedings~~

~~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			2019			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	)

11. Legal Proceedings

On May 25, 2018, plaintiffs Tsemach Mishal and Paul Berger (on behalf of ~~2016,~~themselves and the purported class, “Plaintiffs”) initiated a purported class action in the Court of Chancery of the State of Delaware (the “Court”) against the following defendants: Boardwalk Pipelines, Boardwalk GP, LP (“General Partner”), Boardwalk GP, LLC and Boardwalk Pipelines Holding Corp. (“BPHC”) (together, “Defendants”), regarding the potential exercise by the General Partner of its right to purchase all of the issued and outstanding common units representing limited partnership interests in Boardwalk Pipelines not already owned by the General Partner or its affiliates.

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

On September 28, 2018, the Court denied approval of the Proposed Settlement. On February 11, 2019, a substitute verified class action complaint was filed ~~against CCC, Continental Assurance Company (“CAC”), CNA,~~in this proceeding. The Defendants filed a motion to dismiss, which was heard by the ~~Investment Committee~~Court in July of 2019. In October of 2019, the Court ruled on the motion and granted a partial dismissal, with certain aspects of the ~~CNA 401(k) Plus Plan (“Plan”),~~case proceeding to trial. The ~~Northern Trust Company and John Does1-10~~ ~~(collectively “Defendants”) related to the Plan. The complaint alleges that Defendants breached fiduciary duties to the Plan and caused prohibited transactions~~case will be set for trial in ~~violation~~early 2021.

Table of the Employee Retirement Income Security Act of 1974 when the Plan’s Fixed Income Fund’s annuity contract with CAC was canceled. The plaintiff alleges he and a proposed class of the Plan participants who had invested in the Fixed Income Fund suffered lower returns in their Plan investments as a consequence of these alleged violations and seeks relief on behalf of the putative class. CCC and the other defendants are contesting the case and no class has been certified. The Plan trustees have provided notice to their fiduciary coverage insurance carriers. Progress on the litigation has been limited as the parties are currently in mediation.

Based on information currently available and CNA’s assessment of the mediation, CNA has recorded its best estimate of probable loss, however, it is reasonably possible that the ultimate liability may differ from that amount given the inherent uncertainty involved in this matter. After consideration of available insurance coverage, the Company does not believe that the ultimate resolution of this matter will have a material impact on its condensed consolidated financial statements; however, the timing of recognition of any additional loss, if any, and insurance recovery, if any, may differ.

~~Other Litigation~~

Contents

The Company and its subsidiaries are from time to time parties to other litigation arising in the ordinary course of business. ~~The~~While it is difficult to predict the outcome or effect of any such litigation, management does not believe that the outcome of ~~this~~any such pending litigation will ~~not, in the opinion of management,~~ materially affect the Company’s results of operations or equity.

~~11. Commitments~~

~~and Contingencies~~

12. Commitments and Contingencies

CNA Guarantees

In the course of selling business entities and assets to third parties, CNA agreed to guarantee the performance of certain obligations of previously owned subsidiaries and to indemnify purchasers for losses arising out of breaches of representations and warranties with respect to the business entities or assets sold, including, in certain cases, losses arising from undisclosed liabilities or certain named litigation. Such guarantee and indemnification agreements in effect for sales of business entities, assets and third party loans may include provisions that survive indefinitely. As of September 30, 2017, the aggregate amount related to quantifiable guarantees was $375 million and the aggregate amount related to quantifiable indemnification agreements was $254 million. In certain cases, should CNA be required to make payments under any such guarantee, it would have the right to seek reimbursement from an affiliate of a previously owned subsidiary.

~~In addition, CNA has agreed to provide indemnification to third party~~indemnified purchasers for certain losses, ~~associated with sold business entities or assets that~~some 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 also provided guarantees, if the primary obligor fails to perform, to holders of structured settlement annuities provided by a previously owned subsidiary. As of September 30, ~~2017,~~2019, the potential amount of future payments CNA could be required to pay under these guarantees was approximately ~~$1.8~~$1.7 billion, which will be paid over the lifetime of the annuitants. CNA does not believe any payment is likely under these guarantees, as CNA is the beneficiary of a trust that must be maintained at a level that approximates the discounted reserves for these annuities.

~~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.

~~12. Segments~~

13. Segments

The Company has ~~five~~5 reportable segments comprised of ~~four~~4 individual operating subsidiaries, CNA, Diamond Offshore, Boardwalk ~~Pipeline~~Pipelines and Loews Hotels & Co; and the Corporate ~~segment.~~segment, which includes operations of Consolidated Container. Each of the operating subsidiaries ~~are~~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. ~~The operations of Consolidated Container since the acquisition date are included in the Corporate segment.~~ For additional disclosures regarding the composition of the Company’s segments, see Note 20 of the Consolidated Financial Statements in the Company’s Annual Report on Form

10-K

for the year ended December 31, ~~2016.~~

2018.

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

Table of Contents

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

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

Three Months Ended September 30, 2016    CNA Financial Diamond
Offshore Boardwalk
Pipeline Loews
Hotels & Co Corporate Total
(In millions)
Revenues:

Insurance premiums
           $     1,767         $     1,767
Net investment income
   524     $         1         $     36 561
Investment gains
   45 45
Contract drilling revenues
   340 340
Other revenues
   97 9         $     306         $     161 1 574
Total
   2,433 350 306 161 37 3,287
Expenses:

Insurance claims and policyholders’ benefits
   1,202 1,202
Amortization of deferred acquisition costs
   314 314
Contract drilling expenses
   187 187
Other operating expenses
   402 108 212 151 25 898
Interest
   39 19 48 6 18 130
Total
   1,957 314 260 157 43 2,731
Income (loss) before income tax
   476 36 46 4 (6 ) 556
Income tax (expense) benefit
   (132 ) (22 ) (9 ) (1 ) 1 (163)
Net income (loss)
   344 14 37 3 (5 ) 393
Amounts attributable to noncontrolling interests
   (36 ) (7 ) (23 ) (66)
Net income (loss) attributable to Loews Corporation
           $     308     $     7         $     14         $     3         $ (5 )         $     327

Nine Months Ended September 30, 2017    CNA
Financial Diamond
Offshore Boardwalk
Pipeline Loews
Hotels & Co Corporate Total
(In millions)
Revenues:

Insurance premiums
           $     5,185         $     5,185
Net investment income
   1,529     $         1         $     109 1,639
Investment gains
   93 93
Contract drilling revenues
   1,113 1,113
Other revenues
   329 30         $     987         $     510 294 2,150
Total
   7,136 1,144 987 510 403 10,180
Expenses:

Insurance claims and policyholders’ benefits
   4,053 4,053
Amortization of deferred acquisition costs
   926 926
Contract drilling expenses
   598 598
Other operating expenses
   1,086 414 646 443 389 2,978
Interest
   166 119 131 20 68 504
Total
   6,231 1,131 777 463 457 9,059
Income (loss) before income tax
   905 13 210 47 (54 ) 1,121
Income tax (expense) benefit
   (226 ) 35 (46 ) (23 ) 20 (240)
Net income (loss)
   679 48 164 24 (34 ) 881
Amounts attributable to noncontrolling interests
   (71 ) (23 ) (104 ) (198)
Net income (loss) attributable to Loews Corporation
           $     608         $     25         $     60         $     24         $     (34)         $     683

Nine Months Ended September 30, 2016    CNA Financial Diamond
Offshore Boardwalk
Pipeline Loews
Hotels & Co Corporate Total
(In millions)
Revenues:

Insurance premiums
           $     5,196         $     5,196
Net investment income
   1,461         $     1         $     108 1,570
Investment gains (losses)
   30 (12 ) 18
Contract drilling revenues
   1,141 1,141
Other revenues
   297 69         $     961         $     513 2 1,842
Total
   6,984 1,199 961 513 110 9,767
Expenses:

Insurance claims and policyholders’ benefits
   3,949 3,949
Amortization of deferred acquisition costs
   926 926
Contract drilling expenses
   598 598
Other operating expenses
   1,158 1,082 615 479 82 3,416
Interest
   127 69 136 17 54 403
Total
   6,160 1,749 751 496 136 9,292
Income (loss) before income tax
   824 (550 ) 210 17 (26 ) 475
Income tax (expense) benefit
   (203 ) 78 (44 ) (10 ) 8 (171)
Net income (loss)
   621 (472 ) 166 7 (18 ) 304
Amounts attributable to noncontrolling interests
   (64 ) 228 (104 ) 60
Net income (loss) attributable to Loews Corporation
           $     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

3
3

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

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with our Consolidated Condensed Financial Statements included under Item 1 of this Report, Risk Factors included under Part II, Item 1A of this Report, Risk Factors included in our Quarterly Report on Form

10-Q

for the quarter ended March 31, 2019 and the Consolidated Financial Statements, Risk Factors, and MD&A included in our Annual Report on Form

10-K

for the year ended December 31, ~~2016.~~2018. This MD&A is comprised of the following sections:


	~~Page~~ ~~No.~~
~~Overview~~	40
	Page No.
Overview		37
Results of Operations	41	38
Consolidated Financial Results	41	38
~~Acquisition of Consolidated Container Company~~CNA Financial	41	39
~~CNA Financial~~Diamond Offshore	42	47
~~Diamond Offshore~~Boardwalk Pipelines	47	49
~~Boardwalk Pipeline~~	49
Loews Hotels & Co		51
Corporate		52
Liquidity and Capital Resources	53	52
Parent Company	53	52
Subsidiaries		53
Investments	55	54
Critical Accounting Estimates		58
Accounting Standards Update		58
Forward-Looking Statements		58

OVERVIEW

We are a holding company and have five reportable segments comprised of four individual operating subsidiaries, CNA Financial Corporation (“CNA”), Diamond Offshore Drilling, Inc. (“Diamond Offshore”), Boardwalk Pipeline Partners, LP (“Boardwalk ~~Pipeline”~~Pipelines”) and Loews Hotels Holding Corporation (“Loews Hotels & Co”); and ~~our~~the 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.

We rely upon our invested cash balances and distributions from our subsidiaries to generate the funds necessary to meet our obligations and to declare and pay any dividends to our shareholders. The ability of our subsidiaries to pay dividends is subject to, among other things, the availability of sufficient earnings and funds in such subsidiaries, applicable state laws, including in the case of the insurance subsidiaries of CNA, laws and rules governing the payment of dividends by regulated insurance companies (see Note 1314 of the Consolidated Financial Statements in our Annual Report on Form

10-K

for the year ended December 31, ~~2016)~~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.

Unless the context otherwise requires, references in this Report to “Loews Corporation,” “the Company,” “Parent Company,” “we,” “our,” “us” or like terms refer to the business of Loews Corporation excluding its subsidiaries.

RESULTS OF OPERATIONS

Consolidated Financial Results

The following table summarizes net income (loss) attributable to Loews Corporation by segment and net income ~~(loss)~~ per share attributable to Loews Corporation for the three and nine months ended September 30, ~~2017~~2019 and ~~2016:~~

   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 income attributable to Loews Corporation for the three months ended September 30, ~~2017~~2019 was ~~$157~~$72 million, or ~~$0.46~~$0.24 per share, compared to ~~$327~~$278 million, or ~~$0.97~~$0.88 per share in the ~~2016~~comparable 2018 period. Net income attributable to Loews Corporation for the nine months ended September 30, ~~2017~~2019 was ~~$683~~$715 million, or ~~$2.02~~$2.34 per share, compared to ~~$364~~$801 million, or ~~$1.08~~$2.49 per share in the ~~2016~~comparable 2018 period.

Net income for the three and nine months ended September 30, 2019 included a charge of $151 million (after tax and noncontrolling interests) related to the recognition of an active life reserve premium deficiency in the long term care business at CNA that was primarily driven by changes in interest rate assumptions. Absent this charge, net income for the three months ended September 30, ~~2017 included several significant items. In the third quarter of 2017, the Company incurred $170 million of net catastrophe losses at CNA as compared~~2019 decreased mainly due to ~~$10 million in 2016, and a loss of $35 million in the aggregate on the early redemption of debt~~lower results at CNA and Diamond ~~Offshore. Excluding these significant items, earnings increased $25 million as compared to the prior year period mainly due to~~Offshore, partially offset by higher ~~earnings at CNA, Diamond Offshore and improved results from the~~ parent company net investment ~~portfolio.~~

~~Net income~~income.

Earnings for the nine months ended September 30, ~~2017 included~~2019 were impacted by the ~~aggregate debt redemption loss discussed above, net catastrophe losses~~long term care charge at CNA ~~of $213 million in 2017 as compared with $85 million in 2016, a loss on the sale of a processing facility at Boardwalk Pipeline of $15 million in 2017~~ and ~~asset impairment charges~~lower results at Diamond Offshore, ~~of $23 million in 2017 as compared with $267 million in 2016. Excluding these items, earnings increased $253 million mainly due to~~partially offset by higher earnings at ~~CNA, Diamond Offshore~~Boardwalk Pipelines reflecting Loews’s 100% ownership of the company in 2019 as compared to 51% for a portion of the prior year period, and ~~Loews Hotels & Co.~~

~~Unless the context otherwise requires, references herein to~~higher parent company net ~~operating income (loss), net realized~~ investment ~~results and net income (loss) reflect amounts attributable to Loews Corporation shareholders.~~

income.

CNA Financial

The following table summarizes the results of operations for CNA for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 as presented in Note 1213 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report. For further discussion of Net investment income and Net ~~realized~~ investment ~~results,~~gains (losses), see the Investments section of this MD&A.

   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

Three Months Ended September 30, ~~2017~~2019 Compared to ~~2016~~

2018

Net income attributable to Loews Corporation decreased ~~$178~~$204 million for the three months ended September 30, ~~2017~~2019 as compared with the ~~2016 period, driven by significantly higher~~2018 period. Net income decreased primarily as a result of a $216 million charge ($151 million after tax and noncontrolling interests) related to the recognition of a premium deficiency as a result of the third quarter gross premium valuation (“GPV”) in the long term care business and unfavorable net ~~catastrophe losses~~prior year loss reserve development in the current year period, a loss of $24 million (after tax and noncontrolling interests) on the early redemption of debt in 2017 and lower net realized investment results. These decreases were partially offset by improved~~non-catastrophe~~ current accident year underwriting results. Favorable net prior year development of $134 million and $137 million was recorded in the three months ended September 30, 2017 and 2016. Further information on net prior year development is included in Note 6 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

period.

Nine Months Ended September 30, ~~2017~~2019 Compared to ~~2016~~

2018

Net income ~~increased $51~~attributable to Loews Corporation decreased $151 million for the nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period ~~primarily due~~driven by the charge related to the recognition of a premium deficiency as a result of the third quarter GPV discussed above and lower favorable net prior year loss reserve development as well as a $15 million charge (after tax and noncontrolling interests) related to the early retirement of debt, partially offset by higher net investment income driven by limited partnership and common stock returns and higher net investment gains. In addition, there was adverse prior year reserve development recorded for the nine months ended September 30, 2018 under the 2010 asbestos and environmental pollution (“A&EP”) loss portfolio transfer ~~improvednon-catastrophe~~ ~~current accident year underwriting results, higher net investment income~~as further discussed in Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

CNA’s Property & Casualty and improved net realized investment results. These increases were partially offset by significantly higher net catastrophe losses in the current year period, lower favorable net prior year loss reserve development and a loss of $24 million (after tax and noncontrolling interests) on the early redemption of debt in 2017. Favorable net prior year development of $229 million and $309 million was recorded in the nine months ended September 30, 2017 and 2016.

Other Insurance Operations

CNA’s ~~Core andNon-Core~~ ~~Operations~~

~~CNA’s core business is its~~commercial property and casualty insurance operations ~~that~~(“Property & Casualty Operations”) include its Specialty, Commercial and International lines of business. CNA’s~~non-core~~ ~~operations~~ Other Insurance Operations outside of Property & Casualty Operations include its long term care business that is in

run-off,

certain corporate expenses, including interest on CNA’s corporate debt, and certain property and casualty businesses in

run-off,

including CNA Re and A&EP. CNA’s products and services are primarily marketed through independent agents, brokers and managing general underwriters to a wide variety of customers, including small, medium and large businesses, insurance companies, associations, professionals and other groups. We believe the presentation of CNA as one reportable segment is appropriate in accordance with applicable accounting standards on segment reporting. However, for purposes of this discussion and analysis of the results of operations, we provide greater detail with

respect to CNA’s ~~core~~Property & Casualty Operations and~~non-core~~ ~~operations~~ Other Insurance Operations to enhance the reader’s understanding and to provide further transparency into key drivers of CNA’s financial results.

In assessing CNA’s insurance operations, the Company utilizes the ~~net operating~~core income (loss) financial measure. ~~Net operating~~Core income (loss) is calculated by excluding from net income (loss) ~~the after tax and noncontrolling interests effects of~~ (i) net ~~realized~~ investment gains or losses, (ii) income or loss from discontinued operations, ~~and~~ (iii) any cumulative effects of changes in accounting ~~guidance.~~guidance and (iv) deferred tax asset and liability remeasurement as a result of an enacted U.S. federal tax rate change. In addition, core income (loss) excludes the effects of noncontrolling interests. The calculation of ~~net operating~~core income (loss) excludes net ~~realized~~ investment gains or losses because net ~~realized~~ investment gains or losses ~~are largely discretionary, except for some losses related to other than temporary impairments (“OTTI”), and~~ are generally driven by economic factors that are not necessarily consistent with key drivers of underwriting performance, and are therefore not considered an indication of trends in insurance operations. ~~Net operating~~Core income (loss) is deemed to be a

non-GAAP

financial measure and management believes this measure is useful to investors as management uses this measure to assess financial performance.

Property ~~and~~& Casualty Operations

In evaluating the results of ~~the property and casualty operations,~~Property & Casualty Operations, CNA utilizes the loss ratio, the expense ratio, the dividend ratio and the combined ratio. These ratios are calculated using GAAP financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders’ dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios. In addition, CNA also utilizes renewal premium change, rate, retention and new business in evaluating operating trends. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. Rate represents the average change in price on policies that renew excluding exposure ~~change.~~changes. For certain products within Small Business, where quantifiable, rate includes the influence of new business as well. Exposure represents the measure of risk used in the pricing of the insurance product. Retention represents the percentage of premium dollars renewed in comparison to the expiring premium dollars from policies available to renew. ~~Rate, renewal~~Renewal premium change, rate and retention presented for the prior ~~year is~~period are updated to reflect subsequent activity on policies written in the period. New business represents premiums from policies written with new customers and additional policies written with existing customers.

Gross written premiums, excluding third party captives, excludes business which is mostly ceded to third party captives, including business related to large warranty programs.

The following tables summarize the results of CNA’s ~~property and casualty operations~~Property & Casualty Operations for the three and nine months ended September 30, ~~2017~~2019 and ~~2016:~~

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

Three Months Ended September 30, 2016    Specialty Commercial International Total
(In millions, except %)

Net written premiums
   $ 733 $ 684 $ 207 $ 1,624
Net earned premiums
   704 719 210 1,633
Net investment income
   140 175 13 328
Net operating income
   175 102 18 295
Net realized investment gains
   5 8 4 17
Net income
   180 110 22 312
Other performance metrics:

Loss and loss adjustment expense ratio
   46.8 % 62.2 % 55.4 % 54.7 %
Expense ratio
   32.5 37.1 37.8 35.2
Dividend ratio
   0.6 0.5 0.5
Combined ratio
   79.9 % 99.8 % 93.2 % 90.4 %

Rate
   0 % (3 )% (1 )% (1 )%
Renewal premium change
   2 5 (1 ) 3
Retention
   88 84 74 84
New business
   $ 66 $ 135 $ 67 $ 268
Nine Months Ended September 30, 2017
Net written premiums
   $ 2,100 $ 2,169 $ 664 $ 4,933
Net earned premiums
   2,056 2,097 629 4,782
Net investment income
   407 482 38 927
Net operating income (loss)
   420 210 (7 ) 623
Net realized investment gains
   15 20 13 48
Net income
   435 230 6 671
Other performance metrics:

Loss and loss adjustment expense ratio
   55.5 % 70.1 % 70.6 % 63.9 %
Expense ratio
   31.8 35.3 37.2 34.0
Dividend ratio
   0.1 0.5 0.3
Combined ratio
   87.4 % 105.9 % 107.8 % 98.2 %

Rate
   0 % 0 % 0 % 0 %
Renewal premium change
   2 1 1 1
Retention
   89 86 78 86
New business
   $ 187 $ 429 $ 207 $ 823
Nine Months Ended September 30, 2016
Net written premiums
   $     2,108 $     2,172 $ 637 $     4,917
Net earned premiums
   2,088 2,103 605 4,796
Net investment income
   380 465 38 883
Net operating income (loss)
   436 251 (1 ) 686
Net realized investment gains
   1 1 10 12
Net income
   437 252 9 698
Other performance metrics:

Loss and loss adjustment expense ratio
   52.6 % 64.6 % 65.2 % 59.4 %
Expense ratio
   32.0 36.7 38.2 34.9
Dividend ratio
   0.3 0.4 0.3
Combined ratio
   84.9 % 101.7 % 103.4 % 94.6 %

Rate
   1 % (2 )% (1 )% (1 )%
Renewal premium change
   2 4 (1 ) 2
Retention
   88 84 78 85
New business
   $ 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

Three Months Ended September 30, ~~2017~~2019 Compared to ~~2016~~

2018

Total ~~net~~gross written premiums ~~decreased $25~~increased $149 million for the three months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period. ~~Net written premiums for Specialty decreased $28 million, partially offset by a $3 million increase for Commercial and~~Total net written premiums ~~were consistent for International~~increased $127 million for the three months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period. The decrease for Specialty was largely driven by the timing of certain renewals. Renewal premium change was flat. Retention remained strong at 89% and new business was at relatively consistent levels. The increase

Gross written premiums for Commercial ~~was~~increased $102 million for the three months ended September 30, 2019 as compared with the 2018 period driven by higher new business ~~within Middle Markets,~~and rate. Net written premiums for Commercial increased $78 million for the three months ended September 30, 2019 as ~~well as strong retention and positive renewal premium change.~~compared with the 2018 period. The ~~change~~increase in net earned premiums was consistent with the trend in net written ~~premiums.~~

~~Total net operating income decreased $146~~premiums in recent quarters for Commercial for the three months ended September 30, 2019.

Gross written premiums, excluding third party captives, for Specialty increased $64 million for the three months ended September 30, ~~2017~~2019 as compared with the ~~2016 period. The decrease in net operating income was primarily due to significantly higher net catastrophe losses in the current year~~2018 period, ~~partially offset~~driven by ~~improvednon-catastrophe~~ ~~current accident year underwriting results. Catastrophe losses were $170~~strong retention and rate. Net written premiums for Specialty increased $44 million ~~including $4 million from reinsurance reinstatement premium (after tax and noncontrolling interests)~~ for the three months ended September 30, ~~2017~~2019 as compared towith the 2018 period. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters for Specialty for the three months ended September 30, 2019.

Gross written premiums for International decreased $4 million for the three months ended September 30, 2019 as compared with the 2018 period. Excluding the effect of foreign currency exchange rates, gross written premiums increased $1 million, or 1% driven by growth in Canada largely offset by the premium reduction from Hardy’s strategic exit from certain business classes announced in the fourth quarter of 2018. Net written premiums for International increased $5 million for the three months ended September 30, 2019 as compared with the 2018 period. Excluding the effect of foreign currency exchange rates, net written premiums increased $10 million, ~~(after tax and noncontrolling interests)~~or 5%, for the three months ended September 30, 2019 as compared with the 2018 period driven by a change in the ~~2016 period.~~

~~Favorable~~timing 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.

Core income decreased $64 million for the three months ended September 30, 2019 as compared with the 2018 period primarily due to unfavorable net prior year loss reserve development partially offset by lower net catastrophe losses.

Net catastrophe losses were $32 million for the three months ended September 30, 2019 as compared with $46 million in the 2018 period. For the three months ended September 30, 2019 and 2018, Specialty had net catastrophe losses of $3 million and $16 million, Commercial had net catastrophe losses of $25 million in both periods and International had net catastrophe losses of $4 million and $5 million.

Unfavorable net prior year loss reserve development of ~~$134~~$16 million ~~and $137~~as compared with favorable net prior year loss reserve development of $60 million was recorded for the three months ended September 30, ~~2017~~2019 and ~~2016.~~2018. For the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, Specialty recorded favorable net prior year loss reserve development of ~~$112~~$20 million ~~for each period,~~and $53 million and Commercial recorded unfavorable net prior year loss reserve development of $35 million as compared with favorable net prior year loss reserve development of ~~$18~~$5 million. For the three months ended September 30, 2019 and 2018, International recorded unfavorable net prior year loss reserve development of $1 million ~~and $8 million and International recorded~~as compared with favorable net prior year loss reserve development of ~~$4 million and $17~~$2 million. Further information on net prior year loss reserve development is included in Note 65 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Specialty’s combined ratio increased 2.4 points for the three months ended September 30, 2017 as compared with the 2016 period. The loss ratio increased 4.0 points driven by higher net catastrophe losses which were $38 million, or 5.4 points of the loss ratio, for the three months ended September 30, 2017 as compared with $1 million, or 0.2 points of the loss ratio, for the 2016 period. The loss ratio, excluding catastrophes and development, improved 1.3 points. Specialty’s expense ratio improved 1.2 points for the three months ended September 30, 2017 as compared with the 2016 period reflecting both CNA’s ongoing efforts to improve productivity and the actions undertaken in last year’s third and fourth quarters to reduce expenses.

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 improved~~non-catastrophe~~ current accident year underwriting results. Net catastrophe losses were $173 million, or 23.9 points of the loss ratio, for the three months ended September 30, 2017, as compared with $12 million, or 1.6 points of the loss ratio, for the 2016 period. The loss ratio, excluding catastrophes and development, improved 1.2 points. The expense ratio improved 2.8 points for the three months ended September 30, ~~2017~~2019 as compared with the ~~2016 period reflecting both CNA’s ongoing efforts to improve productivity and the actions undertaken in last year’s third and fourth quarters to reduce expenses.~~

~~International’s combined~~2018 period. The loss ratio increased ~~32.7~~3.3 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, ~~2017~~2019 as compared with the ~~2016~~same period in 2018 driven by a favorable acquisition ratio.

Commercial’s combined ratio increased 4.2 points for the three months ended September 30, 2019 as compared to the 2018 period. The loss ratio increased ~~33.0~~5.8 points ~~driven by higher net catastrophe losses and lower favorable~~primarily due to unfavorable net prior year loss ~~reserve development. Net catastrophe losses were $58 million, or 27.5 points of~~development in the ~~loss~~current year period. The expense ratio for the three months ended September 30, ~~2017~~2019 improved 1.5 points as compared with ~~$3 million, or 1.5~~the 2018 period driven by a favorable acquisition ratio.

International’s combined ratio increased 3.5 points ~~of the loss ratio,~~ for the ~~2016~~three months ended September 30, 2019 as compared with the 2018 period. The loss ratio ~~excluding catastrophes and~~increased 1.8 points, driven by unfavorable net prior year loss reserve development ~~was 0.5 points higher than~~in the current year period as compared with favorable development in the prior year ~~period. International’s~~period and an increase in large property losses in Hardy and Europe. The expense ratio ~~improved 0.3 points.~~

increased 1.7 points for the three months ended September 30, 2019 as compared with the 2018 period driven by lower net earned premiums.

Nine Months Ended September 30, ~~2017~~2019 Compared to ~~2016~~

2018

Total ~~net~~gross written premiums increased ~~$16~~$184 million for the nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period. ~~Net~~Total net written premiums ~~for International~~ increased ~~$27~~$225 million for the nine months ended September 30, ~~2017~~2019 as compared with the ~~2016 period due to higher new business and positive renewal premium change. Net~~2018 period.

Gross written premiums for ~~Specialty decreased $8~~Commercial increased $262 million for the nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period driven by ~~lower~~higher new ~~business.~~business and rate. Net written premiums for Commercial ~~decreased $3~~increased $197 million for the nine months ended September 30, ~~2017~~2019 as compared with the 2016 period, due to unfavorable premium development driven by a premium rate adjustment within its Small Business unit as discussed in Note 11 to the Consolidated Condensed Financial Statements under Item 1. This was partially offset by higher new business within Middle Markets, strong retention and positive renewal premium change.2018 period. The ~~change~~increase in net earned premiums was consistent with the trend in net written ~~premiums.~~

~~Total net operating income decreased $63~~premiums in recent quarters for Commercial for the nine months ended September 30, 2019.

Gross written premiums for Specialty, excluding third party captives, increased $133 million for the nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period driven by higher new business, strong retention and rate. Net written premiums for Specialty increased $81 million for the nine months ended September 30, 2019 as compared with the 2018 period. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters for Specialty for the nine months ended September 30, 2019.

Gross written premiums for International decreased $47 million for the nine months ended September 30, 2019 as compared with the 2018 period. Excluding the effect of foreign currency exchange rates, gross written premiums decreased by $17 million, or 2%, for the nine months ended September 30, 2019 as compared with the 2018 period driven by the premium reduction from Hardy’s strategic exit from certain business classes announced in the fourth quarter of 2018. Net written premiums for International decreased $53 million for the nine months ended September 30, 2019 as compared with the 2018 period. Excluding the effect of foreign currency exchange rates, net written premiums decreased $25 million, or 3%, for the nine months ended September 30, 2019 as compared with the 2018 period. The decrease in net ~~operating~~earned premiums was consistent with the trend in net written premiums in recent quarters for International for the nine months ended September 30, 2019.

Core income ~~was~~decreased $98 million for the nine months ended September 30, 2019 as compared with the 2018 period primarily due to ~~significantly higher net catastrophe losses in the current year period and~~ lower favorable net prior year loss reserve development, partially offset by ~~improvednon-catastrophe~~ ~~current accident year underwriting results and~~ higher net investment ~~income. In addition, results reflect the favorable period over period effect of foreign currency exchange. Catastrophe~~income driven by higher limited partnership and common stock returns.

Net catastrophe losses were ~~$213~~$128 million ~~including $4 million from reinsurance reinstatement premium (after tax and noncontrolling interests)~~ for the nine months ended September 30, ~~2017~~2019 as compared towith $106 million in the 2018 period. For the nine months ended September 30, 2019 and 2018, Specialty had net catastrophe losses of ~~$85~~$16 million ~~(after tax~~ and ~~noncontrolling interests) for the 2016 period.~~

$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.

Favorable net prior year loss reserve development of ~~$229~~$29 million and ~~$309~~$158 million was recorded for the nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018. For the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, Specialty ~~recorded favorable net prior year development of $176 million and $229 million. Commercial~~ recorded favorable net prior year loss reserve development of ~~$65~~$58 million and $127 million, Commercial recorded unfavorable ~~premium~~net prior year loss reserve development of ~~$27~~$15 million ~~for the nine months ended September 30, 2017~~ as compared with favorable net prior year loss reserve development of ~~$37~~$27 million and ~~favorable premium~~International recorded unfavorable net prior year loss reserve development of $7$14 million ~~for the 2016 period. International recorded~~as compared with favorable net prior year loss reserve development of ~~$15 million and $36 million for the nine months ended September 30, 2017 and 2016.~~$4 million. Further information on net prior year loss reserve development is included in Note 65 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Specialty’s combined ratio increased ~~2.5~~3.8 points for the nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period. The loss ratio increased ~~2.9~~3.0 points primarily due to lower favorable net prior year loss reserve development. The expense ratio increased 0.8 points for the nine months ended September 30, 2019 as compared with the 2018 period driven by higher employee costs.

Commercial’s combined ratio increased 3.9 points for the nine months ended September 30, 2019 as compared to the 2018 period. The loss ratio increased 4.6 points driven by the current accident year and unfavorable net prior year loss reserve development ~~and higher net catastrophe losses. Net catastrophe losses were $47 million, or 2.3 points of~~in the ~~loss~~current year period. The expense ratio for the nine months ended September 30, ~~2017~~2019 improved 0.6 points as compared with ~~$14 million, or 0.7 points of~~ the ~~loss~~2018 period driven by a favorable acquisition ratio ~~for the 2016 period. The loss~~partially offset by higher employee costs.

International’s combined ratio ~~excluding catastrophes and development, improved 1.0 point. Specialty’s expense ratio improved 0.2~~increased 0.4 points for the nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period.

~~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 ~~4.2~~0.7 points for the nine months ended September 30, ~~2017~~2019 as compared with the ~~2016 period. The loss ratio increased 5.5 points primarily~~2018 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~~

Other Insurance Operations

The following table summarizes the results of CNA’s~~non-core~~ ~~operations~~ Other Insurance Operations for the three and nine months ended September 30, ~~2017~~2019 and ~~2016:~~

   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
)

Three Months Ended September 30, ~~2017~~2019 Compared to ~~2016~~

~~The net~~2018

Core loss was ~~$27~~$139 million, an increase of $151 million for the three months ended September 30, ~~2017, an increase of $23 million~~2019 as compared with the ~~2016~~2018 period. ~~This~~The increase was driven by a ~~loss~~$170 million charge related to recognition of ~~$24~~an active life reserve premium deficiency partially offset by a $44 million ~~(after tax and noncontrolling interests) on the early redemption of debt~~reduction in ~~2017, as discussed in Note 7 of the Notes to Consolidated Condensed Financial Statements~~

~~included under Item 1. The~~ long term care ~~business continued~~claim reserves resulting from the annual claim experience study. The favorable claim reserve development was primarily due to ~~produce results generally~~lower 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.

Nine Months Ended September 30, ~~2017~~2019 Compared to ~~2016~~

~~The net~~2018

Core loss was ~~$63~~$139 million, an increase of $56 million for the nine months ended September 30, ~~2017, an improvement of $78 million~~2019 as compared with the ~~2016~~2018 period. ~~This improvement was primarily driven by lower~~The drivers of core income for the nine month period were generally consistent with the three month discussion above. The prior period included

non-recurring

costs of $27 million associated with the transition to a new IT infrastructure service provider. In addition, the 2018 period included adverse net prior year reserve development ~~in 2017~~ for A&EP under the loss portfolio transfer, as further discussed in Note 65 of the Notes to Consolidated Condensed Financial Statements included under Item 1. ~~In addition,~~

Long Term Care Policyholder Reserves

Annually, CNA assesses the ~~improvement also reflects favorable morbidity partially offset by unfavorable persistency in the~~adequacy of its long term care ~~business and~~future policy benefit reserves by performing the GPV to determine if there is a ~~loss of $24 million (after tax and noncontrolling interests) on~~premium deficiency. See the ~~early redemption of debt in 2017.~~

~~Diamond Offshore~~

~~Overview~~

~~Overall fundamentals in the offshore oil and gas industry have not yet improved from those described in the Results of Operations – Diamond Offshore~~Insurance Reserves section of our MD&A included under Item 7 of our Annual Report on Form

10-K

for the year ended December 31, ~~2016. Volatility~~2018 for further information on the reserving process.

Prior to September 30, 2019, the active life reserves for long term care were based on the actuarial best estimate assumptions established at December 31, 2015 as a result of a reserve unlocking. The September 30, 2018 GPV indicated the carried reserves included a margin of approximately $182 million. The September 30, 2019 GPV indicated a premium deficiency of $216 million and future policy benefit reserves were increased accordingly. As a result, the long term care active life reserves carried as of September 30, 2019 represent management’s best estimate assumptions at that date with no margin for adverse deviation. A summary of the changes in ~~oil price~~the GPV results is presented in the table below:


(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	)

The premium deficiency was primarily driven by changes in discount rate assumptions driven by lower expected reinvestment rates, contemplating both near-term market indications and long-term normative assumptions. The premium deficiency was also adversely affected by the recognition of margin in earnings in recent quarters and changes in persistency assumptions, primarily from lower projected active life mortality rates. These unfavorable drivers were partially offset by higher than expected rate increases on active rate increase programs, new planned rate increase filings and favorable changes to the underlying morbidity and expense assumptions.

As a result of the premium deficiency, CNA’s projections no longer indicate a pattern of expected profits in earlier future years followed by expected losses in later future years. As such, CNA will no longer establish additional future policy benefit reserves for profits followed by losses in periods where the long term care business generates core income. The need for these additional future policy benefit reserves will be

re-evaluated

in connection with the next GPV, which is expected to be completed in the third quarter of 2020.

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


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

The following table summarizes policyholder reserves for CNA’s long term care operations:


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.

Non-GAAP

Reconciliation of Core Income (Loss) to Net Income

The following table reconciles core income (loss) to net income attributable to ~~multiple factors, including fluctuations in~~Loews Corporation for the ~~current~~CNA segment for the three and ~~expected level of global oil inventories~~nine months ended September 30, 2019 and ~~estimates of global oil demand, production cuts by the Organization of the Petroleum Exporting Countries (which have been extended until~~2018:


	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

Diamond Offshore

Overview

At the end of the ~~first~~third quarter of ~~2018) and~~2019, the ~~impact~~average price for Brent crude oil was at the

$60-per-barrel

level. Industry-wide floater utilization was approximately 66% based on industry analyst reports, which was relatively unchanged from the previous quarter but an increase from approximately 58% for the comparable quarter of ~~hurricanes and tropical storms~~2018. During 2019, there has been a slight improvement in average dayrates in some geographic markets; however, dayrates remain low compared to previous periods, as the U.S. Gulf of Mexico. In addition, some U.S. shale producers have resumed drilling and production activities due to their ability to quickly and more inexpensively bring oil reserves to production and therefore benefit from modestly-improved commodity prices. This has prevented crudeincrease in oil prices from ~~rising through typical~~earlier lows has not resulted in significantly higher dayrates at a sustained or consistent level. Some industry analysts indicate that, based on historical data, utilization rates will have to increase to the 80%-range before pricing power shifts to the drilling contractor from the customer.

During the first nine months of 2019, the number of contract tenders for 2020 and 2021 floater project commencements increased, primarily for work in the North Sea and Australia markets. Presently, many of these tenders have been limited to single-well contracts, with options for future wells. Although some geographic areas appear to be improving, other markets show little or no sign of recovery at this time.

From a supply and demand economics to a more sustainable level for offshore exploration and development. As a result, capital spending for offshore exploration and development continued to decline in 2017, with annual capital spending estimated byperspective, some industry analysts ~~to be up to 20% lower than reduced 2016 capital spending levels. If these~~have reported a three rig decrease in the global supply of floater rigs during the third quarter of 2019. However, the offshore contract drilling market ~~estimates are realized, it would represent three consecutive years of decline in offshore spending.~~

~~Some industry analysts have predicted that the downturn is leveling off; however, the~~remains oversupplied, providing for a challenging offshore drilling market ~~has been slow to recover and is not yet at~~in 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 than~~report, industry analysts report that there are approximately 80 stacked or uncontracted floaters and approximately 30 ~~floater rigs~~newbuild floaters currently ~~remain on order, with~~under construction that are scheduled ~~deliveries from 2017~~for delivery during the remainder of 2019 through ~~2021. The majority of~~2022. Of these rigs ~~are not~~under 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 predicted~~add to the over-supply of floaters.

As a result of these challenges, Diamond Offshore and other offshore drillers are continuing to actively seek ways to drive efficiency, reduce

non-productive

time on rigs and provide technical innovation to customers. Diamond Offshore anticipates that ~~demand for drilling rigs~~these efficiencies and innovations will result in the ~~offshore market will slowly improve, but utilization growth may not be significant enough~~faster drilling and completion of wells, leading to ~~impact dayrates for some time.~~

lower overall well costs to the benefit of its customers.

Contract Drilling Backlog

Diamond Offshore’s contract drilling backlog was ~~$2.6 billion and $3.6~~$1.8 billion as of October 1, ~~2017~~2019 (based on information available at that time) and $2.0 billion as of January 1, ~~2017~~2019 (the date reported in our Annual Report on Form

10-K

for the year ended December 31, ~~2016)~~2018). The contract drilling backlog by year as of October 1, ~~2017~~2019 is ~~$0.3~~$0.2 billion in ~~2017~~2019 (for the three-month period beginning October 1, ~~2017)~~2019), ~~$1.2~~$0.8 billion in ~~2018, $0.9~~2020 and an aggregate of $0.8 billion in ~~2019 and $0.2 billion in 2020.~~

2021 through 2024. Contract drilling backlog ~~includes $38 million and $119~~as of October 1, 2019 excludes future gross margin commitments of $30 million for ~~2017~~2019, approximately $25 million for 2020 and ~~2018 attributable~~an aggregate $75 million in 2021 through 2023, payable by a customer in the form of a guarantee of gross margin to ~~contracted work for~~be earned on future contracts or by direct payment at the~~Ocean Valorunder a contract that Petróleo Brasileiro S.A. (“Petrobras”) has attempted to terminate, which is currently in effect~~ end of each of the three respective periods, pursuant to terms of an ~~injunction granted by a Brazilian court. Petrobras appealed the granting~~existing contract.

Diamond Offshore’s contract remain in effect. Petrobras has filed an appeal of the ruling to the Superior Court of Justice. Diamond Offshore intends to continue to defend its rights under the contract, which is estimated to conclude in accordance with its terms in October of 2018. However, litigation is inherently unpredictable, and there can be no assurance as to the ultimate outcome of this matter. The rig is currently on standby earning a reduced dayrate.

~~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.

Results of Operations

The following table summarizes the results of operations for Diamond Offshore for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 as presented in Note 1213 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:

   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
)

Three Months Ended September 30, ~~2017~~2019 Compared to ~~2016~~

2018

Contract drilling revenue ~~increased $17~~decreased $39 million for the three months ended September 30, ~~2017~~2019 as compared with the 2016 period, primarily due to incremental revenue earning days for rigs of $73 million, partially offset by lower overall average daily revenue earned of $56 million. The increase was driven by incremental revenue earning days for the~~Ocean GreatWhite~~ ~~and the~~~~Ocean BlackRhino~~~~, neither of which was operating under contract during the third quarter of 2016, and the~~~~Ocean Scepter~~~~, which returned to service under a new contract offshore Mexico in early 2017. These increases were partially offset by a lower dayrate earned by the~~~~Ocean Monarch~~ ~~under a new contract that commenced in the second quarter of 2017, the cold stacking of the~~~~Ocean Victory~~ ~~in the second quarter of 2017 after completion of its contract in Trinidad and the warm stacking of the~~~~Ocean Guardian~~ ~~between contracts for much of the third quarter of 2017.~~

~~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 the~~~~Ocean GreatWhite~~~~of $9 million, which began operating during the first quarter of 2017, and the~~ ~~Ocean BlackRhino~~ ~~of $17 million and~~~~Ocean Scepter~~of $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 the~~Ocean 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 the~~Ocean 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 2016~~2018 period, primarily due to lower average daily revenue earned ~~by multiple rigs in~~reflecting 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 the~~~~Ocean Endeavor,~~~~combined with the effect~~ of lower dayrates earned under ~~new~~ contracts ~~for both the~~~~Ocean Monarch~~~~and~~ ~~Ocean BlackRhino~~~~, a lower dayrate being earned by the~~~~Ocean Valiant~~ ~~under its current contract in the North Sea~~ that commenced inafter the ~~fourth quarter of 2016, the completion of the final contract for the~~~~Ocean Ambassador~~ ~~in March of 2016 prior to the rig being sold and fewer revenue earning days for the~~~~Ocean Guardian~~ ~~andthe cold-stacked~~~~Ocean Victory~~~~. These decreases are~~2018 period. This decrease was partially offset by the effect of incremental revenue earning days, ~~for the~~~~Ocean GreatWhite~~due to fewer

non-productive

days and ~~the~~~~Ocean BlackRhino,~~~~which was warm-stacked for much~~fewer planned shipyard projects and mobilization of ~~the prior year period, and incremental revenue earning days for active deepwater floaters.~~

rigs. Contract drilling expense ~~was flat~~increased $14 million for the ~~nine~~three months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 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 loss attributable to Loews Corporation increased $21 million for the three months ended September 30, 2019 as compared with the 2018 period, reflecting lower margins from contract drilling services, primarily due to lower contract drilling revenues, higher depreciation expense due to capital expenditures since the latter part of 2018 and a loss of $3 million (after tax and noncontrolling interests) on the disposition of assets. These unfavorable impacts on results were partially offset by the absence of costs related to the settlement of a legal claim in the 2018 period. ~~Interest expense increased $50~~

Nine Months Ended September 30, 2019 Compared to 2018

Contract drilling revenue decreased $158 million for the nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period, primarily due to ~~a $35 million loss related to the redemption of debt in 2017~~lower average daily revenue earned and the ~~absence~~effect of ~~$15 million in capitalized interest for construction projects during the 2016 period.~~

~~Net results~~fewer revenue earning days. Contract drilling expense increased ~~$269~~$32 million for the nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period, primarily due to ~~a lower impairment loss recognized~~incremental 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 period~~second quarter of ~~$23~~2019 and lower fuel costs for the current fleet.

Net loss attributable to Loews Corporation increased $83 million ~~(after taxes and noncontrolling interests)~~for the nine months ended September 30, 2019 as compared with ~~$267 million (after taxes and noncontrolling interests) in~~ the ~~2016~~2018 period, ~~and reduced~~reflecting lower margins from contract drilling services, primarily due to lower contract drilling revenues, higher depreciation expense primarily due to capital expenditures and the completion of software implementation projects in 2019 and a lower ~~depreciable asset base in 2017,~~tax benefit as compared to the ~~first nine months of 2016, as a result of asset impairments recognized in 2016 and 2017. The~~prior year period. These unfavorable impacts on results were ~~also impacted~~partially offset by the absence of a $12 million ($4 million after tax and noncontrolling interests) loss on an investment in privately-held corporate bonds sold in the 2016 period. These favorable variances were partially offset by decreased revenue and higher interest expense, as discussed above. Net results were also impacted by a net income tax benefit resulting from a mix of domestic and international earnings and losses before tax, inclusive of the impairment losses recognized in 2017 and 2016 and a losscosts related to the ~~redemption~~settlement of ~~debt recognized~~a legal claim in the ~~2017~~2018 period and the absence of an impairment charge recorded in the 2018 period.

Boardwalk ~~Pipeline~~

Pipelines

Firm ~~Transportation Contracts and Growth Projects~~

~~Each year a~~Agreements

A substantial portion of Boardwalk ~~Pipeline’s~~Pipelines’ transportation and storage capacity is contracted for under firm ~~transportation agreements expire and need~~agreements. For the last twelve months ended September 30, 2019, approximately 88% of Boardwalk Pipelines’ revenues, excluding retained fuel, were derived from fixed fees under firm agreements. Boardwalk Pipelines expects to ~~be renewed or replaced as reported 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 ended December 31, 2016. In the third quarter of 2017, Boardwalk Pipeline executed an agreement regarding capacity on its Fayetteville and Greenville Laterals with Southwestern Energy Company (“Southwestern”), the largest customer on those laterals. The agreement, which remains subject to Federal Energy Regulatory Commission approval, reduces contracted volumes (or the amount of capacity under contract) on the Fayetteville Lateral for the remaining contract term and commits Southwestern to new firm transportation agreements on the Fayetteville and Greenville Laterals that begin January 1, 2021, some of which expire on December 31, 2030, and to an interim agreement on the Greenville Lateral from April of 2019 through 2020. The agreement also provides Boardwalk Pipeline the opportunity to transport natural gas produced from committed properties in the Fayetteville and Moorefield shales that are connected to the Fayetteville Lateral through 2030. Although the transaction will result in a reduction of firm transportation reservationearn revenues of approximately ~~$70 million~~$10.3 billion from ~~2017 to 2020, including reductions in 2018 and 2019 of approximately $44 million and $15 million, it provides longer-term revenue generation by addingten-years~~ ~~of firm transportation service commitments on both laterals and offers additional commodity fee revenue upside from Southwestern’s volume commitment.~~

~~Approximate projected revenues from capacity reservation and minimum bill charges~~fixed fees under committed firm ~~transportation~~ agreements in place as of September 30, ~~2017 are $1.1~~2019, 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 ended~~at 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 for~~2018, from contracts entered into ~~since December 31, 2016. The approximate projected~~during 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 charges~~fixed 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 ~~does~~for 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 ~~Pipeline~~Pipelines 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 as~~2019.

Contract renewals

Each year a ~~result~~portion of Boardwalk Pipelines’ firm transportation and storage agreements expire. Demand for firm service is primarily based on market conditions which can vary across Boardwalk Pipelines’ pipeline systems. The amount of change in firm reservation fees under contract reflects the overall market trends, including the impact from Boardwalk Pipelines’ growth projects. Boardwalk Pipelines focuses its marketing efforts on enhancing the value of the ~~increase in overall~~capacity that is up for renewal and works with customers to match gas supplies ~~demand markets, primarily in the Gulf Coast area, are growing due~~from various basins to new ~~natural gas export facilities, power plants~~ and ~~petrochemical facilities~~existing customers and ~~increased exports~~markets, including aggregating supplies at key locations along its pipelines to ~~Mexico. These developments have resulted in significant growth projects for~~provide

end-use

customers with attractive and diverse supply options. If the market perceives the value of Boardwalk ~~Pipeline, several of which were placed into service over the past twelve months. Boardwalk Pipeline has an additional $1.2 billion of growth projects under development that are expected~~Pipelines’ available capacity to be ~~placed into service through 2020, and through September 30, 2017,~~lower than its long-term view of the capacity, Boardwalk ~~Pipeline has invested $556 million~~Pipelines may seek to shorten contract terms until market perception improves.

Results of Operations

The following table summarizes the results of operations for Boardwalk ~~Pipeline~~Pipelines for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 as presented in Note 1213 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:

   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

Three Months Ended September 30, ~~2017~~2019 Compared to ~~2016~~

2018

Total revenues ~~decreased $5~~increased $17 million for the three months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period. Excluding the net effect of items offset in fuel and transportation expense, primarily retained fuel, operating revenues increased ~~$7 million. The increase was~~$17 million primarily driven by ~~an increase in transportation revenues of $15 million, which resulted from~~Boardwalk Pipelines’ recently completed growth projects, ~~recently placed into service,~~ partially offset by contract restructuring and contract expirations ~~and~~that were recontracted at overall lower ~~parking and lending and storage revenues of $5 million due to unfavorable market conditions.~~

average rates.

Operating expenses ~~decreased $21~~increased $15 million for the three months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period. Excluding items offset in operating revenues, operating expenses ~~decreased~~increased $10 million as compared with the prior year period primarily due to ~~the sale of a processing plant, as discussed in Note 5 to the Consolidated Condensed Financial Statements under Item 1~~higher maintenance project expenses and ~~a decrease in employee costs. Interest expense decreased $7 million primarily due to lower average debt levels at lower interest rates and higher capitalized interest~~an increased asset base from recently completed growth projects.

Net income attributable to Loews Corporation increased $3$1 million for the three months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period ~~primarily~~ due to the changes discussed above.

Nine Months Ended September 30, ~~2017~~2019 Compared to ~~2016~~

2018

Total revenues increased ~~$26~~$68 million for the nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period. Excluding the ~~$13 million~~net effect of ~~income from the settlement of a legal matter in the 2016 period and~~ items offset in fuel and transportation expense, primarily retained fuel, and net proceeds of approximately $24 million as a result of drawing on letters of credit due to a customer bankruptcy, operating revenues increased ~~$52 million. The increase was~~$47 million primarily driven by ~~an increase in transportation revenues of $50 million, which resulted primarily from~~Boardwalk Pipelines’ recently completed growth projects, ~~recently placed into service.~~

partially offset by contract restructuring and contract expirations that were recontracted at overall lower average rates.

Operating expenses increased ~~$31~~$18 million for the nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period. Excluding items offset in operating revenues, ~~and the $47 million loss on the sale of a processing plant,~~ operating expenses ~~decreased $7 million. Interest expense decreased $5~~increased $15 million as compared with the prior year period primarily due to higher ~~capitalized interest~~maintenance project expenses and an increased asset base from recently completed growth projects.

Net income ~~decreased $2~~attributable to Loews Corporation increased $81 million for the nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 period ~~primarily~~ due to the changes discussed ~~above.~~

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.

Loews Hotels & Co

The following table summarizes the results of operations for Loews Hotels & Co for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 as presented in Note 1213 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:

   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

Operating revenues ~~increased $5~~decreased $21 million and ~~$1 million and operating expenses increased $4 million and $3~~$35 million for the three and nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 periods primarily due to ~~an increase~~hotel renovations during the three and nine months ended September 30, 2019 and the sale of two owned hotel properties, one of which occurred in ~~revenue~~the second quarter of 2019 and one of which occurred in the third quarter of 2018. Revenues for the three months ended September 30, 2019 were also impacted by lower management fees of $2 million due to reduced operating revenues at managed properties. In addition, Loews Hotels operating revenues and expenses ~~upon completion~~for the three and nine months ended September 30, 2019 include a $12 million reduction due to the reclassification of ~~renovations at the Loews Miami Beach Hotel.~~

~~Equity income from joint ventures increased $2~~services provided to customers by a third party vendor.

Operating expenses decreased $16 million and ~~$34~~$27 million for the three and nine months ended September 30, ~~2017~~2019 as compared with the ~~2016 periods. The increase~~2018 periods due to the above stated reclassification and the aforementioned sale of an owned hotel in 2018.

Loews Hotels considers events or changes in circumstances that indicate the carrying amount of a long-lived asset may not be recoverable. Asset impairments for the nine ~~month period was primarily~~months ended September 30, 2019 include charges of $11 million in 2019 related to the

write-off

of previously capitalized costs due to the ~~$25 million gain on~~change in plans for an owned property and the sale of ~~an equity interest in the Loews Don CeSar Hotel, a joint venture hotel property, in February~~another owned property. Asset impairments of 2017, the absence of a $13 million impairment charge related to an equity interest in a joint venture hotel property in the 2016 period, the opening of a new joint venture hotel in the third quarter of 2016 and the~~400-room~~ expansion of a joint venture hotel in the second quarter of 2017. These increases were partially offset by a $15 million impairment charge in 2017 related to an equity interest in a joint venture hotel property.

~~Net income increased $1 million and $17~~$22 million for the three and nine months ended September 30, ~~2017~~2018 reflect reductions in the carrying value of two owned properties.

Interest expense decreased $1 million and $6 million for the three and nine months ended September 30, 2019 as compared with the ~~2016~~2018 periods due to additional capitalized interest on development projects in progress.

Equity income from joint ventures decreased $6 million for both the three and nine months ended September 30, 2019 as compared with the 2018 periods. The decrease for the three months ended September 30, 2019 was primarily due to

pre-opening

expenses for properties recently opened and properties currently under development of $2 million. In addition, the threat of Hurricane Dorian negatively impacted results at the properties in the Universal Orlando joint venture. The decrease for the nine months ended September 30, 2019 was primarily due to

pre-opening

expenses for properties under development of $8 million partially offset by the improved performance of several properties.

Net income decreased $8 million and $13 million for the three and nine months ended September 30, 2019 as compared to the 2018 period due to the changes discussed above.

Corporate

Corporate operations consist primarily of investment income at the Parent Company, operating results of Consolidated Container, ~~from the May 22, 2017 acquisition date,~~ corporate interest expenses and other corporate administrative costs. Investment income includes earnings on cash and short term investments held at the Parent Company to meet current and future liquidity needs, as well as results of limited partnership investments and the Parent Company trading portfolio.

The following table summarizes the results of operations for Corporate for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 as presented in Note 1213 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:

   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	)

Net investment income increased $12 million for the three months ended September 30, 2017 as compared with the 2016 period, primarily due to improved performance from equity based investments in the trading portfolio, partially offset by lower results from limited partnership investments. Net investment income increased $1 million for the nine months ended September 30, 2017 as compared with the 2016 period, primarily due to improved performance from limited partnership investments, partially offset by lower results from equity based investments in the trading portfolio.

~~Other revenues increased $200~~$31 million and ~~$292~~$92 million for the three and nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 periods primarily due to ~~$202 million and $293 million~~improved performance of ~~revenue from Consolidated Container’s operations for~~equity 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 absence~~lower income from limited partnership investments as a result of ~~prior year expenses related to the implementation of the 2016 Incentive Compensation Plan. Interest expense~~lower invested balances.

Other revenues increased ~~$10~~$27 million and ~~$14~~$36 million for the three and nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 periods, ~~primarily due to interest expense associated with~~reflecting an increase in Consolidated Container’s ~~$605~~operations of $35 million ~~term loan from the date of acquisition of Consolidated Container.~~

~~Net results improved $5~~and $43 million ~~for~~related to acquisitions in 2019. For the three months ended September 30, ~~2017~~2019 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 $16~~expenses 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.

Operating and other expenses increased $20 million and $26 million for the three and nine months ended September 30, ~~2017~~2019 as compared with the ~~2016~~2018 periods, primarily due to an increase in Consolidated Container’s expenses of $35 million and $44 million related to acquisitions in 2019 and operating personnel expenses at Consolidated Container, partially offset by lower corporate overhead expenses. Interest expenses increased $4 million for the three and nine months ended September 30, 2019 as compared with the 2018 periods, primarily due to incremental borrowings associated with funding Consolidated Container’s 2019 acquisitions.

Net results improved $26 million and $80 million for the three and nine months ended September 30, 2019 as compared with the 2018 periods primarily due to the changes discussed above.

LIQUIDITY AND CAPITAL RESOURCES

Parent Company

Parent Company cash and investments, net of receivables and payables, totaled $3.5 billion at September 30, ~~2017 totaled $5.1 billion,~~2019 as compared ~~with $5.0~~to $3.1 billion at December 31, ~~2016.~~2018. During the nine months ended September 30, ~~2017,~~2019, we received ~~$719~~$817 million in dividends from our subsidiaries, including a special dividend from CNA of $485 million. Cash inflows also included $183 million from Loews Hotels & Co. Cash outflows included the payment of ~~$620~~$643 million to fund the acquisition of Consolidated Container, which was in addition to approximately $600 million of debt financing proceeds at the subsidiary level as discussed in Note 7 to the Consolidated Condensed Financial Statements under Item 1. In addition, cash outflows included the payment of $63treasury stock purchases and $57 million of cash dividends to our ~~shareholders and $6 million to fund treasury stock purchases.~~shareholders. As a holding company we depend on dividends from our subsidiaries and returns on our investment portfolio to fund our obligations. We ~~are not responsible for the liabilities and obligations~~also have an

effective ~~Registration Statement on FormS-3~~registration statement on file with the Securities and Exchange Commission (“SEC”) registering the future sale of an unlimited amount of our debt and equity securities.

~~In April~~ We are not responsible for the liabilities and obligations of ~~2017, Fitch Ratings, Inc. affirmed~~ our ~~unsecured debt rating~~subsidiaries and there are no Parent Company guarantees.

Depending on market and other conditions, we may purchase our shares and shares of our subsidiaries outstanding common stock in the open market or otherwise. During the nine months ended September 30, 2019, we purchased 13.2 million shares of Loews common stock. As of October 25, 2019, we had purchased an additional 1.8 million shares of Loews common stock at A, with the rating outlook revised to negative from stable and in June of 2017, S&P Global Ratings (“S&P”) lowered our corporate credit and senior debt ratings from A+ to A with a stable outlook. Our current unsecured debt rating is A3 for Moody’s Investors Service, Inc. (“Moody’s”), with a stable outlook. Should one or more rating agencies downgrade our credit ratings from current levels, or announce that they have placed us under review for a potential downgrade, ouran aggregate cost of ~~capital could increase and our ability to raise new capital could be adversely affected.~~

~~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.

Future uses of our cash may include investing in our subsidiaries, new acquisitions, dividends and/or repurchases of our and our subsidiaries’ outstanding common stock.

The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend on many factors, including our earnings, financial condition and business needs.

Subsidiaries

CNA’s cash provided by operating activities was ~~$894~~$980 million for the nine months ended September 30, ~~2017~~2019 as compared with ~~$1.1 billion~~$868 million for the ~~2016~~2018 period. ~~Cash~~The increase in cash provided by operating activities ~~reflected higher net claim payments and a lower level of distributions on limited partnerships partially offset~~was driven by an increase in premiums collected and lower ~~salaries~~income taxes paid. CNA believes that its present cash flows from operating, investing and ~~related expenses paid.~~

financing activities are sufficient to fund its current and expected working capital and debt obligation needs.

CNA declared and paid dividends of ~~$2.80~~$3.05 per share on its common stock, including a special dividend of $2.00 per share, during the nine months ended September 30, ~~2017.~~2019. On October ~~27, 2017,~~25, 2019, CNA’s Board of Directors declared a quarterly dividend of ~~$0.30~~$0.35 per share on its common stock, payable ~~November 29, 2017~~December 2, 2019 to shareholders of record on November ~~13, 2017.~~11, 2019. CNA’s declaration and payment of future dividends is at the discretion of its Board of Directors and will depend on many factors, including CNA’s earnings, financial condition, business needs and regulatory constraints.

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

Dividends from the Continental Casualty Company (“CCC”), a subsidiary of CNA, are subject to the insurance holding company laws of the State of Illinois, the domiciliary state of CCC. Under these laws, ordinary dividends, or dividends that do not require prior approval by the Illinois Department of Insurance (“Department”), are determined based on the greater of the prior year’s statutory net income or 10% of statutory surplus as of the end of the prior year, as well as the timing and amount of dividends paid in the preceding twelve months. Additionally, ordinary dividends may only be paid from earned surplus, which is calculated by removing unrealized gains from unassigned surplus. As of September 30, ~~2017,~~2019, CCC was in a positive earned surplus position. The maximum allowable dividend CCC could pay during ~~2017~~2019 that would not be subject to the Department’s prior approval is approximately ~~$1.1~~$1.4 billion, less dividends paid during the preceding twelve months measured at that point in time. CCC paid dividends of ~~$100~~$116 million during the three months ended December 31, ~~2016~~2018 and ~~$855~~$940 million during the nine months ended September 30, ~~2017.~~2019. As of September 30, ~~2017,~~2019, CCC is able to pay approximately ~~$120~~$327 million of dividends that would not be subject to prior approval of the Department. The actual level of dividends paid in any year is determined after an assessment of available dividend capacity, holding company liquidity and cash needs as well as the impact the dividends will have on the statutory surplus of the applicable insurance company.

~~CNA 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.~~

Diamond Offshore’s cash provided by operating activities for the nine months ended September 30, ~~2017~~2019 decreased ~~$125~~$203 million as compared to the ~~2016~~2018 period, ~~primarily~~ due to lower cash ~~receipts~~collected from the performance of contract drilling services and higher income tax payments, net of ~~$193 million,~~refunds, primarily in Diamond Offshore’s foreign tax jurisdictions. Incremental cash used for operations during the 2019 period was partially offset by a net decrease in cash ~~payments for~~expenditures related to contract drilling ~~expenses, including personnel-related, repairs~~ and general and administrative costs.

Diamond Offshore expects capital expenditures for the fourth quarter of 2019 to be approximately $110 million to $130 million for a total spend of approximately $360 million to $380 million in 2019. Capital expenditures in 2019 include spending associated with projects under its capital maintenance and replacement programs, including equipment upgrades for the

Ocean BlackHawk

Ocean BlackHornet

and

Ocean Courage

and other ~~rig operating~~large shipyard projects. In addition, other specific projects for 2019 include approximately $110 million in capitalized costs associated with the reactivation and upgrade of ~~$72 million. The decline in both cash receipts~~ the

Ocean Onyx

and ~~cash payments related to~~approximately $20 million associated with the ~~performance~~reactivation of ~~contract drilling services reflects continuing depressed market conditions in~~ the ~~offshore drilling industry, as well as positive results of Diamond Offshore’s continuing focus on controlling costs.~~

~~For 2017, Diamond Offshore has budgeted approximately $125 million for capital expenditures.~~

Ocean Endeavor.

At September 30, 2019, Diamond Offshore has no ~~other~~significant purchase obligations, except for ~~major~~those related to its direct rig ~~upgrades at September 30, 2017.~~

operations, which arise during the normal course of business.

As of ~~September 30, 2017,~~October 25, 2019, Diamond Offshore had ~~no outstanding borrowings under its credit agreement and was in compliance with all covenant requirements thereunder. As of October 26, 2017, Diamond Offshore had $1.5~~$1.2 billion available under its credit ~~agreement to provide liquidity for payment obligations.~~

~~In October of 2017,~~agreements.

On September 25, 2019, S&P Global Ratings (“S&P”) downgraded Diamond Offshore’s corporate and senior unsecured notes credit ratings to CCC+ from B. The rating outlook from S&P changed to B+stable from~~BB-~~ ~~with a negative outlook. In July of 2017, Moody’s downgraded~~ negative. Diamond Offshore’s current corporate credit rating ~~to Ba3 with a negative~~from Moody’s Investor Services (“Moody’s”) is B2 and its current senior unsecured notes credit rating from Moody’s is B3. The rating outlook from ~~Ba2 with a stable outlook. Market conditions~~Moody’s is negative. These credit ratings are below investment grade and ~~other factors, many of which are outside of~~could raise Diamond Offshore’s ~~control, could cause its credit ratings to be lowered. Any downgrade in Diamond Offshore’s credit ratings could adversely impact its~~ cost of issuing additional debt and the amount of additional debt that it could issue, and could further restrict its access to capital markets and its ability to raise funds by issuing additional debt. As a consequence,financing. Consequently, Diamond Offshore may not be able to issue additional debt in amounts and/or with terms that it considers to be reasonable. ~~One or more of these occurrences~~These ratings could limit Diamond Offshore’s ability to pursue other business opportunities.

Diamond Offshore will make periodic assessments of its capital spending programs based on industry conditions and will make adjustments if it determines they are required. Diamond Offshore, may, from time to time, issue debt or equity securities, or a combination thereof, to finance capital expenditures, the acquisition of assets and businesses or for general corporate purposes. Diamond Offshore has an effective shelf registration statement under which it may publicly issue debt, equity or hybrid securities from time to time. Diamond Offshore’s ability to access the capital markets by issuing debt or equity securities will be dependent on its results of operations, ~~current~~ financial condition, ~~current~~ credit ratings, ~~current~~ market conditions and other factors beyond its ~~control.~~

control at the time Diamond Offshore seeks such access.

Boardwalk ~~Pipeline’s~~Pipelines’ cash provided by operating activities increased ~~$49~~$81 million for the nine months ended September 30, ~~2017~~2019 compared to the ~~2016~~2018 period primarily due to the change in net income ~~excluding the effects ofnon-cash~~ ~~items such as depreciation, amortization~~ and the ~~loss on the sale~~timing of ~~operating assets. The increase also reflects the settlement of the Gulf South rate refund in the 2016 period.~~

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.

For the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, Boardwalk ~~Pipeline’s~~Pipelines’ capital expenditures were ~~$496~~$263 million and ~~$432~~$345 million, consisting of a combination of growth and maintenance ~~capital expenditures.~~capital. During the nine months ended September 30, 2019 and 2018, Boardwalk ~~Pipeline expects total capital expenditures~~Pipelines purchased $13 million and $10 million of natural gas to be ~~approximately $790~~used as base gas for its pipeline system.

As of September 30, 2019, Boardwalk Pipelines had $260 million ~~in 2017, primarily related to growth projects and pipeline system maintenance.~~

of outstanding borrowings under its credit facility. Boardwalk ~~Pipeline~~Pipelines 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 ~~Pipeline~~Pipelines may seek to access the ~~capital~~debt markets to fund some or all capital expenditures for growth projects, acquisitions or for general ~~business~~corporate purposes. Boardwalk ~~Pipeline’s ability~~Pipelines has an effective shelf registration statement under which it may publicly issue debt securities, warrants or rights from time to ~~access~~time.

Boardwalk Pipelines paid distributions of $77 million for the ~~capital markets~~nine months ended September 30, 2019 and 2018. The Company received distributions of $77 million and $52 million for ~~equity~~the nine months ended September 30, 2019 and 2018. The distributions received in 2019 reflect the Company owning 100% of Boardwalk Pipelines, which increased from 51% with the purchase of Boardwalk Pipelines common units on July 18, 2018.

For the nine months ended September 30, 2019, Consolidated Container paid approximately $260 million to complete three acquisitions of plastic packaging manufacturers located in the U.S. and Canada, funded with approximately $250 million of debt financing ~~under reasonable terms depends on its financial condition, credit ratings~~proceeds and ~~market conditions.~~

available cash, see Notes 2 and 7 for further discussion.

INVESTMENTS

Investment activities of

non-insurance

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

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

Credit exposure associated with

non-performance

by counterparties to our derivative instruments is generally limited to the uncollateralized change in fair value of the derivative instruments recognized in the Consolidated Condensed Balance Sheets. We mitigate the risk of

non-performance

by monitoring the creditworthiness of counterparties and diversifying derivatives by using multiple counterparties. We occasionally require collateral from our derivative investment counterparties depending on the amount of the exposure and the credit rating of the counterparty.

Insurance

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

Net Investment Income

The significant components of CNA’s ~~Net~~net investment income are presented in the following ~~table:~~

   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

non-redeemable

preferred stock.


	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	%

Net investment income after tax and noncontrolling interests for the three months ended September 30, ~~2017~~2019 decreased $8$1 million as compared with the ~~2016~~2018 period. ~~The decrease was~~Net investment income after tax and noncontrolling interests increased $56 million for the nine months ended September 30, 2019 as compared with the 2018 period, driven by limited partnership ~~investments, which returned 2.2% in 2017 as compared with 2.6%~~and common stock returns.

Net Investment Gains (Losses)

The components of CNA’s net investment gains (losses) are presented in the ~~2016 period. Income from fixed maturity securities,~~following table:


	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

Net investment gains after tax and noncontrolling interests for the three months ended September 30, ~~2017 increased $2~~2019 decreased $6 million as compared with the ~~2016 period, primarily due to an increase~~2018 period. The decrease was driven by higher OTTI losses recognized in ~~the invested asset base.~~

earnings.

Net investment ~~income~~gains after tax and noncontrolling interests for the nine months ended September 30, ~~2017~~2019 increased ~~$41~~$10 million as compared with the ~~2016~~2018 period. The increase was driven by ~~limited partnership investments, which returned 6.8%~~the favorable change in ~~2017 as compared with 3.8% in the prior year period. Income from fixed maturity securities,~~

~~after tax and noncontrolling interests, for the nine months ended September 30, 2017 increased $13 million as compared with the 2016 period, primarily due to an increase in the invested asset base.~~

~~Net Realized Investment Gains (Losses)~~

~~The components~~fair 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~~

non-redeemable

preferred stock, partially offset by ~~lower~~higher OTTI losses recognized in earnings. ~~Net realized investment gains increased $40 million for the nine months ended September 30, 2017 as compared with the 2016 period, driven by lower OTTI losses recognized in earnings.~~

Further information on CNA’s ~~realized~~investment gains and losses, including OTTI losses, is set forth in Note 3 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Portfolio Quality

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

   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

As of September 30, ~~2017~~2019 and December 31, ~~2016, only 2%~~2018, 1% of CNA’s fixed maturity portfolio was rated internally.

AAA rated securities included $1.3 billion of

pre-refunded

municipal bonds as of September 30, 2019 and December 31, 2018.

The following table presents CNA’s

available-for-sale

fixed maturity securities in a gross unrealized loss position by ratings distribution:

      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

The following table presents the maturity profile for these

available-for-sale

fixed maturity securities. Securities not due to mature on a single date are allocated based on weighted average life:

      Gross
   Estimated    Unrealized
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

Duration

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

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

Other Insurance Operations.

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

   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

The investment portfolio is periodically analyzed for changes in duration and related price risk. Additionally, CNA periodically reviews the sensitivity of the portfolio to the level of foreign exchange rates and other factors that contribute to market price changes. A summary of these risks and specific analysis on changes is included in the Quantitative and Qualitative Disclosures about Market Risk included under Item 7A of our Annual Report on Form

10-K

for the year ended December 31, ~~2016.~~

2018.

Short Term Investments

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

   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

CRITICAL ACCOUNTING ESTIMATES

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

10-K

for the year ended December 31, ~~2016~~2018 for further information.

ACCOUNTING STANDARDS UPDATE

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

FORWARD-LOOKING STATEMENTS

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

Developments in any of the risks or uncertainties facing us or our subsidiaries, including those described under Part I, Item 1A, Risk Factors in our Annual Report on Form

10-K

for the year ended December 31, ~~2016,~~2018, Part II, Item 1A, Risk Factors in our Quarterly Report on Form

10-Q

for the quarter ended ~~June 30, 2017~~March 31, 2019 and in our other filings with the SEC, could cause our results to differ materially from results that have been or may be anticipated or projected. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made and we expressly disclaim any obligation or undertaking to update these statements to reflect any change in our expectations or beliefs or any change in events, conditions or circumstances on which any forward-looking statement is based.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There were no material changes in our market risk components as of September 30, ~~2017.~~2019. See the Quantitative and Qualitative Disclosures about Market Risk included under Item 7A of our Annual Report on Form

10-K

for the year ended December 31, ~~2016 and Item 3 of our Quarterly Report on Form10-Q~~2018 for ~~the quarter ended June 30, 2017.~~further information. Additional information related to portfolio duration and market conditions is discussed in the Investments section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included under Part I, Item 2.

Item 4. Controls and Procedures.

The Company maintains a system of disclosure controls and procedures (as defined in Rules

13a-15(e)

and

15d-15(e)

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

The Company’s management, including the Company’s principal executive officer (“CEO”) and principal financial officer (“CFO”)~~, concluded~~ conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Report and, based on that evaluation, the CEO and CFO ~~have~~ concluded that the Company’s disclosure controls and procedures were effective as of September 30, ~~2017.~~

2019.

There were no changes in the Company’s internal control over financial reporting (as defined in Rules

13a-15(f)

and

15d-15(f)

under the Exchange Act) that occurred during the quarter ended September 30, ~~2017~~2019 that have materially affected or that are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Information on our legal proceedings is set forth in ~~Notes 10 and~~Note 11 to the Consolidated Condensed Financial Statements included under Part I, Item 1.

Item 1A. Risk Factors.

Our Annual Report on Form

10-K

for the year ended December 31, ~~2016~~2018 and our Quarterly Report on Form

10-Q

for the quarter ended ~~June 30, 2017~~March 31, 2019 include a detailed ~~discussions~~discussion of certain risk factors facing the company. No updates or additions have been made to such risk factors as of September 30, ~~2017.~~

2019.

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

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

Period

(a) Total number

of shares

purchased

(b) Average

price paid per

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

August 1, 2019 - August 31, 2019

1,620,985

48.55

N/A

September 1, 2019 - September 30, 2019

1,431,981

49.78

N/A

Item 6. Exhibits.


~~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, 2017 - July 31, 2017~~	~~None~~	~~N/A~~	~~N/A~~	~~N/A~~

~~August 1, 2017 - August 31, 2017~~	~~None~~	~~N/A~~	~~N/A~~	~~N/A~~

~~September 1, 2017 - September 30, 2017~~	~~None~~	~~N/A~~	~~N/A~~	~~N/A~~

~~Item 6. Exhibits.~~


~~Description of Exhibit~~	~~Exhibit~~ ~~Number~~
Description of Exhibit	Exhibit Number

Certification by the Chief Executive Officer of the Company pursuant to Rule13a-14(a) and Rule15d-14(a)		31.1*

Certification by the Chief Financial Officer of the Company pursuant to Rule13a-14(a) and Rule15d-14(a)		31.2*

Certification by the Chief Executive Officer of the Company pursuant to 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of 2002)		32.1*

Certification by the Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of 2002)		32.2*

~~XBRL Instance Document~~		101.INS *

XBRL ~~Taxonomy Extension Schema~~ Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document		~~101.SCH~~ 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 *

~~XBRL Taxonomy Label Linkbase~~		101.LAB *
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*

*Filed herewith.


	~~Yes~~ Page
	No.
Part I. Financial Information		No X


~~Class~~						~~Outstanding at October 20, 2017~~
~~Common stock, $0.01 par value~~						~~336,631,152 shares~~


	~~Page~~ ~~No.~~
~~Part I. Financial Information~~

Item 1. Financial Statements (unaudited)

Consolidated Condensed Balance Sheets September 30, ~~2017~~2019 and December 31, ~~2016~~2018		3

Consolidated Condensed Statements of Income Three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018		4

Consolidated Condensed Statements of Comprehensive Income (Loss) Three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018		5

Consolidated Condensed Statements of Equity ~~Nine~~ Three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018		6

Consolidated Condensed Statements of Cash Flows Nine months ended September 30, ~~2017~~2019 and ~~2016~~2018		7 8

Notes to Consolidated Condensed Financial Statements		8 9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		40 37

Item 3. Quantitative and Qualitative Disclosures about Market Risk		59

Item 4. Controls and Procedures		59

Part II. Other Information		59

Item 1. Legal Proceedings		59

Item 1A. Risk Factors		59

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		60 59

~~Item 6. Exhibits~~		61
Item 6. Exhibits		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


				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


	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


			Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)														Transfers		Transfers					Unrealized Gains (Losses) Recognized in Net Income on Level 3 Assets and Liabilities
2016	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)

Fixed maturity securities:
Corporate and other bonds	$	242	$	1		$	7		$	16				$	(5	)						$	261
States, municipalities and political subdivisions		2													(1	)							1
Asset-backed:
Residential mortgage-backed		134					(1	)		5					(1	)			$	(58	)		79
Commercial mortgage-backed		11								23					(8	)				(2	)		24
Other asset-backed		45								34										(36	)		43
Total asset-backed		190		-			(1	)		62		$	-		(9	)	$	-		(96	)		146	$	-
Fixed maturitiesavailable-for-sale		434		1			6			78					(15	)				(96	)		408
Fixed maturities trading		6																					6		(1	)
Total fixed maturities	$	440	$	1		$	6		$	78		$	-	$	(15	)	$	-	$	(96	)	$	414	$	(1	)


Equity securitiesavailable-for-sale	$	19	$	(1	)	$	1															$	19	$	(2	)
Equity securities trading		2							$	(1	)												1		(1	)
Total equity securities	$	21	$	(1	)	$	1		$	(1	)	$	-	$	-		$	-	$	-		$	20	$	(3	)


Life settlement contracts	$	67																				$	67
Derivative financial instruments, net		1	$	(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
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, municipalities and political 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 trading		7									(1	)										6
Total fixed maturities	$	375	$	(2	)	$	-	$	122	$	(1	)	$	(29	)	$	59	$	(32	)	$	492	$	(2	)	$	1
Equity securities	$	18	$	1																	$	19	$	1


	OTTI Gains (Losses)			Unrealized Gains (Losses) 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


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


Three Months Ended September 30, 2016	CNA Financial			Diamond Offshore			Boardwalk Pipeline			Loews Hotels & Co			Corporate			Total
(In millions)

Revenues:

Insurance premiums	$	1,767														$	1,767
Net investment income		524		$	1								$	36			561
Investment gains		45															45
Contract drilling revenues					340												340
Other revenues		97			9		$	306		$	161			1			574
Total		2,433			350			306			161			37			3,287

Expenses:

Insurance claims and policyholders’ benefits		1,202															1,202
Amortization of deferred acquisition costs		314															314
Contract drilling expenses					187												187
Other operating expenses		402			108			212			151			25			898
Interest		39			19			48			6			18			130
Total		1,957			314			260			157			43			2,731
Income (loss) before income tax		476			36			46			4			(6	)		556
Income tax (expense) benefit		(132	)		(22	)		(9	)		(1	)		1			(163)
Net income (loss)		344			14			37			3			(5	)		393
Amounts attributable to noncontrolling interests		(36	)		(7	)		(23	)								(66)
Net income (loss) attributable to Loews Corporation	$	308		$	7		$	14		$	3		$	(5	)	$	327


Nine Months Ended September 30, 2017	CNA Financial			Diamond Offshore			Boardwalk Pipeline			Loews Hotels & Co			Corporate			Total
(In millions)

Revenues:

Insurance premiums	$	5,185														$	5,185
Net investment income		1,529		$	1								$	109			1,639
Investment gains		93															93
Contract drilling revenues					1,113												1,113
Other revenues		329			30		$	987		$	510			294			2,150
Total		7,136			1,144			987			510			403			10,180

Expenses:

Insurance claims and policyholders’ benefits		4,053															4,053
Amortization of deferred acquisition costs		926															926
Contract drilling expenses					598												598
Other operating expenses		1,086			414			646			443			389			2,978
Interest		166			119			131			20			68			504
Total		6,231			1,131			777			463			457			9,059
Income (loss) before income tax		905			13			210			47			(54	)		1,121
Income tax (expense) benefit		(226	)		35			(46	)		(23	)		20			(240)
Net income (loss)		679			48			164			24			(34	)		881
Amounts attributable to noncontrolling interests		(71	)		(23	)		(104	)								(198)
Net income (loss) attributable to Loews Corporation	$	608		$	25		$	60		$	24		$	(34)		$	683


Nine Months Ended September 30, 2016	CNA Financial			Diamond Offshore			Boardwalk Pipeline			Loews Hotels & Co			Corporate			Total
(In millions)

Revenues:

Insurance premiums	$	5,196														$	5,196
Net investment income		1,461		$	1								$	108			1,570
Investment gains (losses)		30			(12	)											18
Contract drilling revenues					1,141												1,141
Other revenues		297			69		$	961		$	513			2			1,842
Total		6,984			1,199			961			513			110			9,767

Expenses:

Insurance claims and policyholders’ benefits		3,949															3,949
Amortization of deferred acquisition costs		926															926
Contract drilling expenses					598												598
Other operating expenses		1,158			1,082			615			479			82			3,416
Interest		127			69			136			17			54			403
Total		6,160			1,749			751			496			136			9,292
Income (loss) before income tax		824			(550	)		210			17			(26	)		475
Income tax (expense) benefit		(203	)		78			(44	)		(10	)		8			(171)
Net income (loss)		621			(472	)		166			7			(18	)		304
Amounts attributable to noncontrolling interests		(64	)		228			(104	)								60
Net income (loss) attributable to Loews Corporation	$	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


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


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


	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
(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


	LOEWS CORPORATION
	(Registrant)

Dated: October 28, 2019	By:	/s/ David B. Edelson
			~~LOEWS CORPORATION~~ DAVID B. EDELSON
			~~(Registrant)~~

~~Dated: October 30, 2017~~			~~By:~~	~~/s/ David B. Edelson~~ Senior Vice President and
				~~DAVID B. EDELSON~~ Chief Financial Officer
				~~Senior Vice President and~~ (Duly authorized officer
				~~Chief Financial Officer~~ and principal financial
				~~(Duly authorized officer~~
				~~and principal financial~~
				officer)