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Item 1. Financial Statements

2022-08-01 compared with 2022-05-02 · 327 added, 97 removed, 624 unchanged (40% of the section changed)

2 unchanged sentences

CONSOLIDATED CONDENSED BALANCE SHEETS

March 31, December 31,

June 30, December 31,

(Dollar amounts in millions, except per share data)

43 unchanged sentences

See accompanying Notes to Consolidated Condensed Financial Statements.

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Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended March 31

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

(In millions, except per share data)

23 unchanged sentences

See accompanying Notes to Consolidated Condensed Financial Statements.

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Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended March 31

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

(In millions)

Net income $ 202 $ 793 $ 572 $ 1,086

Other comprehensive loss, after tax

Other comprehensive income (loss), after tax

Net unrealized losses on investments with an allowance for credit losses ( 2 ) ( 6 )

Net unrealized losses on other investments ( 1,611 ) ( 627 )

Total unrealized losses on investments ( 1,615 ) ( 627 )

Net unrealized gains (losses) on other investments ( 1,346 ) 300 ( 2,957 ) ( 327 )

Total unrealized gains (losses) on investments ( 1,348 ) 300 ( 2,963 ) ( 327 )

Unrealized gains on cash flow hedges 6 8 24 12

1 unchanged sentence

Foreign currency translation ( 68 ) 11 ( 83 ) 14

Other comprehensive loss ( 1,605 ) ( 611 )

Comprehensive loss ( 1,235 ) ( 318 )

Other comprehensive income (loss) ( 1,405 ) 326 ( 3,010 ) ( 285 )

Comprehensive income (loss) ( 1,203 ) 1,119 ( 2,438 ) 801

Amounts attributable to noncontrolling interests 124 ( 72 ) 260 ( 40 )

Total comprehensive loss attributable to Loews Corporation $ ( 1,099 ) $ ( 286 )

Total comprehensive income (loss) attributable to Loews Corporation $ ( 1,079 ) $ 1,047 $ ( 2,178 ) $ 761

See accompanying Notes to Consolidated Condensed Financial Statements.

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Loews Corporation and Subsidiaries

4 unchanged sentences

(In millions)

Balance, April 1, 2021

$ 18,537 $ 3 $ 3,119 $ 14,394 $ 34 $ ( 280 ) $ 1,267

Net income 793 754 39

Other comprehensive income 326 293 33

Dividends paid ($ 0.0625 per share)

( 27 ) ( 16 ) ( 11 )

Purchase of subsidiary stock from noncontrolling interests ( 15 ) ( 15 )

Purchases of Loews Corporation treasury stock ( 219 ) ( 219 )

Stock-based compensation 3 2 1

Other — ( 1 ) 1

Balance, June 30, 2021

$ 19,398 $ 3 $ 3,121 $ 15,132 $ 327 $ ( 500 ) $ 1,315

Balance, April 1, 2022

$ 17,695 $ 2 $ 2,859 $ 15,097 $ ( 1,251 ) $ ( 132 ) $ 1,120

Net income 202 180 22

Other comprehensive loss ( 1,405 ) ( 1,259 ) ( 146 )

Dividends paid ($ 0.0625 per share)

( 26 ) ( 15 ) ( 11 )

Purchases of Loews Corporation treasury stock ( 255 ) ( 255 )

Stock-based compensation 12 11 1

Other ( 2 ) ( 1 ) ( 1 ) 1 ( 1 )

Balance, June 30, 2022

$ 16,221 $ 2 $ 2,869 $ 15,261 $ ( 2,510 ) $ ( 386 ) $ 985

See accompanying Notes to Consolidated Condensed Financial Statements.

Table of c o ntents

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF EQUITY

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, 2021

8 unchanged sentences

Other ( 4 ) ( 3 ) ( 1 )

Balance, March 31, 2021

Balance, June 30, 2021

$ 19,398 $ 3 $ 3,121 $ 15,132 $ 327 $ ( 500 ) $ 1,315

9 unchanged sentences

Other ( 3 ) ( 1 ) ( 2 ) 1 ( 1 )

Balance, March 31, 2022

Balance, June 30, 2022

$ 16,221 $ 2 $ 2,869 $ 15,261 $ ( 2,510 ) $ ( 386 ) $ 985

See accompanying Notes to Consolidated Condensed Financial Statements.

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Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

Three Months Ended March 31

Six Months Ended June 30

(In millions)

19 unchanged sentences

Purchases of property, plant and equipment ( 312 ) ( 183 )

Dispositions 52

Sale of interest in Altium Packaging 417

Change in short term investments 739 405

15 unchanged sentences

See accompanying Notes to Consolidated Condensed Financial Statements.

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Loews Corporation and Subsidiaries

5 unchanged sentences

transportation and storage of natural gas and natural gas liquids (Boardwalk Pipeline Partners, LP (“Boardwalk Pipelines”), a wholly owned subsidiary) and the operation of a chain of hotels (Loews Hotels Holding Corporation (“Loews Hotels & Co”), a wholly owned subsidiary).

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

On April 1, 2021, Loews Corporation sold 47 % of Altium Packaging LLC (“Altium Packaging”), previously a 99 % owned subsidiary, and following the transaction Loews Corporation deconsolidated Altium Packaging.

Unless the context otherwise requires, the term “Company” means Loews Corporation including its consolidated subsidiaries, the term “Parent Company” means Loews Corporation excluding its subsidiaries, the term “Net income (loss) attributable to Loews Corporation” means Net income (loss) attributable to Loews Corporation shareholders and the term “subsidiaries” means Loews Corporation’s consolidated subsidiaries.

On April 1, 2021, Loews Corporation sold 47 % of Altium Packaging LLC (“Altium Packaging”), previously a 99 % owned subsidiary, for $ 420 million in cash consideration, and following the transaction Loews Corporation deconsolidated Altium Packaging.

Effective April 1, 2021, Loews Corporation’s investment in Altium Packaging is accounted for under the equity method of accounting, with the investment reported in Other assets on the Consolidated Condensed Balance Sheets and equity income (loss) reported in Operating expenses and other on the Consolidated Condensed Statements of Operations.

The transaction resulted in a gain of $ 555 million ($ 438 million after tax) for the six months ended June 30, 2021, which was recorded in Investment gains (losses) on the Consolidated Condensed Statement of Operations.

For additional information regarding the deconsolidation of Altium Packaging, see Note 2 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of March 31, 2022 and December 31, 2021 and results of operations, comprehensive loss and changes in shareholders’ equity and cash flows for the three months ended March 31, 2022 and 2021.

Net income for the first quarter of each of the years is not necessarily indicative of net income for that entire year.

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 June 30, 2022 and December 31, 2021 and results of operations, comprehensive income (loss) and changes in shareholders’ equity for the three and six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021.

Net income for the second quarter and first half of each of the years is not necessarily indicative of net income 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, 2021.

2 unchanged sentences

Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

For the three months ended March 31, 2022 and 2021 there were no shares attributable to employee stock-based compensation awards excluded from the diluted weighted average shares outstanding amounts because the effect would have been antidilutive.

For the three and six months ended June 30, 2022 and 2021 there were no shares attributable to employee stock-based compensation awards excluded from the diluted weighted average shares outstanding amounts because the effect would have been antidilutive.

Recently issued Accounting Standards Updates (“ASUs”) – In August of 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-12, “Financial Services – Insurance (Topic 944):

Targeted Improvements to the Accounting for Long-Duration Contracts.” The updated accounting guidance requires changes to the measurement and disclosure of long-duration contracts.

For the Company, this includes CNA’s Long term care and fully-ceded single premium immediate annuity business.

For the Company, this includes CNA’s l ong term care a nd fully-ceded single premium immediate annuity business.

Entities will be required to review, and update if there is a change, cash flow assumptions (including morbidity and persistency) at least annually and to update quarterly discount rate assumptions using an upper-medium grade fixed-income instrument yield.

7 unchanged sentences

Long term care contracts will be grouped separately from the fully-ceded single premium immediate annuity contracts.

Table of c o ntents

The most significant impact at the transition date will be the effect of updating the discount rate assumption to reflect an upper-medium grade fixed-income instrument yield, which will be partially offset by the de-recognition of Shadow Adjustments associated with long-duration contracts.

The Company expects the net impact of these changes will be a $ 2.0

billion - $ 2.3 billion (after tax and noncontrolling interests) decrease in Accumulated other comprehensive income (“AOCI”) as of the transition date of January 1, 2021.

The Company expects the net impact of these changes will be a $ 2.0 billion - $ 2.3 billion (after tax and noncontrolling interests) decrease in Accumulated other comprehensive income (“AOCI”) as of the transition date of January 1, 2021.

There is a minimal transition impact expected to retained earnings.

5 unchanged sentences

Net investment income is as follows:

Three Months Ended March 31

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

(In millions)

3 unchanged sentences

Income (loss) from trading portfolio (a)

( 62 ) 26 ( 77 ) 76

Other 13 14 28 30

Total investment income 388 634 839 1,204

1 unchanged sentence

Net investment income $ 366 $ 616 $ 798 $ 1,166

(a) During the three months ended March 31, 2022 and 2021, $( 31 ) and $ 32 of net investment income (loss) was recognized due to the change in fair value of securities still held as of March 31, 2022 and 2021.

(a) During the three and six months ended June 30, 2022, $ 95 and $ 120 of net investment losses were recognized due to the change in fair value of securities still held as of June 30, 2022.

During the three and six months ended June 30, 2021, $ 28 and $ 58 of net investment income was recognized due to the change in fair value of securities still held as of June 30, 2021.

Table of c o ntents

Investment gains (losses) are as follows:

Three Months Ended March 31

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

(In millions)

5 unchanged sentences

Derivative instruments 26 ( 12 ) 55 5

Short term investments and other 1 ( 13 ) 1 ( 13 )

Altium Packaging (see Note 1) 555 555

Investment gains (losses) (a) $ ( 59 ) $ 578 $ ( 70 ) $ 635

(a) During the three months ended March 31, 2022 and 2021, $ 38 of investment losses and $ 2 of investment gains were recognized due to the change in fair value of non-redeemable preferred stock still held as of March 31, 2022 and 2021.

(a) During the three and six months ended June 30, 2022, $ 70 and $ 108 of investment losses were recognized due to the change in fair value of non-redeemable preferred stock still held as of June 30, 2022.

During the three and six months ended June 30, 2021, $ 15 of investment gains were recognized due to the change in fair value of non-redeemable preferred stock still held as of June 30, 2021.

The following tables present the activity related to the allowance on available-for-sale securities with credit impairments and purchased credit-deteriorated (“PCD”) assets.

Accrued interest receivables on available-for-sale fixed maturity securities totaled $ 389 million, $ 369 million and $ 389 million as of March 31, 2022, December 31, 2021 and March 31, 2021 and are excluded from the estimate of expected credit losses and the amortized cost basis in the tables within this Note.

Three months ended March 31, 2022 Corporate and Other Bonds

Accrued interest receivables on available-for-sale fixed maturity securities totaled $ 374 million, $ 369 million and $ 374 million as of June 30, 2022, December 31, 2021 and June 30, 2021 and are excluded from the estimate of expected credit losses and the amortized cost basis in the tables within this Note.

Three months ended June 30, 2022 Corporate and Other Bonds

Asset-backed Total

1 unchanged sentence

Allowance for credit losses:

Balance as of April 1, 2022

$ 12 $ 5 $ 17

Additions to the allowance for credit losses:

Available-for-sale securities accounted for as PCD assets 3 3

Reductions to the allowance for credit losses:

Write-offs charged against the allowance 12 12

Additional decreases to the allowance for credit losses

on securities that had an allowance recorded in a previous period

Total allowance for credit losses $ — $ 5 $ 5

Table of c o ntents

Three months ended June 30, 2021 Corporate and Other Bonds Asset-backed Total

Allowance for credit losses:

Balance as of April 1, 2021

$ 27 $ 16 $ 43

Additions to the allowance for credit losses:

Available-for-sale securities accounted for as PCD assets 4 4

Additional increases or (decreases) to the allowance for credit losses

on securities that had an allowance recorded in a previous period

( 3 ) 1 ( 2 )

Total allowance for credit losses $ 24 $ 21 $ 45

Six months ended June 30, 2022

Allowance for credit losses:

Balance as of January 1, 2022

$ 11 $ 7 $ 18

Additions to the allowance for credit losses:

Available-for-sale securities accounted for as PCD assets 3 3

Reductions to the allowance for credit losses:

Write-offs charged against the allowance 12 12

Additional increases or (decreases) to the allowance for credit

2 unchanged sentences

Total allowance for credit losses $ — $ 5 $ 5

Three months ended March 31, 2021

Six months ended June 30, 2021

Allowance for credit losses:

8 unchanged sentences

on securities that had an allowance recorded in a previous period

( 6 ) ( 1 ) ( 7 )

Total allowance for credit losses $ 24 $ 21 $ 45

The components of available-for-sale impairment losses recognized in earnings by asset type are presented in the following table.

The table includes losses on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date:

Three Months Ended March 31

Table of c o ntents

The components of available-for-sale impairment losses (gains) recognized in earnings by asset type are presented in the following table.

The table includes losses (gains) on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date:

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

(In millions)

2 unchanged sentences

Asset-backed ( 1 ) 1 1

Impairment losses recognized in earnings $ 10 $ 6

There were no losses recognized on mortgage loans during the three months ended March 31, 2022 or 2021.

Impairment losses (gains) recognized in earnings $ 20 $ ( 1 ) $ 30 $ 5

There were no losses recognized on mortgage loans during the three and six months ended June 30, 2022 or 2021.

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

March 31, 2022 Cost or Amortized Cost Gross Unrealized

June 30, 2022 Cost or Amortized Cost Gross Unrealized

Gains Gross Unrealized

18 unchanged sentences

Total fixed maturity securities $ 41,261 $ 1,017 $ 2,842 $ 5 $ 39,431

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December 31, 2021 Cost or Amortized Cost Gross Unrealized

18 unchanged sentences

Total fixed maturity securities $ 39,952 $ 4,558 $ 112 $ 18 $ 44,380

The net unrealized gains on available-for-sale investments included in the tables above are recorded as a component of AOCI.

The net unrealized gains and losses on available-for-sale investments included in the tables above are recorded as a component of 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 maturity securities supporting structured settlements not funded by annuities were realized, or that unrealized gains on fixed maturity securities supporting long term care products would result in a premium deficiency, or would impact the reserve balance, if realized, a related increase in Insurance reserves is recorded, net of tax and noncontrolling interests, as a reduction of net unrealized gains through Other comprehensive income (loss) (“Shadow Adjustments”).

As of March 31, 2022 and December 31, 2021, the net unrealized gains on investments included in AOCI were correspondingly reduced by Shadow Adjustments of $ 1.3 billion and $ 2.2 billion (after tax and noncontrolling interests).

To the extent there are unrealized gains on fixed income securities supporting the reserves of certain products within the Life & Group business that would result in a premium deficiency, or would impact the reserve balance if realized, a related increase in Insurance reserves is recorded, net of tax and noncontrolling interests, as a reduction of net unrealized gains (losses) through Other comprehensive income (loss) (“Shadow Adjustments”).

As of June 30, 2022 and December 31, 2021, the net unrealized gains and losses on investments included in AOCI were correspondingly reduced by Shadow Adjustments of $ 432 million and $ 2.2 billion (after tax and noncontrolling interests).

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

Less than 12 Months 12 Months or Longer Total

March 31, 2022 Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses

June 30, 2022 Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses

(In millions)

26 unchanged sentences

Total fixed maturity securities $ 5,695 $ 92 $ 370 $ 20 $ 6,065 $ 112

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The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities in a gross unrealized loss position for which an allowance for credit loss has not been recorded, by ratings distribution.

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses

7 unchanged sentences

Total $ 26,363 $ 2,842 $ 6,065 $ 112

Based on current facts and circumstances, the unrealized losses presented in the March 31, 2022 securities in a gross unrealized loss position table above are not believed to be indicative of the ultimate collectibility of the current amortized cost of the securities, but rather are primarily attributable to changes in risk-free interest rates, and to a lesser extent credit spreads.

In reaching this determination, the recent volatility in risk-free rates and spreads, as well as the fact that the unrealized losses are concentrated in investment grade issuers, were considered.

Based on current facts and circumstances, the unrealized losses presented in the June 30, 2022 securities in the gross unrealized loss position table above are not believed to be indicative of the ultimate collectibility of the current amortized cost of the securities, but rather are primarily attributable to changes in risk-free interest rates and a general market widening of credit spreads.

In reaching this determination, the recent volatility in risk-free rates and credit spreads, as well as the fact that the unrealized losses are concentrated in investment grade issuers, were considered.

Additionally, there is no current intent to sell securities with unrealized losses, nor is it more likely than not that sale will be required prior to recovery of amortized cost;

accordingly, it was determined that there are no additional impairment losses to be recorded at March 31, 2022.

accordingly, it was determined that there are no additional impairment losses to be recorded at June 30, 2022.

Contractual Maturity

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Cost or Amortized Cost Estimated Fair

8 unchanged sentences

Securities not due at a single date are allocated based on weighted average life.

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Mortgage Loans

2 unchanged sentences

Mortgage Loans Amortized Cost Basis by Origination Year (a)

As of March 31, 2022

As of June 30, 2022

(In millions)

15 unchanged sentences

Gross estimated fair values of derivative positions are currently presented in Equity securities, Receivables and Payable to brokers on the Consolidated Condensed Balance Sheets.

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Contractual/Notional Amount Estimated Fair Value Contractual/Notional Amount Estimated Fair Value

3 unchanged sentences

Without hedge designation:

Equity markets:

Options – purchased $ 76 $ 1

Futures – short 103 1

Interest rate swaps $ 240 $ 12 $ 100

Forward commitments for mortgage-backed securities 45

Currency forwards 13

Embedded derivative on funds withheld liability 285 41 270 $ ( 12 )

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Investment Commitments

1 unchanged sentence

These investments are recorded once funded, and the related commitments may include future capital calls from various third-party limited partnerships, signed and accepted mortgage loan applications and obligations related to private placement securities.

As of March 31, 2022, commitments to purchase or fund were approximately $ 1.3 billion and to sell were approximately $ 65 million under the terms of these investments.

As of June 30, 2022, commitments to purchase or fund were approximately $ 1.5 billion and to sell were approximately $ 25 million under the terms of these investments.

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

1 unchanged sentence

Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.

March 31, 2022 Level 1

June 30, 2022 Level 1

Level 3 Total

11 unchanged sentences

Payable to brokers ( 75 ) ( 75 )

December 31, 2021 Level 1

Level 3 Total

December 31, 2021 Level 1 Level 2 Level 3 Total

(In millions)

9 unchanged sentences

Payable to brokers ( 70 ) ( 70 )

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 months ended March 31, 2022 and 2021:

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 Liabilities Held at March 31

Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and Liabilities Held at March 31

Table of c o ntents

Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and Liabilities Held at June 30

2022 Balance, April 1 Included in Net Income

Included in OCI Purchases Sales

Transfers into

Level 3 Transfers out of Level 3

Balance, June 30

(In millions)

Fixed maturity securities:

Corporate bonds and other $ 915 $ ( 1 ) $ ( 82 ) $ 51 $ ( 37 ) $ 846 $ ( 81 )

States, municipalities and political

subdivisions 51 ( 5 ) 46 ( 5 )

Asset-backed 604 8 ( 52 ) 92 $ ( 2 ) ( 23 ) $ 14 641 ( 52 )

Fixed maturities available-for-sale 1,570 7 ( 139 ) 143 ( 2 ) ( 60 ) 14 — 1,533 — ( 138 )

Fixed maturities trading — —

Total fixed maturities $ 1,570 $ 7 $ ( 139 ) $ 143 $ ( 2 ) $ ( 60 ) $ 14 $ — $ 1,533 $ — $ ( 138 )

Equity securities $ 44 $ ( 3 ) $ ( 3 ) $ 9 $ 47 $ ( 3 )

Table of c o ntents

Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and Liabilities Held at June 30

2021 Balance, April 1 Included in Net Income Included in OCI Purchases Sales Settlements Transfers into

Level 3 Transfers out of Level 3 Balance, June 30

(In millions)

Fixed maturity securities:

Corporate bonds and other $ 767 $ 3 $ 16 $ 122 $ ( 3 ) $ ( 22 ) $ 883 $ 16

States, municipalities and political

subdivisions 44 2 12 ( 1 ) 57 2

Asset-backed 315 1 4 84 ( 10 ) $ 21 $ ( 5 ) 410 4

Fixed maturities available-for-sale 1,126 4 22 218 ( 3 ) ( 33 ) 21 ( 5 ) 1,350 — 22

Fixed maturities trading 5 ( 3 ) ( 2 ) —

Total fixed maturities $ 1,131 $ 1 $ 22 $ 218 $ ( 3 ) $ ( 35 ) $ 21 $ ( 5 ) $ 1,350 $ — $ 22

Equity securities $ 45 $ ( 15 ) $ 10 $ ( 4 ) $ 36

Table of c o ntents

Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and Liabilities Held at June 30

2022 Balance, January 1 Included in Net Income

2 unchanged sentences

Level 3 Transfers out of Level 3

Balance, March 31

Balance, June 30

(In millions)

8 unchanged sentences

Equity securities $ 29 $ 12 $ ( 3 ) $ 9 $ 47 $ ( 1 )

Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and Liabilities Held at March 31

Table of c o ntents

Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and Liabilities Held at June 30

2021 Balance, January 1 Included in Net Income Included in OCI Purchases Sales Settlements Transfers into

Level 3 Transfers out of Level 3 Balance, March 31

Level 3 Transfers out of Level 3 Balance, June 30

(In millions)

15 unchanged sentences

Derivative financial instruments, other Investment gains (losses) and Operating revenues and other

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Significant Unobservable Inputs

3 unchanged sentences

The weighted average rate is calculated based on fair value.

March 31, 2022 Estimated

June 30, 2022 Estimated

Fair Value Valuation Techniques Unobservable Inputs Range (Weighted Average)

9 unchanged sentences

Carrying Amount Estimated Fair Value

March 31, 2022 Level 1 Level 2 Level 3 Total

June 30, 2022 Level 1 Level 2 Level 3 Total

(In millions)

6 unchanged sentences

Long term debt 8,981 $ 9,170 611 9,781

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Claim and Claim Adjustment Expense Reserves

11 unchanged sentences

Catastrophes are an inherent risk of the property and casualty insurance business and have contributed to material period-to-period fluctuations in the Company’s results of operations and/or equity.

The Company reported catastrophe losses, net of reinsurance, of $ 19 million and $ 125 million for the three months ended March 31, 2022 and 2021.

Catastrophe losses for the three months ended March 31, 2022 were primarily related to severe weather related events.

Catastrophe losses for the three months ended March 31, 2021 were primarily driven by Winter Storms Uri and Viola.

The Company reported catastrophe losses, net of reinsurance, of $ 37 million and $ 54 million for the three months ended June 30, 2022 and 2021 and of $ 57 million and $ 179 million for the six months ended June 30, 2022 and 2021, in each case primarily related to severe weather related events.

Table of c o ntents

Liability for Unpaid Claim and Claim Adjustment Expenses

The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of Other Insurance Operations.

Three Months Ended March 31

Six Months Ended June 30

(In millions)

6 unchanged sentences

Provision for insured events of current year 2,974 2,930

Increase (decrease) in provision for insured events of prior years ( 45 ) ( 54 )

Decrease in provision for insured events of prior years ( 69 ) ( 78 )

Amortization of discount 90 95

12 unchanged sentences

These changes can be favorable or unfavorable.

Favorable net prior year development of $ 12 million and $ 15 million were recorded for commercial property and casualty operations (“Property & Casualty Operations”) for the three months ended March 31, 2022 and 2021.

The following table and discussion presents details of the net prior year loss reserve development in Property & Casualty Operations:

Three Months Ended March 31

Favorable net prior year development of $ 37 million and $ 11 million was recorded for commercial property and casualty operations (“Property & Casualty Operations”) for the three months ended June 30, 2022 and 2021 and favorable net prior year development of $ 49 million and $ 26 million was recorded for the six months ended June 30, 2022 and 2021.

Unfavorable net prior year loss reserve development of $ 64 million and $ 40 million was recorded for CNA’s operations outside of Property & Casualty Operations (“Other Insurance Operations”) for the three and six months ended June 30, 2022 and 2021.

Table of c o ntents

The following table and discussion presents details of the net prior year loss reserve development in Property & Casualty Operations and Other Insurance Operations:

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

(In millions)

Medical professional liability $ 1 $ 9 $ 8

Other professional liability and management liability 13 $ 10 13 10

Surety ( 19 ) ( 23 ) ( 28 ) ( 38 )

Commercial auto 21 30 21 30

General liability 41 41

Workers’ compensation ( 82 ) ( 42 ) ( 84 ) ( 42 )

Property and other ( 12 ) 14 ( 21 ) 6

Other insurance operations 64 40 64 40

Total pretax (favorable) unfavorable development $ 27 $ 29 $ 15 $ 14

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

Unfavorable development in commercial auto was due to higher than expected claim severity in CNA’s construction business in multiple accident years.

Unfavorable development in general liability was due to higher than expected claim severity in construction, middle market and small business across multiple accident years.

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

Unfavorable development in other insurance operations was largely associated with legacy mass tort abuse claims, including the recent Diocese of Rochester proposed settlement.

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

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

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

Unfavorable development in other insurance operations was due to legacy mass tort exposures, primarily related to abuse.