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We have described below the material risks facing us and our subsidiaries.
−Removed: There may be additional risks that we do not yet know of or that we do not currently perceive to be material that may also materially adversely impact our business or the businesses of our subsidiaries.
+Added: additional risks that we do not yet know of or that we do not currently perceive to be material that may also materially adversely impact our business or the businesses of one or more of our subsidiaries.
You should carefully consider and evaluate all of the information included in this Report and any subsequent reports we may file with the SEC and the information we make available to the public before investing in any securities issued by us.
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The reserve estimation process involves a high degree of judgment and variability and is subject to a number of factors which are highly uncertain.
−Removed: These variables can be affected by both changes in internal processes and external events.
+Added: These factors can be affected by both changes in internal processes and external events.
Key variables include frequency of claims, claim severity, mortality, morbidity, discount rates, economic, social and medical inflation, claim handling policies and procedures, case reserving approach, underwriting and pricing policies, changes in the legal and regulatory environment and the lag time between the occurrence of an insured event and the time of its ultimate settlement.
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Morbidity is the frequency and severity of injury, illness, sickness and diseases contracted.
−Removed: There is generally a higher degree of variability in estimating required reserves for long-tail coverages, such as workers’ compensation, general liability and professional liability, as they require a relatively longer period of time for claims to be reported and settled.
+Added: There is generally a higher degree of variability in estimating required reserves for long-tail coverages, such as long term care, workers’ compensation, general liability and professional liability, as they require a relatively longer period of time for claims to be reported and settled.
The impact of changes in economic and social inflation, and medical costs are also more pronounced for long-tail coverages due to the longer settlement period.
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Further, the impact of social inflation continues to be significant, and the trajectory of its future impact remains uncertain.
−Removed: These issues, as well as social inflation, have had, and may continue to have, a negative effect on CNA’s business, results of operations and financial condition by either extending coverage beyond the original underwriting intent or by increasing the number or size of claims, resulting in further increases in CNA’s reserves.
+Added: These issues, have had, and may continue to have, a negative effect on CNA’s business, results of operations and financial condition by either extending coverage beyond the original underwriting intent or by increasing the number or size of claims, resulting in further increases in CNA’s reserves.
The effects of unforeseen emerging claim and coverage issues are extremely difficult to predict and may be material.
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These charges could be substantial.
−Removed: CNA’s actual experience could vary from the key assumptions used to determine active life reserves for long term care policies.
−Removed: CNA’s active life reserves for long term care policies are based on CNA’s best estimate assumptions as of September 30, 2020, due to a reserve unlocking at that date.
+Added: CNA’s actual experience could vary from the key assumptions used to determine future policy benefit reserves for long term care policies.
+Added: CNA’s future policy benefit reserves for long term care policies are based on CNA’s best estimate assumptions as of September 30, 2020, due to a reserve unlocking at that date.
Key assumptions include morbidity, persistency (the percentage of policies remaining in force), discount rate and future premium rate increases.
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Further, changes to the Internal Revenue Code may also affect the rate at which CNA discounts its reserves.
−Removed: addition, CNA may not receive regulatory approval for the level of premium rate increases it requests.
+Added: In addition, CNA may not receive regulatory approval for the level of premium rate increases it requests.
Any adverse deviation between the level of future premium rate increases approved and the level included in CNA’s reserving assumptions may require an increase to its reserves.
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Various events can cause catastrophe losses.
−Removed: These events can be natural or man-made, and may include hurricanes, windstorms, earthquakes, hail, severe winter weather, fires, floods, riots, strikes, civil unrest, cyber-attacks, pandemics and acts of terrorism.
+Added: These events can be natural or man-made, and may include hurricanes, tornadoes, windstorms, earthquakes, hail, severe winter weather, fires, floods, riots, strikes, civil unrest, cyber-attacks, pandemics and acts of terrorism.
The frequency and severity of these catastrophe events are inherently unpredictable.
−Removed: In addition, longer-term natural catastrophe trends may be changing and new types of catastrophe losses may be developing due to climate change, a phenomenon that has been associated with extreme weather events linked to rising temperatures, and includes effects on global weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, rain, hail and snow.
+Added: Exposure to cyber risk is increasing systematically due to greater digital dependence, which increases the potential for, and the potential losses due to, a catastrophic cyber event.
+Added: Catastrophic cyber-attack scenarios are not bound by time or geographic limitations and cyber-related catastrophic perils do not have well-established definitions or fundamental physical properties.
+Added: In addition, longer-term natural catastrophe trends may be changing and new types of catastrophe losses may be developing due to climate change, its associated extreme weather events linked to rising temperatures and its effects on global weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, rain, hail and snow.
+Added: Climate studies by government agencies, academic institutions, catastrophe modeling organizations and other groups indicate that climate change may be altering the frequency and/or severity of catastrophic weather events, such as hurricanes, tornadoes, windstorms, floods and other natural disasters.
The extent of CNA’s losses from catastrophes is a function of the total amount of its insured exposures in the affected areas, the frequency and severity of the events themselves, the level of reinsurance coverage, reinsurance reinstatement premiums and state residual market assessments, if any.
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Further, significant catastrophic events or a series of catastrophic events have the potential to impose financial stress on the reinsurance industry, which could impact CNA’s ability to collect amounts owed to CNA by reinsurers, thereby resulting in higher net incurred losses.
−Removed: Reinsurance coverage for terrorism events is provided only in limited circumstances, especially in regard to “unconventional” terrorism acts, such as nuclear, biological, chemical or radiological attacks.
+Added: Reinsurance coverage for “unconventional” terrorism events (such as nuclear, biological, chemical or radiological attacks) is provided only in limited circumstances.
CNA’s principal reinsurance protection against these large-scale terrorist attacks is the coverage currently provided through the Terrorism Risk Insurance Program Reauthorization Act of 2019 (“TRIPRA”) through December 31, 2027.
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CNA has experienced, and may continue to experience, increased claim submissions and litigation related to denial of claims based on policy coverage, or the facts of the claim, in certain lines of business that are implicated by the pandemic and mitigating actions taken by its customers and governmental authorities in response to its spread.
−Removed: These lines include primarily healthcare professional liability, workers’ compensation, commercial property-related business interruption coverage, management liability (directors and officers, employment practices, and professional liability lines) and trade credit.
+Added: These lines include primarily healthcare professional liability, workers’ compensation, commercial property-related business interruption coverage, management liability (directors and officers, employment practices and professional liability lines) and trade
CNA recorded significant losses during 2020, the majority of which are classified as incurred but not reported (“IBNR”) reserves, in these areas and may experience continued losses, which could be material.
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Any additional reinsurance premium or future claim handling costs would also reduce CNA’s earnings.
−Removed: CNA is exposed to, and may face adverse developments related to, mass tort claims that could arise from its insureds’ sale or use of potentially harmful products or substances, changes to the social and legal environment, issues related to altered interpretation of coverage and other new and emerging claim theories.
−Removed: CNA faces potential exposure to various types of new and emerging mass tort claims including, those related to exposure to potentially harmful products or substances such as glyphosate, lead paint and opioids;
+Added: CNA is exposed to, and may face adverse developments related to, mass tort claims that could arise from, among other things, its insureds’ sale or use of potentially harmful products or substances, changes to the social and legal environment, issues related to altered interpretation of coverage and other new and emerging claim theories.
+Added: CNA faces potential exposure to various types of existing, new and emerging mass tort claims including, those related to exposure to potentially harmful products or substances, such as glyphosate, lead paint, per- and polyfluoroalkyl substances (“PFAS”) and opioids;
claims arising from changes that expand the right to sue, remove limitations on recovery, extend the statutes of limitations or otherwise repeal or weaken tort reforms, such as those related to abuse reviver statutes, including New York reviver statutes;
and claims related to new and emerging theories of liability, such as those related to global warming and climate change.
−Removed: Evolving judicial interpretations and new legislation regarding the application of various tort theories and defenses, including application of various theories of joint and several liability, as well as the application of insurance coverage to these claims, give rise to new claimant activity.
−Removed: Emerging mass tort claim activity, including activity based on such changing judicial interpretations and recent and proposed legislation could have a material adverse effect on CNA’s business, results of operations and financial condition.
+Added: Evolving judicial interpretations and new legislation regarding the application of various tort theories and defenses, including application of various theories of joint and several liability, as well as the application of insurance coverage to these claims, give rise to new and potentially more severe claim activity.
+Added: Mass tort claim activity, including activity based on such changing judicial interpretations and recent and proposed legislation could have a material adverse effect on CNA’s business, results of operations and financial condition.
CNA faces intense competition in its industry;
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CNA markets its insurance products worldwide primarily through independent insurance agents, insurance brokers and managing general underwriters who also promote and distribute the products of CNA’s competitors.
−Removed: Any change in CNA’s relationships with its distribution network agents, brokers or managing general underwriters, including as a result of consolidation and their increased promotion and distribution of CNA’s competitors’ products, could adversely affect CNA’s ability to sell its products.
+Added: Any change in CNA’s relationships with its distribution network agents, brokers or managing general underwriters, including as a result of consolidation or their increased promotion and distribution of CNA’s competitors’ products, could adversely affect CNA’s ability to sell its products.
As a result, CNA’s business volume and results of operations could be materially adversely impacted.
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Under CNA’s ceded reinsurance arrangements, a reinsurer assumes a specified portion of its exposure in exchange for a specified portion of policy premiums.
−Removed: Market conditions determine the availability and cost of the reinsurance protection CNA purchases, which affects the volatility of its business and profitability, as well as the level and types of risk CNA retains.
+Added: The availability and cost of the reinsurance protection CNA purchases, which affects the volatility and profitability of its business, as well as the level and types of risk CNA retains, is determined by general economic conditions and conditions in the reinsurance market, such as the occurrence of significant reinsured events or unexpected adverse trends, including those associated with climate change.
If CNA is unable to obtain sufficient reinsurance at a cost or on terms and conditions it deems acceptable, CNA’s risk exposure will not be mitigated or it may forego such increased risk, thereby adversely impacting its underwriting strategies.
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CNA uses analytical models to assist its decision making in key areas such as pricing, reserving, catastrophe risks and capital modeling and may be adversely affected if actual results differ materially from the model outputs and related analyses.
−Removed: CNA uses various modeling techniques and data analytics (e.g., scenarios, predictive, stochastic and/or forecasting) to analyze and estimate exposures, loss trends and other risks associated with its assets and liabilities.
+Added: CNA uses various modeling techniques and data analytics (e.g., scenarios, predictive, stochastic and forecasting) to analyze and estimate exposures, loss trends and other risks associated with its assets and liabilities.
This includes both proprietary and third party modeled outputs and related analyses to assist CNA in decision-making related to underwriting, pricing, capital allocation, reserving, investing, reinsurance and catastrophe risk, among other things.
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The foregoing risks could expose CNA to monetary and reputational damages.
−Removed: Potential exposures resulting from the March 2021 cybersecurity attack, described in the immediately following risk factor, as well as any future incidents may include substantially increased compliance costs, as well as increased costs relating to investments in computer system and security-related upgrades, with those costs potentially not recoverable under relevant insurance coverage.
−Removed: CNA anticipates making continued investments to improve its security and infrastructure which are not recoverable under relevant insurance coverage.
+Added: Potential additional exposures relating to significant interruptions to CNA’s operations may include substantially increased compliance costs, as well as increased costs relating to investments in computer system and security-related upgrades, and such costs may not be recoverable under its relevant insurance coverage.
+Added: CNA has made, and continues to make, investments to improve its security and infrastructure.
+Added: Some of these investments are a direct result of the March 2021 cybersecurity attack, described in the immediately following risk factor, which are not recoverable under existing insurance coverage.
If CNA’s business continuity plans or system security do not sufficiently address these risks, they could have a material adverse effect on CNA’s business, results of operations and financial condition.
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A significant breach of CNA’s data security infrastructure may result from actions by its employees, vendors, third-party administrators, or unknown third parties or through cyber attacks.
−Removed: The risk of a breach can exist whether software services are in CNA’s data centers or are cloud-based software services.
+Added: The risk of a breach can exist whether software services are in CNA’s or third party administered data centers or are cloud-based software services.
Breaches have occurred, and may occur again, in CNA’s systems and in the systems of its vendors and third party administrators.
−Removed: Such a breach could affect CNA’s data framework or cause a failure to protect the personal information of its customers, claimants or employees, or sensitive and confidential information regarding its business and may result in operational impairments and financial losses, as well as significant harm to its reputation.
+Added: Such a breach could affect CNA’s data framework or cause a failure to protect the personal information of its customers, claimants or employees, or sensitive and confidential information regarding its business or policyholders and may result in operational impairments and financial losses, significant harm to its reputation and the loss of business with existing or potential customers.
The breach of confidential information also could give rise to legal liability and regulatory action under data protection and privacy laws, as well as evolving regulation in this regard.
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While CNA does not believe such notifications and resultant actions will have a material adverse effect on its business, this or similar incidents, or any other such breach of CNA’s or its vendors’ data security infrastructure could have a material adverse effect on its business, results of operations and financial condition.
−Removed: CNA sustained a sophisticated cybersecurity attack in March 2021 involving ransomware that caused a network disruption and impacted certain of its systems.
−Removed: Upon detection, CNA undertook steps to address the incident, including engaging a team of third-party forensic experts and notifying law enforcement and key regulators.
−Removed: CNA restored network systems and resumed normal operations.
−Removed: CNA is continuing to assess all actions that it will take to improve its existing systems.
−Removed: CNA’s investigation revealed that an unauthorized third party copied some personal information relating to certain current and former employees, contractor workers and their dependents and certain other persons, including some policyholders.
−Removed: In July 2021, CNA provided notifications to the impacted individuals and to regulators, in accordance with applicable law.
−Removed: Although CNA currently has no indication that the impacted data has been misused, or that CNA or its policyholder data was specifically targeted by the unauthorized third party, it may be subject to subsequent investigations, claims or actions in addition to other costs, fines, penalties, or other obligations related to impacted data, whether or not such data is misused.
+Added: As previously disclosed, CNA sustained a sophisticated cybersecurity attack in March 2021 involving ransomware that caused a network disruption and impacted certain of its systems.
+Added: CNA’s investigation into the incident revealed that an unauthorized third party copied some personal information relating to certain current and former employees, contract workers and their dependents and certain other persons, including some policyholders.
+Added: Although CNA currently has no indication that the impacted data has been misused, or that CNA or its policyholder data was specifically targeted by the
+Added: unauthorized third party, it may be subject to subsequent investigations, claims or actions in addition to other costs, fines, penalties, or other obligations related to impacted data, whether or not such data is misused.
In addition, the misuse, or perceived misuse, of sensitive or confidential information regarding its business or policyholders could cause harm to CNA’s reputation and result in the loss of business with existing or potential customers, which could adversely impact its business, results of operations and financial condition.
−Removed: Although CNA maintains cybersecurity insurance coverage insuring against costs resulting from cyber attacks (including the March 2021 attack), CNA does not expect the amount available under its coverage policy to cover all losses.
−Removed: Costs and expenses incurred and likely to be incurred by CNA in connection with the March 2021 attack include both direct and indirect costs and are not all covered by its insurance coverage.
−Removed: In addition, potential disputes with its insurers about the availability of insurance coverage for claims relating to the March 2021 attack or any future incident could occur.
+Added: Although CNA maintains cybersecurity insurance coverage insuring against costs resulting from cyber attacks (including the March 2021 attack), CNA does not expect the amount available under its coverage policy to cover all losses from cyber-attacks.
+Added: In addition, potential disputes with its insurers about the availability of insurance coverage could occur.
Further, as a result of the March 2021 attack, CNA incurred higher costs for the replenishment of its current policy through the end of the term, and CNA believes it will incur higher costs for future cybersecurity insurance coverage beyond the current term.
−Removed: Based on the information currently known, CNA does not believe that the March 2021 cybersecurity attack will have a material impact on its business, results of operations or financial condition, but no assurances can be given as it continues to assess the full impact from the incident, including costs, expenses and insurance coverage.
−Removed: CNA may also be subject to future incidents that could have a material adverse effect on its business, results of operations or financial condition or may result in operational impairments and financial losses, as well as significant harm to CNA’s reputation.
+Added: CNA may also be subject to future cyber incidents that could have a material adverse effect on its business, results of operations or financial condition or may result in operational impairments and financial losses, as well as significant harm to CNA’s reputation.
Inability to detect and prevent significant employee or third party service provider misconduct, inadvertent errors and omissions, or exposure relating to functions performed on CNA’s behalf could result in a material adverse effect on CNA’s business, results of operations and financial condition.
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It is possible that in such circumstance CNA might not be fully indemnified for such third parties’ contractual breaches.
−Removed: Additionally, CNA relies on certain third-party claims administrators, including the administrators of its long term care claims, to handle policyholder services and perform significant claim administration and claim adjudication functions.
+Added: Additionally, CNA relies on certain third-party claims administrators, including the administrator of its long term care claims, to handle policyholder services and perform significant claim administration and claim adjudication functions.
Any failure by such administrator to properly perform service functions may result in losses as a result of over-payment of claims, legal claims against CNA and adverse regulatory enforcement exposure.
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If CNA does not meet these minimum requirements, CNA may be restricted or prohibited from operating its business in the applicable jurisdictions and specialized markets.
−Removed: If CNA is required to record a material charge against earnings in connection with a change in estimated insurance reserves or the occurrence of a catastrophic event or if it incurs significant losses related to its investment portfolio, which severely deteriorates its capital position, CNA may violate these minimum capital adequacy requirements unless it is able to raise sufficient additional capital.
+Added: If CNA is required to record a material charge against earnings in connection with a change in estimated insurance reserves, or the occurrence of a catastrophic event or otherwise, or if it incurs significant losses related to its investment portfolio, which severely deteriorates its capital position, CNA may violate these minimum capital adequacy requirements unless it is able to raise sufficient additional capital.
CNA may be limited in its ability to raise significant amounts of capital on favorable terms or at all.
−Removed: The IAIS has adopted a common framework for the supervision of internationally active insurance groups and continues to develop a group basis ICS.
−Removed: The NAIC is also developing a group capital standard that is intended to be comparable to the ICS.
+Added: The IAIS has adopted a ComFrame for the supervision of IAIGs and has developed a global capital standard that, if adopted in the U.S., would be applicable to U.S.-based IAIGs.
+Added: The NAIC also developed the GCC and AM approach to assessing group capital as an alternative to the ICS developed by the IAIS.
The development and adoption of these capital standards could increase CNA’s prescribed capital requirement, the level at which regulatory scrutiny intensifies, as well as significantly increase its cost of regulatory compliance.
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(“Moody’s”), S&P Global Ratings (“S&P”) and Fitch Ratings, Inc.
−Removed: Ratings reflect the rating agency’s opinions of an insurance company’s or insurance holding company’s financial strength, capital adequacy, enterprise risk management practices, operating performance, strategic position and ability to meet its obligations to policyholders and debt holders, and may also reflect opinions on other areas such as information security and ESG matters.
+Added: Ratings reflect the rating agency’s opinions of an insurance company’s or insurance holding company’s financial strength, capital adequacy, enterprise risk management practices, operating performance, strategic position and ability to meet its obligations to policyholders and debt holders, and may also reflect opinions on other areas such as information security and climate risk, as well as ESG matters more broadly.
The rating agencies may take action to lower CNA’s ratings in the future as a result of any significant financial loss or changes in the methodology or criteria applied by the rating agencies.
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In addition, rules and regulations have recently been introduced, or are being considered, in the areas of information security and ESG, which may also affect CNA’s business.
+Added: CNA also is subject to numerous regulations governing the protection of personal and confidential information of its clients and employees, including medical records, credit card data and financial information.
+Added: These laws and regulations are increasing in complexity and number, change frequently, sometimes conflict, and could expose CNA to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more
+Added: jurisdictions, including regulations related to cyber security protocols (which continue to evolve in breadth, sophistication and maturity in response to an ever-evolving threat landscape).
+Added: In response to climate change, regulators at the federal, state and international level also could impose new regulations requiring disclosure of underwriting or investment in certain industry sectors.
Regulatory powers also extend to premium rate regulations which require that rates not be excessive, inadequate or unfairly discriminatory.
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Boardwalk Pipelines may not be able to recover the full cost of operating its pipelines, including earning a reasonable return.
−Removed: Boardwalk Pipelines’ natural gas transportation and storage operations are subject to extensive regulation by the FERC, including the types, rates and terms of services Boardwalk Pipelines may offer to its customers, construction of new
−Removed: facilities, creation, modification or abandonment of services or facilities and recordkeeping and relationships with affiliated companies.
+Added: Boardwalk Pipelines’ natural gas transportation and storage operations are subject to extensive regulation by the FERC, including the types, rates and terms of services Boardwalk Pipelines may offer to its customers, construction of new facilities, creation, modification or abandonment of services or facilities and recordkeeping and relationships with affiliated companies.
An adverse FERC action in any of these areas could affect Boardwalk Pipelines’ ability to compete for business, construct new facilities, offer new services or recover the full cost of operating its pipelines.
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Adoption of potential legislation that would amend Section 5 of the NGA to add refund provisions could increase the likelihood of such a challenge.
−Removed: If such a challenge is successful for any of Boardwalk Pipelines’ pipelines, the revenues associated with transportation and storage services the pipeline provides pursuant to cost-of-service rates could materially decrease in the future, which would adversely affect the revenues on that pipeline going forward.
+Added: If such a challenge is successful for any of Boardwalk Pipelines’ pipelines, the revenues associated with transportation and storage services the pipeline provides pursuant to cost-of-service rates could materially decrease in the future, which would adversely affect, perhaps substantially, the revenues on that pipeline going forward.
+Added: The FERC issued a NOI on April 19, 2018, initiating a review of its policies on certification of natural gas pipelines, including an examination of the 1999 Policy Statement that is used to determine whether to grant certificates for new pipeline projects.
+Added: On February 18, 2021, the FERC issued the 2021 NOI, reopening its review of the 1999 Policy Statement.
+Added: On February 18, 2022, the FERC issued the 2022 Policy Statements, to be effective that same day.
+Added: On March 24, 2022, the FERC issued an order converting the 2022 Policy Statements into draft policy statements and requested further comments.
+Added: The FERC will not apply the draft 2022 Policy Statements until it issues final guidance on these topics.
+Added: Boardwalk Pipelines is unable to predict what, if any, changes may result upon finalization of the draft 2022 Policy Statements that will affect its natural gas pipeline operations or when such new policies, if any, might become effective.
+Added: Boardwalk Pipelines does not expect that any change in these policy statements would affect it in a materially different manner than any other natural gas pipeline company operating in the U.S.
+Added: The FERC has authority to impose civil penalties for violations of the NGA and NGPA, and the implementing regulations thereunder, up to a maximum amount that is adjusted annually for inflation, which for 2023 is approximately $1.5 million per day per violation.
+Added: Should Boardwalk Pipelines fail to comply with applicable statutes, rules, regulations and orders administered by the FERC, it could be subject to substantial penalties and fines.
Boardwalk Pipelines’ operations, and those of Boardwalk Pipelines’ customers, are subject to a series of risks regarding climate change.
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These proposals expose Boardwalk Pipelines’ operations as well as the operations of its fossil fuel producer customers to a series of regulatory, political, litigation and financial risks.
−Removed: In the U.S., no comprehensive climate change legislation has been implemented at the federal level.
−Removed: However, the EPA has issued several rules regulating GHGs following the U.S.
+Added: In the U.S., no comprehensive climate change legislation has been implemented at the federal level, but President Biden has shown that action to address climate change is an important part of his Administration’s agenda.
+Added: For example, in August 2022, the Inflation Reduction Act of 2022 (“IRA”) passed which advanced numerous climate-related objectives.
+Added: Additionally, the EPA has issued several rules regulating GHGs following the U.S.
Supreme Court finding that GHGs are air pollutants under the CAA and the EPA’s own endangerment finding for certain GHGs, including carbon dioxide and methane.
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In June 2021, President Biden signed into law a joint resolution of Congress under the Congressional Review Act that rescinded the EPA’s 2020 Policy Rule, effectively reinstating the 2012 and 2016 NSPS for the transmission and storage sector.
−Removed: In November 2021, the EPA proposed a rule to establish standards of performance for methane and volatile organic compound emissions from new sources and, for the first time, existing sources, within the crude oil and natural gas source category, including the transmission and storage sector.
−Removed: The proposed rule includes several requirements relevant to Boardwalk Pipelines’ operations, including stricter emissions limits for various facilities and equipment (including pneumatic controllers, storage tanks, reciprocating compressors and wet seal centrifugal compressors), more frequent leak detection and monitoring of fugitive emissions from compressor stations, and deadlines for repairing fugitive emissions.
−Removed: The EPA plans to issue a supplemental proposal containing proposed regulations in 2022 and aims to finalize the rule by the end of 2022.
+Added: In November 2021, the EPA proposed a rule to establish standards of performance for methane and volatile organic compound emissions from new sources and, for the first time, existing sources (those that commenced construction or reconstruction after November 15, 2021), within the crude oil and natural gas source category, including the transmission and storage sector.
+Added: On November 11, 2022, the EPA released a supplemental methane proposal that modified the original proposal and provided additional detail.
+Added: The proposed rule includes several requirements relevant to Boardwalk Pipelines’ operations, including stricter emissions limits for various facilities and equipment (including pneumatic devices, storage tanks, reciprocating compressors and wet seal and dry seal centrifugal compressors), more frequent leak detection and monitoring of fugitive emissions from compressor stations, and deadlines for repairing fugitive emissions.
+Added: The proposal also establishes a program for third-party notification of “super-emitter” events.
+Added: The final rule will likely work alongside the IRA, which appropriates significant federal funding for renewable energy initiatives as well as amends the CAA to impose a first-time fee on the emission of methane from sources required to report their GHG emissions to the EPA.
+Added: The methane emissions fee applies to excess methane emissions from certain facilities and starts at $900 per metric ton of leaked methane in 2024 and increases to $1,200 in 2025 and $1,500 in 2026 and thereafter.
+Added: Compliance with the EPA’s proposed new rule and the IRA’s methane emissions fee could increase Boardwalk Pipelines’ operating costs and the costs of Boardwalk Pipelines’ customers and accelerate the transition away from fossil fuels which could, in turn, reduce the demand for its services, thereby adversely affecting its operations.
Governmental entities, including certain states and groups of states, have adopted or are considering legislation, regulations or other initiatives such as GHG cap and trade programs, carbon taxes, GHG reporting and tracking programs, and emissions limits.
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In November 2021, the U.S.
−Removed: joined other nations for the 26th Conference to the Parties (COP26), during which nations including the U.S.
+Added: joined other nations for the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26), during which nations including the U.S.
made various commitments, including the Global Methane Pledge to reduce methane emissions 30% from 2020 levels by 2030.
+Added: Additionally, at the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27) in November 2022, countries, including the U.S., reiterated the agreements from COP26 and were called upon to accelerate efforts toward the phase out of inefficient fossil fuel subsidies.
+Added: also announced, in conjunction with the European Union and other partner countries, that it would develop standards for monitoring and reporting methane emissions to help create a market for low methane-intensity gas.
+Added: Although no firm commitment or timeline to phase out or phase down fossil fuels were made at COP27, there can be no guarantees that countries will not seek to implement such a phase out or phase down in the future.
+Added: Additionally, Boardwalk Pipelines cannot predict whether similar efforts at future climate conferences will be successful and the potential resultant impact this may have upon its business or financial condition.
Governmental, scientific and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the U.S.
−Removed: The Biden administration and future administrations could take various actions to curtail oil and natural gas production and transportation, including limiting fracturing of oil and natural gas wells, restricting flaring and venting during natural gas production on federal properties, limiting or banning oil and gas leases on federal lands and offshore waters, increasing requirements for construction and permitting of pipeline infrastructure and
−Removed: LNG export facilities, and further restricting GHG emissions from oil and gas facilities.
+Added: The Biden Administration and future administrations could take various actions to curtail oil and natural gas production and transportation, including limiting fracturing of oil and natural gas wells, restricting flaring and venting during natural gas production on federal properties, limiting or banning oil and gas leases on
+Added: federal lands and offshore waters, increasing requirements for construction and permitting of pipeline infrastructure and LNG export facilities, and further restricting GHG emissions from oil and gas facilities.
Litigation risks are also increasing, as a number of cities and other governmental entities have brought suit alleging that fossil fuel producers created public nuisances by producing fuels that contributed to global warming effects such as rising sea levels, are responsible for associated roadway and infrastructure damage, or defrauded investors or customers by failing to timely and adequately disclose adverse effects of climate change.
There are also increasing financial risks for fossil fuel energy companies as investors become increasingly concerned about the potential effects of climate change and may elect in the future to shift some or all of their investments into non-fossil fuel energy related sectors.
−Removed: Institutional lenders who provide financing to fossil fuel energy companies also have become more attentive to sustainable lending practices that favor alternative power sources (such as wind, solar, geothermal, tidal and biofuels), making those sources more attractive, and some of them may elect not to provide funding for fossil fuel energy companies.
+Added: Some institutional lenders who provide financing to fossil fuel energy companies also have become more attentive to sustainable lending practices that favor alternative power sources (such as wind, solar, geothermal, tidal and biofuels), making those sources more attractive, and some of them may elect not to provide funding for fossil fuel energy companies.
Many of the largest U.S.
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Financial institutions could be required to adopt policies that limit funding for fossil fuel energy companies.
−Removed: In late 2020 the Federal Reserve joined the Network for Greening the Financial System (“NGFS”), a consortium of financial regulators focused on addressing climate-related risks in the financial sector, and in 2021 the Federal Reserve issued a statement supporting the efforts of NGFS in identifying potential solutions for climate-related challenges relevant to central banks and supervisory authorities.
−Removed: While Boardwalk Pipelines cannot predict what policies may result from these announcements, a material reduction in the capital available to the fossil fuel industry could make it more difficult to secure funding for exploration and production or midstream energy business activities, which could adversely impact its business and operations.
−Removed: Separately, the SEC has also announced that it is scrutinizing existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege an issuer’s existing climate disclosures are misleading or deficient.
−Removed: The adoption and implementation of new or more stringent international, federal, regional, state or local legislation, regulations or other initiatives that impose more stringent standards for GHG emissions from the oil and gas sector or otherwise restrict fossil fuel production could result in increased costs of compliance for fossil fuel use, and thereby reduce demand for fossil fuels, which could reduce demand for Boardwalk Pipelines’ transportation and storage services.
−Removed: Political, litigation and financial risks may result in Boardwalk Pipelines’ fossil fuel producer customers restricting or canceling production activities, incurring liability for infrastructure damages as a result of climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce demand for Boardwalk Pipelines’ services.
+Added: In late 2020 the Federal Reserve joined the Network for Greening the Financial System (“NGFS”), a consortium of financial regulators focused on addressing climate-related risks in the financial sector, and in September 2022, announced that six of the U.S.’ largest banks will participate in a pilot climate scenario analysis to enhance the ability of firms and supervisors to measure and manage climate-related financial risk.
+Added: The Federal Reserve released its pilot exercise in January 2023, which is designed to analyze the impact of both physical and transition risks related to climate change on specific assets of the banks’ portfolios.
+Added: While Boardwalk Pipelines cannot predict what policies may result from these announcements and activities, a material reduction in the capital available to the fossil fuel industry could make it more difficult to secure funding for exploration and production or midstream energy business activities, which could adversely impact its business and operations.
+Added: Additionally, in March 2022, the SEC released a proposed rule that would establish a framework for the reporting of climate risks, targets, and metrics.
+Added: A final rule is expected to be released in 2023, but Boardwalk Pipelines cannot predict the final form and substance of the rule and its requirements.
+Added: The ultimate impact of the rule on Boardwalk Pipelines’ business is uncertain and, upon finalization, may result in increased compliance costs and increased costs of and restrictions on access to capital.
+Added: Separately, the SEC has also announced that it is scrutinizing existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege that an issuer’s existing climate disclosures are misleading or deficient.
+Added: These agency actions could increase the potential for litigation.
+Added: The adoption and implementation of new or more stringent international, federal, regional, state or local legislation, regulations or other initiatives that impose more stringent standards for GHG emissions from the oil and gas sector or otherwise restrict fossil fuel production could result in increased costs of compliance for fossil fuel use, and reduce demand for fossil fuels, which could reduce demand for Boardwalk Pipelines’ transportation and storage services.
+Added: Political, litigation and financial risks may result in Boardwalk Pipelines’ fossil fuel producer customers restricting or canceling production activities, incurring liability for infrastructure and other damages as a result of climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce demand for Boardwalk Pipelines’ services.
Moreover, the increased competitiveness of alternative energy sources could reduce demand for hydrocarbons and for Boardwalk Pipelines’ services.
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Such climactic conditions could also impact Boardwalk Pipelines’ customers’ ability to utilize Boardwalk Pipelines’ services and third party suppliers’ ability to provide Boardwalk Pipelines with the products and services necessary to maintain operation of its facilities.
−Removed: Boardwalk Pipelines may incur significant damages as well as costs to repair or maintain its facilities, which could adversely affect its operations and the financial health of its business.
+Added: Boardwalk Pipelines may incur significant damages as well as costs to repair or
+Added: maintain its facilities, which could adversely affect its operations and the financial health of its business.
In recent years, local governments and landowners in Louisiana have filed lawsuits against energy companies, alleging that their operations contributed to increased coastal rising seas and erosion and seeking substantial damages.
Changing meteorological conditions, particularly temperature, may affect the amount, timing, or location of demand for energy or the products Boardwalk Pipelines transports, which may impact demand for its services.
−Removed: Legislative and regulatory initiatives relating to pipeline safety that require the use of new or more prescriptive compliance activities, substantial changes to existing integrity management programs or withdrawal of regulatory waivers could subject Boardwalk Pipelines to increased capital and operating costs and operational delays.
+Added: Boardwalk Pipelines is subject to reputational risks and risks related to public opinion.
+Added: Boardwalk Pipelines’ business, operations and financial condition may be adversely impacted as a result of negative public opinion.
+Added: Boardwalk Pipelines operates in an industry which receives negative portrayals and opposition to development projects.
+Added: Boardwalk Pipelines’ reputation and public opinion could be impacted by the actions, activities and responses of other companies operating in the energy industry, particularly other energy infrastructure providers, over which Boardwalk Pipelines has no control.
+Added: Boardwalk Pipelines’ reputation also could be impacted by negative publicity related to pipeline incidents, unpopular expansion projects and opposition to development of hydrocarbons and energy infrastructure, particularly projects involving resources that are considered to increase GHG emissions and contribute to climate change.
+Added: Negative impacts from a compromised reputation or changes in public opinion (including with respect to the production, transportation and use of hydrocarbons generally) could include increased regulatory oversight, delays in obtaining, or challenges to, regulatory approvals with respect to growth projects, blockades, project cancellations, difficulty securing financing at reasonable terms, revenue loss or a reduction in customer base.
+Added: Legislative and regulatory initiatives relating to new or more stringent pipeline safety requirements or substantial changes to existing integrity management programs or withdrawal of regulatory waivers could subject Boardwalk Pipelines to increased capital and operating costs and operational delays.
Boardwalk Pipelines’ interstate pipelines are subject to regulation by PHMSA, which is part of the DOT.
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PHMSA regulation currently requires pipeline operators to implement integrity management programs, including frequent inspections, remediation of certain identified anomalies and other measures to promote pipeline safety in HCAs, MCAs, Class 1 and 2 areas (depending on the potential impacts of a risk event), Class 3 and Class 4 areas, as well as in areas unusually sensitive to environmental damage and commercially navigable waterways.
+Added: PHMSA has revised its standards from time-to-time.
+Added: In October 2019, PHMSA published a final rule imposing numerous new requirements, also known as the Mega Rule, on onshore gas transmission pipelines relating to MAOP reconfirmation and exceedance reporting, the integrity assessment of additional pipeline mileage found in MCAs and Class 3 and Class 4 non-HCAs by 2033, and the consideration of seismicity as a risk factor in integrity management.
+Added: PHMSA published a second final rule in October 2019 for hazardous liquid transmission and gathering pipelines that significantly extends and expands the reach of certain of its integrity management requirements, and that requires the accommodation of in-line inspection tools by 2039 unless the pipeline cannot be modified to permit such accommodation, increased annual, accident and safety-related conditional reporting requirements, and expanded use of leak detection systems beyond HCAs.
+Added: PHMSA also published final rules during February and July 2020 that amended the minimum safety requirements related to natural gas storage facilities, including wells, wellbore tubing and casing, and added applicable reporting requirements.
+Added: In June 2021, PHMSA issued an Advisory Bulletin advising pipeline and pipeline facility operators of applicable requirements to update their inspection and maintenance plans for the elimination of hazardous leaks and minimization of natural gas released from pipeline facilities.
+Added: PHMSA and state regulators reportedly began their review of these plans in 2022, and PHMSA has separately announced plans to propose rules addressing methane leaks from pipelines.
+Added: In August 2022, PHMSA published another final rule expanding the Management of Change process, extending corrosion control requirements for gas transmission pipelines, adding requirements that operators ensure no conditions exist following an extreme weather event that could adversely affect the safe operation of the pipeline, and adopting repair criteria for non-HCAs similar to those applicable to HCAs.
+Added: These new and any future regulations adopted by PHMSA have imposed and may impose more stringent requirements applicable to integrity management programs and other pipeline safety aspects of Boardwalk Pipelines’ operations, which is expected to cause it to incur increased capital and operating costs, may cause it to experience operational delays and may result in potential adverse impacts to its ability to reliably serve its customers.
States have jurisdiction over certain of Boardwalk Pipelines’ intrastate pipelines and have adopted regulations similar to existing PHMSA regulations.
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Compliance with these rules over time generally has resulted in an overall increase in maintenance costs.
−Removed: The imposition of new or more stringent pipeline safety rules applicable to natural gas or NGL pipelines, or any issuance or reinterpretation of guidance from PHMSA or any state agencies, could cause Boardwalk Pipelines to install new or modified safety controls, pursue additional capital projects or conduct maintenance programs on an accelerated basis, any or all of which tasks could result in Boardwalk Pipelines incurring increased capital and operating costs, experiencing operational delays and suffering potential adverse impacts to its operations or ability to reliably serve its customers.
−Removed: Requirements that are imposed under the 2011 Act, the 2016 Act or the 2020 Act, or other pipeline safety legislation or implementing regulations, may also increase Boardwalk Pipelines’ capital and operating costs or impact the operation of its pipelines.
+Added: The imposition of new or more stringent pipeline safety rules applicable to natural gas or NGL pipelines, or any issuance or reinterpretation of guidance from PHMSA or any state agencies, could cause Boardwalk Pipelines to install new or modified safety controls, pursue additional capital projects or conduct maintenance programs on an accelerated basis, any or all of which could result in Boardwalk Pipelines incurring increased capital and operating costs, experiencing operational delays and suffering potential adverse impacts to its operations or ability to reliably serve its customers.
+Added: Requirements that are imposed under the 2011 Act, the 2016 Act, the 2020 Act or other
+Added: pipeline safety legislation or implementing regulations, may also increase Boardwalk Pipelines’ capital and operating costs or impact the operation of its pipelines.
Boardwalk Pipelines has entered into certain firm transportation contracts with shippers that utilize the design capacity of certain of its pipeline assets, based upon the authority Boardwalk Pipelines received from PHMSA to operate those pipelines at higher than normal operating pressures of up to 0.80 of the pipeline’s SMYS under issued permits with specific conditions.
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Any of these events could result in material unexpected costs or have a material adverse effect on Boardwalk Pipelines’ ability to realize the anticipated benefits from its growth projects.
−Removed: Boardwalk Pipelines may face opposition to the operation of its pipelines and facilities or construction or expansion of facilities or new pipeline projects from various groups.
−Removed: Boardwalk Pipelines may face opposition to the operation of its pipelines and facilities or construction or expansion of its facilities or new pipeline projects from governmental officials, environmental groups, landowners, communities, tribal or local groups and other advocates.
+Added: Boardwalk Pipelines may face opposition to the operation of its pipelines and facilities, construction or expansion of facilities and new pipeline projects from various groups.
+Added: Boardwalk Pipelines may face opposition to the operation of its pipelines and facilities, construction or expansion of its facilities and new pipeline projects from governmental officials, environmental groups, landowners, communities, tribal or local groups and other advocates.
Such opposition could take many forms, including organized protests, attempts to block or sabotage Boardwalk Pipelines’ operations, acts of eco-terrorism, intervention in regulatory or administrative proceedings involving Boardwalk Pipelines’ assets, or lawsuits or other actions designed to prevent, disrupt or delay the operation of its assets and business.
For example, repairing Boardwalk Pipelines’ pipelines often involves securing consent from individual landowners to access their property;
−Removed: one or more landowners may resist Boardwalk Pipelines’ efforts to make needed repairs, which could lead to an interruption in the operation of the affected pipeline or facility for a period of
−Removed: time that is significantly longer than would have otherwise been the case.
+Added: one or more landowners may resist Boardwalk Pipelines’ efforts to make needed repairs, which could lead to an interruption in the operation of the affected pipeline or facility for a period of time that is significantly longer than would have otherwise been the case.
Acts of sabotage or eco-terrorism could cause significant damage or injury to people, property or the environment and lead to extended interruptions of Boardwalk Pipelines’ operations and material damages and costs.
−Removed: The price differentials between natural gas supplies and market demand for natural gas may reduce the transportation rates that Boardwalk Pipelines can charge on certain portions of its pipeline systems.
+Added: Market conditions, including the price differentials between natural gas supplies and market demand for natural gas, may reduce the transportation rates that Boardwalk Pipelines can charge on certain portions of its pipeline systems.
Each year a portion of Boardwalk Pipelines’ firm natural gas transportation contracts expire and need to be replaced or renewed.
−Removed: As a result of current market conditions, Boardwalk Pipelines may renew some expiring contracts at lower rates or for shorter terms than in the past.
+Added: As a result of market conditions, Boardwalk Pipelines may renew some expiring contracts at lower rates or for shorter terms than in the past.
The transportation rates Boardwalk Pipelines is able to charge customers are heavily influenced by market trends (both short and longer term), including the available supply, geographical location of natural gas production, the competition between producing basins, competition with other pipelines for supply and markets, the demand for gas by end-users such as power plants, petrochemical facilities and LNG export facilities and the price differentials between the gas supplies and the market demand for the gas (basis differentials).
−Removed: Market conditions have resulted in a sustained narrowing of basis differentials on certain portions of Boardwalk Pipelines’ pipeline system, which has reduced transportation rates that can be charged in the affected areas and adversely affected the contract terms Boardwalk Pipelines can secure from its customers for available transportation capacity and for contracts being renewed or replaced.
−Removed: Boardwalk Pipelines expects these market conditions to continue.
Changes in energy prices, including natural gas, oil and NGLs, impact the supply of and demand for those commodities, which impact Boardwalk Pipelines’ business.
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If a customer fails to post the required credit support or defaults during the growth project process, overall returns on the project may be reduced to the extent an adjustment to the scope of the project occurs or Boardwalk Pipelines is unable to replace the defaulting customer with a customer willing to pay similar rates.
−Removed: In 2020 and 2019, two expansion customers declared bankruptcy for which Boardwalk Pipelines was able to use the credit support obtained during the growth project process to cover a portion of the customer’s remaining long term commitment.
+Added: In 2020, an expansion customer declared bankruptcy for which Boardwalk Pipelines was able to use the credit support obtained during the growth project process to cover a portion of the customer’s remaining long term commitment.
Boardwalk Pipelines’ credit exposure also includes receivables for services provided, future performance under firm agreements and volumes of gas owed by customers for imbalances or gas loaned by Boardwalk Pipelines to them under certain NNS and parking and lending (“PAL”) services.
−Removed: Boardwalk Pipelines’ revolving credit facility contains operating and financial covenants that restrict its business and financing activities.
+Added: Boardwalk Pipelines’ revolving credit facility contains operating and financial covenants that may restrict its business and financing activities.
Boardwalk Pipelines’ revolving credit facility contains operating and financial covenants that may restrict its ability to finance future operations or capital needs or to expand or pursue business activities.
Its credit agreement limits its ability to make loans or investments, make material changes to the nature of its business, merge, consolidate or engage in asset sales, or grant liens or make negative pledges.
−Removed: This agreement also requires it to maintain a ratio of consolidated debt to consolidated EBITDA (as defined in the agreement) of not more than 5.0 to 1.0, or up to 5.5 to 1.0 for the three quarters following a qualified acquisition or series of acquisitions, where the purchase price exceeds $100.0 million over a rolling 12-month period, which limits the amount of additional indebtedness Boardwalk Pipelines can incur to grow its business,
−Removed: and could require it to reduce indebtedness if its earnings before interest, income taxes, depreciation and amortization (“EBITDA”) decreases to a level that would cause it to breach this covenant.
+Added: This agreement also requires it to maintain a ratio of total consolidated debt to consolidated EBITDA (as defined in the agreement) of not more than 5.0 to 1.0, or up to 5.5 to 1.0 for the three quarters following a qualified acquisition or series of acquisitions, where the purchase price exceeds $100.0 million over a rolling 12-month period, which limits the amount of additional indebtedness Boardwalk Pipelines can incur to grow its business, and could require it to reduce indebtedness if its earnings before interest, income taxes, depreciation and amortization (“EBITDA”) decreases to a level that would cause it to breach this covenant.
Future financing agreements Boardwalk Pipelines may enter into could contain similar or more restrictive covenants or may not be as favorable as those under its existing indebtedness.
Boardwalk Pipelines’ ability to comply with the covenants and restrictions contained in its credit agreement may be affected by events beyond its control, including economic, financial and market conditions.
−Removed: If market, economic conditions or its financial performance deteriorate, its ability to comply with these covenants may be impaired.
+Added: If market or economic conditions or its financial performance deteriorate, its ability to comply with these covenants may be impaired.
If Boardwalk Pipelines is not able to incur additional indebtedness, it may be required to seek other sources of funding that may be on less favorable terms.
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In addition, a default could result in a significant portion of its indebtedness becoming immediately due and payable, and its lenders could terminate their commitment to make further loans to it.
−Removed: If such event occurs, Boardwalk Pipelines would not have, and may not be able to obtain, sufficient funds to make these accelerated payments.
+Added: If such event occurs, Boardwalk Pipelines may not be able to obtain sufficient funds to make these accelerated payments.
Boardwalk Pipelines’ indebtedness could affect its ability to meet its obligations and may otherwise restrict its activities.
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This level of debt requires significant interest payments.
−Removed: Boardwalk Pipelines’ inability to generate sufficient cash flow to satisfy its debt obligations, or to refinance its obligations on commercially reasonable terms, would have a material adverse effect on its business.
+Added: Boardwalk Pipelines’ inability to generate sufficient cash flow to
+Added: satisfy its debt obligations, or to refinance its obligations on commercially reasonable terms, would have a material adverse effect on its business.
Boardwalk Pipelines’ indebtedness could have important consequences.
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Boardwalk Pipelines may be unable to execute its growth strategy or take advantage of certain business opportunities.
−Removed: The outbreak of COVID-19 and the measures to mitigate the spread of COVID-19 could materially adversely affect Boardwalk Pipelines’ business, financial condition and results of operations and those of its customers, suppliers and other business partners.
−Removed: The global outbreak of the COVID-19 pandemic and measures to mitigate the spread of COVID-19 significantly impacted the world and the U.S., and impacted global demand for oil and petrochemical products.
−Removed: COVID-19 has also resulted in significant business and operational disruptions, including business closures, supply chain disruptions, travel restrictions, stay-at-home orders and limitations on the availability of workforces.
+Added: Pandemics or other outbreaks of contagious diseases and the measures to mitigate their spread could materially adversely affect Boardwalk Pipelines’ business, financial condition and results of operations and those of its customers, suppliers and other business partners.
+Added: The global outbreak of the COVID-19 pandemic and measures to mitigate the spread of COVID-19 caused unprecedented disruptions to the global and U.S.
+Added: economies and impacted global demand for oil and petrochemical products.
+Added: Future pandemics and other outbreaks of contagious diseases could result in similar or worse impacts and significant business and operational disruptions, including business closures, supply chain disruptions, travel restrictions, stay-at-home orders and limitations on the availability of workforces.
Boardwalk Pipelines’ operations are considered essential critical infrastructure under current Cybersecurity and Infrastructure Security Agency guidelines;
−Removed: however, if significant portions of Boardwalk Pipelines’ workforce are unable to work effectively, including because of illness or quarantines, its business could be materially adversely affected.
−Removed: Boardwalk Pipelines may also be unable to perform fully on its contracts, and its costs may increase as a result of the COVID-19 outbreak.
+Added: however, if significant portions of Boardwalk Pipelines’ workforce are unable to work effectively, including because of illness or quarantines or from the impacts of any potential future pandemics and other outbreaks of contagious diseases, its business could be materially adversely affected.
+Added: Boardwalk Pipelines may also be unable to perform fully on its contracts, and its costs may increase as a result of any potential future pandemics and other outbreaks of contagious diseases.
These cost increases may not be fully recoverable.
−Removed: It is possible that the continued spread of COVID-19 could also further cause disruption in Boardwalk Pipelines’ customers’ business;
+Added: It is possible that future pandemics and other outbreaks of contagious diseases could cause disruption in Boardwalk Pipelines’ customers’ business;
cause delay, or limit the ability of its customers to perform, including in making timely payments to it.
−Removed: The impact of COVID-19 has impacted capital markets, which may impact Boardwalk Pipelines’ customers’ financial position.
−Removed: The COVID-19 pandemic may also have the effect of increasing several of the other risk factors contained herein.
+Added: Future pandemics and other outbreaks of contagious diseases could impact capital markets, which may impact Boardwalk Pipelines’ customers’ financial position.
+Added: Future pandemics and other outbreaks of contagious diseases may also have the effect of increasing several of the other risk factors contained herein.
Boardwalk Pipelines does not own all of the land on which its pipelines and facilities are located, which could result in disruptions to its operations.
Substantial portions of Boardwalk Pipelines’ pipelines, storage and other facilities are constructed and maintained on property owned by others pursuant to rights-of-way, easements, permits, licenses or consents, and Boardwalk Pipelines is subject to the possibility of more onerous terms and/or increased costs to retain necessary land use rights if it does not have valid land use rights or if such land use rights lapse or terminate.
−Removed: Some of the rights to construct and operate Boardwalk Pipelines’ pipelines storage or other facilities on land owned by third parties and governmental agencies that it obtains are for specific periods of time.
+Added: Some of the rights to construct and operate Boardwalk Pipelines’ pipelines storage or other facilities on land owned by third parties and governmental agencies that it obtains are
+Added: for specific periods of time.
Boardwalk Pipelines cannot guarantee that it will always be able to renew, when necessary, existing land use rights or obtain new land use rights without experiencing significant costs or experiencing landowner opposition.
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Risks Related to Us and Our Subsidiary, Loews Hotels & Co
−Removed: The COVID-19 pandemic and efforts to mitigate the spread of the virus have had, and are expected to continue to have, material adverse impacts on Loews Hotels & Co’s results of operations, financial condition and cash flows .
−Removed: In response to the spread of COVID-19, governments across the globe have implemented measures to mitigate the spread of the virus, such as through city, regional or national lockdowns or stay-at-home orders, narrowly defined and widespread business closures, restrictions on travel, limitations on large group gatherings and quarantines, among others.
−Removed: Some of these measures, such as international travel restrictions in particular, continue in order to contain further spread.
−Removed: Beyond the existence of governmental restrictions, the perception of health risks associated with COVID-19 has limited, and continues to limit, business and leisure travel.
−Removed: The spread of the coronavirus, including its resurgence through new variants, and the continuing related containment efforts have had, and continue to have, macro-economic implications, the effects of which could be felt well beyond the time the spread of the virus is mitigated or contained.
−Removed: These developments have caused unprecedented disruptions to the global economy, including supply chains, air travel and normal business operations across sectors, including the hospitality industry that depends on active levels of business and leisure travel.
−Removed: In response to the pandemic, Loews Hotels & Co temporarily suspended operations at the majority of its owned and/or operated hotels.
−Removed: While all of these hotels have resumed general operations, occupancy rates remain considerably lower, particularly for certain hotels that rely on business travel, when compared to occupancy rates prior to March of 2020.
−Removed: As such, revenues have been lower and may be insufficient to offset certain fixed costs, such as insurance and property taxes.
−Removed: The potential for the resuspension of operations varies by hotel property and will depend on numerous factors, many of which are outside Loews Hotels & Co’s control, including the transmissivity and virulence of future virus variants, the velocity of future virus spread and quarantine periods for individuals exposed or infected required or recommended by governmental authorities or medical professionals.
−Removed: In addition, as a result of the pandemic, Loews Hotels & Co has had to implement a number of new measures for the health and safety of its guests and employees.
−Removed: These new measures, which may need to remain in place for the foreseeable future, have resulted and will continue to result in increased costs.
−Removed: Given that Loews Hotels & Co owns and leases, relative to some of its competitors, a higher proportion of its hotel properties, compared to the number of properties that it manages for third-party owners, it may as a result of COVID-19 and mitigation measures face increased risks associated with mortgage debt, including the possibility of default, cash trap periods, the inability to draw further loan disbursements and reduced availability of replacement financing at reasonable terms or at all;
−Removed: difficulty reducing costs;
−Removed: declines in real estate values and potential additional impairments in the value of Loews Hotels & Co’s assets;
−Removed: and a limited ability to respond to market conditions.
−Removed: In addition, uncertain or fluctuating real estate valuations and the inability for third-party purchasers to obtain capital may prevent Loews Hotels & Co from selling properties on acceptable terms.
−Removed: The full extent and duration of the impacts caused by the COVID-19 outbreak on Loews Hotels & Co’s business, financial condition, operating results and cash flows remains largely uncertain and dependent on future developments that cannot be accurately predicted at this time, such as the severity, duration, transmission rate and geographic spread of current and future variants of COVID-19 worldwide, including in the United States and Canada, the extent and effectiveness, whether perceived or actual, of the containment and mitigation measures taken, the cost to implement containment and mitigation measures, the impact of containment and mitigation measures on operations and Loews Hotels & Co’s workforce, the timing, efficacy and ability of vaccinations and other treatments to combat COVID-19, and the response of the overall economy, the travel and leisure sector, financial markets, governmental authorities and the population, particularly in areas where Loews Hotels & Co operates.
−Removed: Accordingly, COVID-19 presents continuing material uncertainty and risk with respect to Loews Hotels & Co’s business, results of operations, financial condition, and cash flows.
−Removed: Even following containment and mitigation of COVID-19, continuing uncertainty exists around when and if Loews Hotels & Co will be able to resume normal, pre-COVID-19 level operations for business or leisure travel.
−Removed: Once the COVID-19 outbreak is mitigated or contained, whenever that may be, historical travel patterns, both domestic and international, may continue to be disrupted either on a temporary basis or with longer term effects.
−Removed: For example, certain travel is dependent on commercial airlines restoring capacity, and their inability to restore full capacity or avoid the necessity to curtail operations in the future on a temporary or more permanent basis, could impact demand for Loews Hotels & Co’s services.
−Removed: Additionally, businesses that continue to rely on remote working and videoconferences may reduce the level of business travel both to save costs and to reduce the risk of exposure for their employees, and they may also seek alternatives to large public gatherings such as conferences and conventions.
−Removed: Leisure travelers may also be less inclined to travel or gather in large groups out of ongoing safety concerns, regardless of the lifting of mandated or recommended restrictions.
−Removed: In addition, with the potential adverse impact on jobs and the economy more broadly, leisure travel may be further impacted due to economic reasons.
−Removed: Further, the demand for lodging, and consumer confidence in travel generally, may not recover as quickly as other industries.
−Removed: Any of these trends could have continuing material adverse effects on Loews Hotels & Co’s results of operations, financial condition and cash flow.
−Removed: As part of cost containment efforts at the outset of the pandemic, Loews Hotels & Co put a substantial number of its employees on unpaid leaves of absence or severed them from the organization.
−Removed: Now that conditions have warranted the resumption of operations that necessitate increased staffing levels, finding and attracting sufficient talent to fill the roles that have been furloughed or eliminated has been challenging in certain markets in which Loews Hotels & Co operates.
−Removed: Additionally, many of Loews Hotels & Co’s service providers and suppliers also put their employees on leaves of absence or severed employees.
−Removed: Should they be unable to find and attract sufficient talent to fill the roles that they have furloughed or eliminated, Loews Hotels & Co may not have the requisite services or supplies available to resume operations at the time or in the manner of its choosing.
−Removed: Loews Hotels & Co continues to evaluate spending and manage operating expenses as variants of COVID-19 impact different markets in which it operates.
−Removed: Loews Hotels & Co has received and may receive additional demands or requests from labor unions that represent its employees, whether in the course of its periodic renegotiation of collective bargaining agreements or otherwise, for additional compensation, healthcare benefits, operational protocols or other terms that could increase costs, and could experience labor disputes or disruptions as it continues to implement mitigation plans.
−Removed: Some actions Loews Hotels & Co has taken, or may take in the future, to reduce costs for it or its third-party owners may negatively impact guest loyalty, owner preference, and its ability to attract and retain employees, and its reputation and market share may suffer as a result.
−Removed: Further, the recovery period could be extensive and certain operational changes, particularly with respect to enhanced health and safety measures, may continue to be necessary and could increase ongoing costs.
−Removed: Loews Hotels & Co’s construction projects could be delayed as a result of COVID-19 and related containment efforts, including containment efforts applicable to or affecting contractors, suppliers and inspectors required to review projects.
−Removed: As a manager of hotels owned by joint ventures that Loews Hotels & Co invests in and by third parties, Loews Hotels & Co earns fees based on the revenues that those managed hotels generate.
−Removed: As a result of reduced revenues described above due to COVID-19 and mitigating measures, Loews Hotels & Co’s fee-based revenues are also materially reduced.
−Removed: Certain of these properties also have contracts that require payments by Loews Hotels & Co to preserve its management of the hotel if the hotel’s operating results do not achieve certain performance levels.
−Removed: These payments may be uneconomical for Loews Hotels & Co and lead to Loews Hotels & Co no longer managing one or more of those properties.
−Removed: In properties in which Loews Hotels & Co has an ownership interest, Loews Hotels & Co leases space to third-party tenants and earns both fixed and variable amounts of rent, depending on each underlying lease arrangement.
−Removed: Some of these tenants informed Loews Hotels & Co that their operations have been adversely impacted by COVID-19 business restrictions causing rent abatement periods in certain circumstances.
−Removed: In addition, variable rent, which is generally tied to the tenant’s sales, has been, and will continue to be, materially adversely affected by the effects of the pandemic.
−Removed: Loews Hotels & Co’s business may be materially adversely affected by various operating risks common to the hospitality industry, including competition, excess supply and dependence on business travel and tourism.
+Added: Loews Hotels & Co’s business may be materially adversely affected by various operating risks common to the hospitality industry, many of which are beyond Loews Hotels & Co’s control.
Loews Hotels & Co owns and operates hotels that have different economic characteristics than many other real estate assets.
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or global economy and financial markets, as well as more localized changes in the economy of each hotel’s geographic location;
+Added: • increases in the costs of supplies, furniture, fixtures, equipment, labor (such as, directly or indirectly, from minimum wage increases, labor shortages or protocols intended to mitigate the spread of COVID-19, future pandemics or outbreaks of other contagious diseases), workers’ compensation, benefits, insurance, food and beverage, commodities, energy and unanticipated costs or cost increases due to inflation or resulting from force majeure events, new or different federal, state or local governmental regulations, including tariffs, constrained supply, and other factors that may not be offset by increased revenues;
• disruptions or delays in our supply chain for goods and materials, including those used for hotel development, renovations and operations;
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• the financial condition and general operational condition of the airline, automotive and other transportation-related industries and its impact on travel;
−Removed: • decreased airline capacities and routes and disruption in airline operations;
+Added: • decreased airline capacities and routes and disruption in airline operations, whether arising from the spread of COVID-19, future pandemics or outbreaks of other contagious diseases and associated mitigation efforts, or otherwise;
• competition from other hotels and alternative accommodations, such as Airbnb, in the markets in which Loews Hotels & Co operates;
• requirements for periodic capital reinvestment to maintain and upgrade hotels;
−Removed: • increases in operating costs, including labor (such as from minimum wage increases or labor shortages), workers’ compensation, benefits, insurance, food and beverage, commodity costs, energy and unanticipated costs resulting from force majeure events, due to inflation, new or different federal, state or local governmental regulations, including tariffs, constrained supply, and other factors that may not be offset by increased revenues;
−Removed: • the costs and administrative burdens associated with compliance with applicable laws and regulations;
+Added: • the costs and administrative burdens associated with compliance with applicable laws and regulations, including, among others, those arising out of mitigation efforts associated with COVID-19, future pandemics or outbreaks of other contagious diseases;
• organized labor activities, which could cause a diversion of business from hotels involved in labor negotiations and loss of business for Loews Hotels & Co’s properties generally as a result of certain labor tactics;
−Removed: • changes in the desirability of particular locations or travel patterns of customers, including with respect to the underlying attractions supporting Loews Hotels & Co’s immersive destination properties, such as the Universal theme parks for its Orlando, Florida properties, and stadiums, arenas and convention centers for properties in other markets;
+Added: • changes in the desirability of particular locations or travel patterns of customers, including the possibility that travelers may be inclined to seek alternatives to large public gatherings, such as conferences and conventions, out of safety concerns associated with COVID-19, future pandemics or outbreaks of other contagious diseases and associated mitigation efforts, or with respect to the underlying attractions supporting the desirability of a particular location, such as, in the case of Loews Hotels & Co’s immersive destination properties, the Universal theme parks for its Orlando, Florida properties, and stadiums, arenas and convention centers for properties in other markets;
• geographic concentration of operations and customers;
• shortages of desirable locations for development;
−Removed: • relationships with third-party property owners, developers, landlords and joint venture partners, including the risk that third-party property owners, developers, landlords and/or partners may encounter financial difficulties, may not fulfill material obligations and/or may terminate lease, management, joint venture or other agreements.
+Added: • relationships with third-party property owners, developers, landlords, tenants, suppliers and joint venture partners, including the risk that such third-parties may encounter financial difficulties, may not fulfill material obligations , may terminate management, lease, supply, joint venture or other agreements with us, may, in the case of landlords, seek material increases or improvements from us in order to renew leases to us, and/or may, in the case of tenants, seek material discounts or concessions from us in order to renew leases from us .
In addition to materially affecting the business of Loews Hotels & Co generally, these factors, and the reputational repercussions of these factors, could materially adversely affect, and from time to time have materially adversely affected, individual hotels and hotels in particular regions.
−Removed: Loews Hotels & Co is exposed to the risks resulting from significant investments in owned and leased real estate, which could increase its costs, reduce its profits, limit its ability to respond to market conditions or restrict its growth strategy.
+Added: Loews Hotels & Co is exposed to the risks resulting from significant investments in owned and leased real estate, including through ownership interests in partnerships and joint ventures, which could increase its costs, reduce its profits, limit its ability to respond to market conditions or restrict its growth strategy.
Loews Hotels & Co’s proportion of owned and leased properties, compared to the number of properties that it manages for third-party owners, is larger than that of some of its competitors.
2 unchanged sentences
• the ongoing need for owner-funded capital improvements and expenditures to maintain or upgrade properties;
−Removed: • risks associated with mortgage debt, including the possibility of default, fluctuating interest rate levels and the availability of replacement financing;
−Removed: • risks associated with the possibility that cost increases will outpace revenue increases and that, in the event of an economic slowdown, a high proportion of fixed costs will make it difficult to reduce costs to the extent required to offset declining revenues;
+Added: • risks associated with mortgage debt, including the possibility of default, fluctuating interest rate levels, compliance with covenants that may include or result in principal amortization or the acceleration of repayment and the availability of financing, including the possibility of lenders electing to freeze or restrict loans secured by hospitality related assets or to not fund loans as anticipated or previously committed, which may arise as a result of pandemics or outbreaks of contagious diseases and associated mitigation efforts or otherwise;
+Added: • risks associated with the possibility that cost increases will outpace revenue increases and that, in the event of an economic slowdown or other circumstances negatively affecting revenues, a high proportion of fixed costs will make it difficult to reduce costs to the extent required to offset declining revenues;
• risks associated with real estate and property leases, including the possibility of rent increases and the inability to renew or extend upon favorable terms;
+Added: • the potential impact of changes in general economic and market conditions, including the severity and duration of any downturn in the U.S.
+Added: or global economy and financial markets and the impact of COVID-19, future pandemics and outbreaks of other contagious diseases and associated mitigation efforts, on tenants of space leases within properties in which Loews Hotels & Co invests;
• risks associated with real estate condominiums, including the possibility of special assessments by condominiums that Loews Hotels & Co does not control;
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In addition, the hospitality industry is cyclical and demand generally follows the general economy on a lagged basis.
−Removed: The seasonality and cyclicality of its industry may contribute to fluctuation in Loews Hotels & Co’s results of operations, financial condition and cash flows.
−Removed: Loews Hotels & Co operates in a highly competitive industry, both for customers and for acquisitions and developments of new properties.
+Added: The seasonality and cyclicality of its industry may contribute to fluctuations in Loews Hotels & Co’s results of operations, financial condition and cash flows.
+Added: Loews Hotels & Co operates in a highly competitive industry, both for customers and for the acquisition and/or development of new properties.
The hospitality industry is highly competitive.
−Removed: Loews Hotels & Co’s properties compete with other hotels and alternative accommodations based on a number of factors, including room rates, quality of accommodations, service levels and amenities, location, brand affiliation, reputation and reservation systems.
+Added: Loews Hotels & Co’s properties compete with other hotels and alternative accommodations based on a number of factors, including room rates, quality of accommodations, service levels and
+Added: amenities, location, brand affiliation, reputation and reservation systems.
New hotels may be constructed and these additions to supply create new competitors, in some cases without corresponding increases in demand for hotel rooms.
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Its ability to attract and retain guests depends, in part, on the public recognition of its brands and their associated reputation.
−Removed: If its brands become obsolete or consumers view them as unfashionable or lacking in consistency and quality, or its brands or reputation are otherwise harmed, Loews Hotels & Co may be unable to attract guests to its properties, and may further be unable to attract or retain joint venture partners or hotel owners.
+Added: If its brands become obsolete or consumers view them as unfashionable or lacking in quality, or its brands or reputation are otherwise harmed, Loews Hotels & Co may be unable to attract guests to its properties, and may further be unable to attract or retain joint venture partners or hotel owners.
Loews Hotels & Co’s reputation may also suffer as a result of negative publicity regarding its hotels, including as a result of social media reports, regardless of the accuracy of such publicity.
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Loews Hotels & Co’s efforts to develop new properties and renovate existing properties could be delayed or become more expensive.
−Removed: Loews Hotels & Co from time to time renovates its properties and is currently expanding its portfolio through the ground-up construction of new properties in Coral Gables, Florida, and Arlington, Texas, along with a support facility in
−Removed: Apopka, Florida, and in the future may similarly develop additional new properties.
+Added: Loews Hotels & Co from time to time renovates its properties and is currently expanding its portfolio through the ground-up construction of new properties in Orlando, Florida, and Arlington, Texas, along with a support facility in Apopka, Florida, and in the future may similarly develop additional new properties.
Often these projects are undertaken with joint venture partners who may also serve as developer.
These renovation and construction efforts are subject to a number of risks, including:
−Removed: • construction delays, changes to plans and specifications and cost overruns (including labor and materials or unforeseeable site conditions) that may increase project costs;
−Removed: cause new development projects to not be completed by lender or municipal imposed required completion dates or subject Loews Hotels & Co to cancellation penalties for reservations accepted;
+Added: • construction delays, changes to plans and specifications and cost overruns (including for labor and materials, unforeseeable site conditions or design defects) that may increase project costs, cause new development projects to not be completed by lender or municipal imposed required completion dates or subject Loews Hotels & Co to cancellation penalties for reservations accepted;
• obtaining zoning, occupancy and other required permits or authorizations;
−Removed: • changes in economic conditions that may result in weakened or lack of demand or negative project returns;
+Added: • changes in economic or other market conditions that may result in weakened or lack of demand or negative project returns;
• governmental restrictions on the size or kind of development;
−Removed: • projects financed with construction debt are subject to interest rate risk as uncertain timing and amount of draws make effective hedging difficult to obtain;
+Added: • projects financed with construction debt are subject to interest rate risk as uncertain timing and amount of draws may make effective hedging difficult or expensive to obtain, as well as the other risks associated with mortgage debt described above;
+Added: • delays resulting from COVID-19, future pandemics or the outbreaks of other contagious diseases and related containment efforts, including as they pertain to contractors, suppliers and inspectors required to review projects;
• weather delays and force majeure events, including earthquakes, tornados, hurricanes, floods and other natural or man-made catastrophes;
−Removed: • design defects that could increase costs.
+Added: • projects with adjacent demand generators under construction that become delayed causing opening delays of hotels under development.
Additionally, renovating existing properties and developing new properties typically involve lengthy development periods during which significant amounts of capital must be funded before the properties begin to operate and generate revenue.
If the cost of renovations or new development exceeds budgeted amounts, and/or the time period for development is longer than initially anticipated, Loews Hotels & Co’s operating results could be reduced.
−Removed: Loews Hotels & Co has seen construction timelines lengthen due to various factors, including competition for skilled construction labor, challenges related to financing, disruption in the supply chain for materials, and the impact of COVID-19 generally, and these circumstances could continue or worsen in the future.
+Added: Loews Hotels & Co has seen
+Added: construction timelines lengthen due to various factors, including competition for skilled construction labor, challenges related to financing, disruption in the supply chain for materials, and the impact of COVID-19 generally, and these or similar circumstances could continue or worsen in the future.
Accordingly, there can be no assurance that all development pipeline projects will result in new hotels entering Loews Hotel & Co’s system, or that those hotels will open when anticipated.
−Removed: Further, due to the lengthy development cycle, intervening adverse economic conditions in general and as they apply to Loews Hotels & Co and its development partners may alter or impede the development plans, thereby resulting in incremental costs or potential impairment charges.
−Removed: In addition, using multiple sources of capital to develop new properties reduces or eliminates the ability of Loews Hotels & Co to cease commenced projects if the overall economic environment conditions change.
+Added: Further, due to the lengthy development cycle, intervening adverse economic or other market conditions in general and as they apply to Loews Hotels & Co and its development partners may alter or impede the development plans, thereby resulting in incremental costs or potential impairment charges.
+Added: In addition, using multiple sources of capital to develop new properties reduces or eliminates the ability of Loews Hotels & Co to cease commenced projects if the overall economic environment or other market conditions change.
Moreover, during the early stages of operations, charges related to interest expense and depreciation may substantially detract from, or even outweigh, the profitability of certain new property investments.
−Removed: Co-investing in hotel properties decreases Loews Hotels & Co’s ability to manage risk .
−Removed: Loews Hotels & Co has from time to time invested, and expects to continue to invest, in hotel properties or businesses as a co-investor.
−Removed: Co-investors often have shared control over the operation of the property or business.
+Added: Investing in hotel properties through ownership interests in partnerships and joint ventures decreases Loews Hotels & Co’s ability to manage risk .
+Added: Loews Hotels & Co has invested, and expects to continue to invest, in hotel properties or businesses through ownership interests in partnerships and joint ventures.
+Added: Partners and joint venturers often have shared control over the operation of the property or business.
Therefore, the operation of such properties or businesses is subject to inherent risk due to the shared nature of the enterprise and the need to reach agreements on material matters.
−Removed: In addition, investments with other investors may involve risks such as the possibility that the co-investor might become bankrupt or not have the financial resources to meet its obligations, or have economic or business interests or goals that are inconsistent with Loews Hotels & Co’s business interests or goals.
−Removed: Further, Loews Hotels & Co may be unable to take action without the approval of its co-investors, or its co-investors could take actions binding on the property without the consent of Loews Hotels & Co.
−Removed: Additionally, should a co-investor become bankrupt, Loews Hotels & Co could become liable for its share of liabilities.
+Added: In addition, investments with other investors may involve risks such as the possibility that the partner or joint venturer might become bankrupt or not have the financial resources to meet its obligations, or have economic or business interests or goals that are inconsistent with Loews Hotels & Co’s business interests or goals.
+Added: Further, Loews Hotels & Co may be unable to take action without the approval of its partners or joint venturers, or its partners or joint venturers could take actions binding on the property without the consent of Loews Hotels & Co.
+Added: Additionally, should a partner or joint venturer become bankrupt, Loews Hotels & Co could become liable for its share of liabilities.
Loews Hotels & Co’s properties are geographically concentrated, which exposes its business to the effects of regional events and occurrences.
Loews Hotels & Co has a concentration of hotels in Florida.
−Removed: Specifically, as of December 31, 2021, eight hotels, representing 55% of rooms in its system, were located at Universal Orlando in Orlando, Florida and nine hotels, representing approximately 60% of rooms in its system, were located in Florida.
+Added: Specifically, as of December 31, 2022, eight hotels, representing 55% of rooms in its system, were located at Universal Orlando in Orlando, Florida and ten hotels, representing approximately 61% of rooms in its system, were located in Florida.
+Added: Furthermore, there are three additional hotels under development in Orlando, Florida that would increase these numbers to 11 hotels in Orlando, Florida and 13 hotels in in Florida.
+Added: In the future, other existing or new geographies may present opportunities for new or additional investment that may create new or increased concentration risk.
The concentration of hotels in one region or a limited number of markets may expose Loews Hotels & Co to risks of adverse economic and other developments that are greater than if its portfolio were more geographically diverse.
−Removed: These developments include regional economic downturns, a decline in the popularity of or access to area tourist attractions, such as theme parks, significant increases in the number of Loews Hotels & Co’s competitors’ hotels in these markets and potentially higher local property, sales and income taxes, property insurance costs or other expenses in the geographic markets in which it is concentrated.
−Removed: Loews Hotels & Co’s properties in Florida are subject to the effects of adverse acts of nature, such as hurricanes, strong winds and flooding, which have in the past caused damage to its hotels in Florida, and which may in the future be intensified as a result of climate change, as well as outbreaks of pandemic or contagious diseases.
+Added: These developments include regional economic downturns, a decline in the popularity of or access to area tourist attractions, such as theme parks, the failure of new tourist attractions to be developed or be successful in markets where new hotels are under development, significant increases in the number of Loews Hotels & Co’s competitors’ hotels in these markets and potentially higher local property, sales and income taxes, property insurance costs or other expenses in the geographic markets in which it is concentrated.
+Added: In addition, Loews Hotels & Co’s properties in Florida are subject to the effects of adverse acts of nature, such as hurricanes, strong winds and flooding, which have in the past caused damage to its hotels in Florida, and which may in the future be intensified as a result of climate change.
Loews Hotels & Co’s business may be significantly affected by other risks common to the Florida tourism industry.
−Removed: For example, the cost and availability of air services and the impact of any events that disrupt or reduce air travel to and from Florida for any reason can adversely affect its business.
+Added: For example, the cost and availability of air services and the impact of any events that disrupt or reduce air travel to and from Florida for any reason can materially adversely affect its business.
+Added: Pandemics or other outbreaks of contagious diseases and efforts to mitigate their spread have had, and could in the future have, material adverse impacts on Loews Hotels & Co’s results of operations, financial condition and cash flows.
+Added: In response to the spread of COVID-19, governments across the globe implemented measures to mitigate the spread of the virus, such as through lockdowns or stay-at-home orders, business closures, restrictions on travel, limitations on large group gatherings and quarantines, among others.
+Added: Beyond the existence of governmental restrictions, the perception of health risks associated with COVID-19 limited business and leisure travel.
+Added: The spread of the coronavirus and related containment efforts caused unprecedented disruptions to the global economy, including supply chains, air travel and normal business operations across sectors, including the hospitality industry that depends on active levels of business and leisure travel.
+Added: Future pandemics or other outbreaks of contagious diseases may result in similar mitigation measures, perceptions of health risks and economic disruptions.
+Added: In response to COVID-19, Loews Hotels & Co temporarily suspended operations at the majority of its properties and, for a period after general operations resumed, occupancy rates were considerably lower for certain of its hotels compared to
+Added: occupancy rates prior to the pandemic.
+Added: As a result of the suspended operations and lower occupancy levels, revenues were lower, while operating costs were not reduced to the same extent.
+Added: In addition, Loews Hotels & Co had to implement a number of new measures for the health and safety of its guests and employees, which increased its costs.
+Added: Loews Hotels & Co may have to implement similar responses to future pandemics or other outbreaks of contagious diseases, which may lead to similar effects.
+Added: As part of cost containment efforts at the outset of the COVID-19 pandemic, Loews Hotels & Co and many of its service providers and suppliers severed or put employees on unpaid leaves of absence.
+Added: When conditions improved such that increased staffing levels were required, finding and attracting talent to fill certain roles that were furloughed or eliminated was challenging for Loews Hotels & Co and certain of its service providers and suppliers, which affected Loews Hotels & Co’s ability to return to normal operations at certain of its hotels.
+Added: Loews Hotels & Co and its service providers and suppliers may have to take similar actions in response to future pandemics or other outbreaks of contagious diseases, which may lead to similar effects.
+Added: The negative impacts of a pandemic or other outbreak of contagious disease on Loews Hotels & Co’s business may substantially exacerbate the other risks facing Loews Hotels & Co, including those described in this section, and such impacts may linger beyond the containment and mitigation of any such pandemic or outbreak, including the COVID-19 pandemic.
The growth and use of alternative reservation channels adversely affects Loews Hotels & Co’s business.
19 unchanged sentences
Also, wage and/or benefit increases resulting from new labor agreements may be significant and could have an adverse impact on its results of operations.
−Removed: To the extent that Loews Hotels & Co’s non-union employees join unions, Loews Hotels & Co would have greater exposure to risks associated with such labor problems.
+Added: Furthermore, Loews Hotels & Co could experience demands from labor unions that represent its employees for additional compensation, healthcare benefits, operational protocols or other terms in response to COVID-19, future pandemics or the outbreak of other contagious diseases that could increase costs.
+Added: To the extent that Loews Hotels & Co’s non-union employees join unions, Loews Hotels & Co would have greater
+Added: exposure to risks associated with such labor problems.
Furthermore, Loews Hotels & Co may have, or acquire in the future, multi-employer plans that are classified as “endangered,” “seriously endangered,” or “critical” status and a withdrawal in the future could result in the incurrence of a contingent liability that would be payable in an amount and at such time (or over a period of time) that would vary based on a number of factors at the time of (and after) withdrawal.
Any such events or additional costs may have materially adverse effects.
−Removed: Risks Related to Us and Our Subsidiary, Altium Packaging
−Removed: The COVID-19 pandemic may have an adverse impact on Altium Packaging.
−Removed: Altium Packaging manufactures packaging that is used with products in critical sectors, such as the pharmaceutical, household and industrial cleaning and food and beverage markets, and is thus an essential business as contemplated by state and local orders.
−Removed: It therefore has operated, and continues to operate, all of its manufacturing facilities to support those sectors.
−Removed: If widespread infections were to affect any of its facilities or workers, including those supporting critical sectors, it may be required to temporarily shut down or otherwise modify the working conditions at such facilities to address the
−Removed: Any such changes could cause Altium Packaging to be unable to meet demand from its customers if it cannot provide support from other facilities in its network.
−Removed: In addition, the COVID-19 pandemic’s wide-reaching impact on the global economy has disrupted global supply chains, including those that supply Altium Packaging with raw materials and other inputs necessary for it to manufacture its packaging products.
−Removed: Further, the pandemic has led to labor market dislocations that have led to employee-retention issues and an increase in the cost of labor at Altium Packaging’s manufacturing facilities.
−Removed: If these supply chain and/or labor market disruptions continue, Altium Packaging’s business may be materially adversely affected.
+Added: Risks Related to Us and Our Unconsolidated Subsidiary, Altium Packaging
Altium Packaging’s substantial indebtedness could affect its ability to meet its obligations and may otherwise restrict its activities.
7 unchanged sentences
In addition, the credit agreements governing its current indebtedness contain, and any future debt instruments would likely contain, financial and other restrictive covenants, which impose operating and financial restrictions on it.
−Removed: As a result of these covenants, Altium Packaging could be limited in the manner in which it conducts its business and may be unable to engage in favorable business activities or finance future operations or capital needs.
+Added: As a result of these covenants, Altium Packaging could be limited in the manner in which it conducts its business and may be unable to engage in certain business activities or finance future operations or capital needs.
Furthermore, a failure to comply with these covenants could result in an event of default which, if not cured or waived, could have a material adverse effect on Altium Packaging.
12 unchanged sentences
Increased self-manufacturing by Altium Packaging’s customers may have a material adverse impact on its sales volume and financial results.
−Removed: Altium Packaging believes that its customers may engage in self-manufacturing over time at locations where transportation costs are high, and where low complexity and available space to install blow molding equipment exist.
+Added: Altium Packaging believes that certain customers may engage in self-manufacturing over time at locations where transportation costs are high, and where low complexity and available space to install blow molding equipment exist.
Risks Related to Us and Our Subsidiaries Generally
In addition to the specific risks and uncertainties faced by our subsidiaries, as discussed above, we and all of our subsidiaries face additional risks and uncertainties described below.
−Removed: The COVID-19 pandemic is having widespread impacts on the way we and our subsidiaries operate.
−Removed: The spread of COVID-19 and mitigating measures has had, and continues to have, macroeconomic implications, the effects of which could be felt well beyond the time during which the spread of the virus is mitigated or contained.
−Removed: These developments have caused unprecedented disruptions to the global economy and normal business operations across sectors and countries, including the sectors and countries in which we and our subsidiaries operate.
−Removed: Because of the size and breadth of the pandemic, all of the direct and indirect consequences of COVID-19 are not yet known and may not emerge for some time.
−Removed: In response to the COVID-19 pandemic, large portions of our and our subsidiaries’ employees continue to work remotely on at least a part time basis, which, among other things, may disrupt their productivity.
−Removed: Similar workplace restrictions are in place at many of our and our subsidiaries’ critical vendors, which may result in interruptions in service delivery or failure by vendors to properly perform required services.
−Removed: In addition, having shifted to remote working arrangements and being more dependent on internet and telecommunications access and capabilities, we and our subsidiaries also face a heightened risk of cybersecurity attacks or data security incidents.
−Removed: We and our subsidiaries also self-insure our health benefits and therefore may experience increased medical claims as a result of the pandemic.
Failures or interruptions in or breaches to our or our subsidiaries’ computer systems or information technology or communication infrastructure or those of our third party vendors could materially and adversely affect our or our subsidiaries’ operations.
−Removed: We and our subsidiaries are dependent upon information technologies, computer and communication systems and networks, including those maintained by us and our subsidiaries and those maintained and provided to us and our subsidiaries by third parties (for example, “software-as-a-service” and cloud solutions), to conduct operations and are reliant on technology to help increase efficiency in our and their businesses.
+Added: We and our subsidiaries are dependent upon information technologies, computer and communication systems and networks, including those maintained by us and our subsidiaries and those maintained and provided to us and our subsidiaries by third parties (for example, “software-as-a-service” and cloud solutions), to conduct operations.
We and our subsidiaries are dependent upon operational and financial computer and communication systems and information technology infrastructure to process the data necessary to conduct almost all aspects of our and their businesses.
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Cyber attacks and cyber incidents take many forms, including cyber extortion, denial of service, social engineering, introduction of viruses or malware, exploiting vulnerabilities in hardware, software or other infrastructure, hacking, website defacement, theft of passwords and other credentials, unauthorized use of computing resources for digital currency mining and business email compromise.
−Removed: CNA was recently subjected to a sophisticated cybersecurity incident involving ransomware.
−Removed: In addition, one of CNA’s vendors also recently experienced a cybersecurity incident.
+Added: CNA was subjected to a sophisticated cybersecurity incident involving ransomware in March 2021.
+Added: In addition, one of CNA’s vendors also experienced a cybersecurity incident during the third quarter of 2021.
For additional information about these incidents see “ Risks Related to Us and Our Subsidiary, CNA Financial Corporation ” above under this Part II, Item 1A.
2 unchanged sentences
The foregoing risks relating to disruption of service, interruption of operations and data loss could impact our and our subsidiaries’ ability to timely perform critical business functions, resulting in disruption or deterioration in our and our subsidiaries’ operations and business and expose us and our subsidiaries to significant financial losses and monetary and reputational damages.
−Removed: In addition, potential exposures include substantially increased compliance costs and required
−Removed: computer system upgrades and security related investments.
+Added: In addition, potential exposures include substantially increased compliance costs and required computer system upgrades and security related investments.
The breach of confidential information also could give rise to legal liability and regulatory action under data protection and privacy laws and regulations, both in the U.S.
6 unchanged sentences
Litigation is inherently subject to great uncertainty and it is difficult to predict the outcome or effect of any litigation matters.
−Removed: The outcome of any pending or future litigation could have a significant adverse impact on our or our subsidiaries’ financial condition or results of operations.
+Added: The outcome of any
+Added: pending or future litigation could have a significant adverse impact on our or our subsidiaries’ financial condition or results of operations.
Acts of terrorism could harm us and our subsidiaries.
−Removed: Terrorist attacks and the continued threat of terrorism in the United States or abroad, the continuation or escalation of armed hostilities or the outbreak of additional hostilities, including military and other action by the United States and its allies, could have a significant impact on us and the assets and businesses of our subsidiaries.
+Added: Terrorist attacks and the continued threat of terrorism in the United States or abroad, the continuation or escalation of armed hostilities or the outbreak of additional hostilities, including military and other action by the United States, its allies or other nations, could have a significant impact on us and the assets and businesses of our subsidiaries.
CNA issues coverages that are exposed to risk of loss from an act of terrorism.
6 unchanged sentences
For example, Boardwalk Pipelines is subject to extensive federal, state and local laws and regulations relating to protection of the environment.
−Removed: Such laws and regulations impose, among other things, restrictions, liabilities and obligations in connection with the generation, handling, use, storage, transportation, treatment and disposal of various substances, including hazardous substances and waste in connection with spills, releases, discharges and emissions of various substances into the environment.
+Added: Such laws and regulations impose, among other things, restrictions, liabilities and obligations in connection with the generation, handling, use, storage, transportation, treatment and disposal of various substances, including hazardous substances and waste and in connection with spills, releases, discharges and emissions of various substances into the environment.
In addition, Altium Packaging may be adversely affected by laws or regulations concerning environmental matters that increase the cost of producing, or otherwise adversely affect the demand for, plastic products.
6 unchanged sentences
We could incur impairment charges related to the carrying value of the long-lived assets and goodwill of our subsidiaries and our equity method investments.
−Removed: Our subsidiaries regularly evaluate their long-lived assets and goodwill for impairment whenever events or changes in circumstances indicate the carrying value of these assets may not be recoverable.
+Added: We and our subsidiaries regularly evaluate our and their long-lived assets and goodwill for impairment whenever events or changes in circumstances indicate the carrying value of these assets may not be recoverable.
Most notably, we could incur impairment charges related to the carrying value of pipeline and storage assets at Boardwalk Pipelines, our equity method investment in Altium Packaging and hotel investments owned by Loews Hotels & Co.
−Removed: We also test goodwill for impairment on an annual basis or when events or changes in circumstances indicate that a potential impairment exists.
+Added: We and our subsidiaries also test goodwill for impairment on an annual basis or when events or changes in circumstances indicate that a potential impairment exists.
Asset impairment evaluations by us and our subsidiaries with respect to both long-lived assets and goodwill are, by nature, highly subjective.
The use of different estimates and assumptions could result in materially different carrying values of our assets which could impact the need to record an impairment charge and the amount of any charge taken.
+Added: Pandemics or other outbreaks of contagious diseases and efforts to mitigate their spread have had, and could in the future have, widespread impacts on the way we and our subsidiaries operate.
+Added: The spread of COVID-19 and mitigating measures caused unprecedented disruptions to the global economy and normal business operations across sectors and countries, including the sectors and countries in which we and our subsidiaries operate.
+Added: Future pandemics or other outbreaks of contagious diseases, and efforts to mitigate their spread, may result in similar or worse economic implications and disruptions, including on our and our subsidiaries’ businesses.
We are a holding company and derive substantially all of our income and cash flow from our subsidiaries.
27 unchanged sentences
Information relating to our subsidiaries’ properties is contained under Item 1.
+Added: Legal Proceedings.
+Added: Information on our legal proceedings is included in Note 17 of the Notes to Consolidated Financial Statements, included under Item 8.
+Added: Mine Safety Disclosures.
+Added: Not applicable.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.