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Item 7. Management’s Discussion and Analysis

2024-02-06 compared with 2023-02-07 · 321 added, 252 removed, 612 unchanged (48% of the section changed)

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and the Corporate segment.

The Corporate segment is primarily comprised of Loews Corporation, excluding its operating subsidiaries, the consolidated operations of Altium Packaging LLC (“Altium Packaging”) through March 31, 2021 and the equity method of accounting for Altium Packaging subsequent to its deconsolidation on April 1, 2021.

For further information on the deconsolidation of Altium Packaging see Note 2 of the Notes to Consolidated Financial Statements included under Item 8.

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

The Corporate segment is primarily comprised of Loews Corporation, excluding its operating subsidiaries, and the equity method of accounting for Altium Packaging LLC (“Altium Packaging”).

Unless the context otherwise requires, as used herein, the term “Company” means Loews Corporation including its subsidiaries, the terms “Parent Company,” “we,” “our,” “us” or like terms mean Loews Corporation excluding its subsidiaries and the term “Net income (loss) attributable to Loews Corporation” means Net income (loss) attributable to Loews Corporation shareholders.

We rely upon our invested cash balances and distributions from our subsidiaries to generate the funds necessary to meet our obligations and to declare and pay any dividends to our shareholders.

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The following discussion should be read in conjunction with Item 1A, Risk Factors, and Item 8, Financial Statements and Supplementary Data of this Form 10-K.

For a discussion of changes in results of operations comparing the years ended December 31, 2021 and 2020 for Loews Corporation and its subsidiaries see Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 8, 2022 .

RESULTS OF OPERATIONS

This section of this Form 10-K generally discusses 2023 and 2022 results and year-to-year comparisons between 2023 and 2022.

With the exception of the discussions of Consolidated Financial Results, CNA Financial and Other Insurance Operations, as a result of the adoption Accounting Standards Update (“ASU”) 2018-12, “Financial Services – Insurance (Topic 944):

Targeted Improvements to the Accounting for Long-Duration Contracts,” (“ASU 2018-12”), a discussion of changes in results of operations comparing the years ended December 31, 2022 and 2021 for Loews Corporation and its subsidiaries may be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 7, 2023 .

As of January 1, 2023, ASU 2018-12 was adopted using the modified retrospective method applied as of the transition date of January 1, 2021, which required changes to the measurement and disclosure of long-duration contracts.

Prior period amounts presented in the financial statements have been adjusted to reflect application of the new guidance.

For additional information see Notes 1 and 9 of the Notes to Consolidated Financial Statements included under Item 8.

Consolidated Financial Results

The following table summarizes net income (loss) attributable to Loews Corporation by segment and net income per share attributable to Loews Corporation for the years ended December 31, 2022 and 2021:

The following table summarizes net income (loss) attributable to Loews Corporation by segment and the basic and diluted net income per share attributable to Loews Corporation for the years ended December 31, 2023, 2022 and 2021:

Year Ended December 31 2023

2022 (a) 2021 (a)

(In millions, except per share data)

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Loews Hotels & Co 147 117 (14)

Corporate (a) (154) 280

Corporate (90) (154) 280

Net income attributable to Loews Corporation $ 1,434 $ 822 $ 1,562

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Diluted net income per share $ 6.29 $ 3.38 $ 6.00

(a) Includes a net investment gain of $555 million ($438 million after tax) related to the sale of 47% of Altium Packaging in 2021.

(a) As of January 1, 2023, ASU 2018-12 was adopted using the modified retrospective method applied as of the transition date of January 1, 2021.

Prior period amounts presented in the financial statements have been adjusted to reflect application of the new guidance.

For additional information see Notes 1 and 9 of the Notes to Consolidated Financial Statements included under Item 8.

2023 Compared with 2022

Net income attributable to Loews Corporation for 2022 was $1.0 billion, or $4.16 diluted net income per share, compared to net income attributable to Loews Corporation of $1.6 billion, or $6.07 diluted net income per share, in 2021.

Excluding the item set forth in footnote (a) in the table above, net income attributable to Loews Corporation for 2021 was $1.1 billion.

Net income attributable to Loews Corporation for 2021 includes a net investment gain of $555 million ($438 million after tax) related to the sale of 47% of Altium Packaging.

Excluding the gain on sale of Altium Packaging, net income decreased $128 million in 2022 compared to 2021, driven by unfavorable limited partnership and common stock results, and net losses from sales of fixed income securities at CNA, partially offset by improved underwriting results and increased net investment income from fixed income securities for CNA and the significantly improvement results for Loews Hotels & Co due to the rebound in leisure travel.

Net income attributable to Loews Corporation for 2023 was $1.4 billion, or $6.29 diluted net income per share, compared to net income attributable to Loews Corporation of $822 million, or $3.38 diluted net income per share, in 2022.

Net income attributable to Loews Corporation for 2023 includes a $37 million after-tax charge for Corporate for the termination of a non-contributory defined benefit pension plan and a $36 million after-tax gain for Loews Hotels & Co related to the acquisition of an additional equity interest in, and the consolidation of, a previously unconsolidated joint venture property.

The increase in net income attributable to Loews Corporation in 2023 compared to 2022 was driven by improved results at CNA due to higher net investment income, improved underwriting income, lower investment losses, and a significantly lower unfavorable impact in 2023 from long-term care annual reserve reviews performed in the third quarter of each year.

Additionally the parent company posted higher investment returns on equity securities and short-term investments.

Boardwalk Pipelines also contributed positively to Loews Corporation’s year-over-year results due to higher revenues due to re-contracting at higher rates and recently completed growth projects.

2022 Compared with 2021

Net income attributable to Loews Corporation decreased to $822 million, or $3.38 diluted net income per share, for 2022 as compared to $1.6 billion, or $6.00 diluted net income per share, in 2021.

Net income attributable to Loews Corporation for 2021 includes a net investment gain of $555 million ($438 million after tax) related to the sale of approximately 47% of Altium Packaging.

Excluding the gain on sale of Altium Packaging, net income decreased $302 million in 2022 compared to 2021, driven by unfavorable limited partnership and common stock results, and net losses from sales of fixed income securities at CNA, partially offset by improved underwriting results and increased net investment income from fixed income securities for CNA and the significant improvement in results for Loews Hotels & Co due to the rebound in leisure travel.

Net income for 2022 also included an increase to long term care reserves for CNA, primarily driven by the unfavorable impact of increased cost of care inflation offset by favorable premium rate assumptions.

Boardwalk Pipelines also contributed positively to Loews Corporation’s year-over-year results due to higher revenues from recently completed growth projects, re-contracting at higher rates and higher utilization-based revenues.

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Year Ended December 31 2023

2022 (a) 2021 (a)

(In millions)

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Net income attributable to Loews Corporation $ 1,094 $ 612 $ 1,061

(a) As of January 1, 2023, ASU 2018-12 was adopted using the modified retrospective method applied as of the transition date of January 1, 2021.

Prior period amounts presented in the financial statements have been adjusted to reflect application of the new guidance.

For additional information see Notes 1 and 9 of the Notes to Consolidated Financial Statements included under Item 8 .

2023 Compared with 2022

Net income attributable to Loews Corporation increased $482 million for 2023 as compared with 2022.

The increase was primarily due to higher net investment income from limited partnership returns and fixed income securities, improved underwriting income and lower investment losses driven by the favorable change in fair value of non-redeemable preferred stock.

Net income for 2022 also included a $186 million ($131 million after tax and noncontrolling interests) increase to long term care reserves primarily driven by the unfavorable impact of increased cost of care inflation offset by favorable premium rate assumptions.

2022 Compared with 2021

Net income attributable to Loews Corporation decreased $449 million for 2022 as compared with 2021.

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Lower net investment income was driven by unfavorable limited partnership and common stock results and investment losses were driven by net losses on fixed maturity securities and the unfavorable change in fair value of non-redeemable preferred stock.

These decreases to net income were partially offset by improved underwriting results and higher net investment income from fixed income securities for 2022 as compared with 2021.

Catastrophe losses were $247 million ($174 million after tax and noncontrolling interests) for 2022 as compared with $397 million ($280 million after

tax and noncontrolling interests) in 2021.

Catastrophe losses were $247 million ($174 million after tax and noncontrolling interests) for 2022 as compared with $397

million ($280 million after tax and noncontrolling interests) in 2021.

Catastrophe losses for 2022 and 2021 were driven by severe weather related events, primarily Winter Storm Elliott and Hurricane Ian for 2022 and Hurricane Ida and Winter Storms Uri and Viola for 2021.

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In assessing its insurance operations, CNA utilizes the core income (loss) financial measure.

Core income (loss) is calculated by excluding from net income (loss), investment gains or losses and any cumulative effects of changes in accounting guidance.

Core income (loss) is calculated by excluding investment gains or losses from net income (loss).

In addition, core income (loss) excludes the effects of noncontrolling interests.

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The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums.

The underlying loss ratio excludes the impact of catastrophes losses and net prior year loss reserve and premium development from the loss ratio.

The underlying loss ratio excludes the impact of catastrophe losses and development-related items from the loss ratio.

Development-related items represent net prior year loss reserve and premium development, and includes the effects of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts.

The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums.

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Rate represents the average change in price on policies that renew excluding exposure change.

For certain products within Small Business, where quantifiable, rate includes the influence of new business as well.

Exposure represents the measure of risk used in the pricing of the insurance product.

The change in exposure represents the change in premium dollars on policies that renew as a result of the change in risk of the policy.

Retention represents the percentage of premium dollars renewed, excluding rate and exposure changes, in comparison to the expiring premium dollars from policies available to renew.

Renewal premium change, rate and retention presented for the prior year are updated to reflect subsequent activity on policies written in the period.

New business represents premiums from policies written with new customers and additional policies written with existing customers.

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

CNA uses underwriting gain (loss) to monitor insurance operations.

CNA uses underwriting gain (loss), calculated using GAAP financial results, to monitor insurance operations.

Underwriting gain (loss) is pretax and is calculated as net earned premiums less total insurance expenses, which includes insurance claims and policyholders’ benefits, amortization of deferred acquisition costs and other insurance related expenses.

Underlying underwriting gain (loss) represents underwriting results excluding catastrophe losses and development-related items.

The following tables summarize the results of CNA’s Property & Casualty Operations for the years ended December 31, 2023 and 2022.

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Gross written premiums $ 7,113 $ 6,120 $ 1,485 $ 14,718

Gross written premiums excluding third-

party captives 3,814 5,056 1,394 10,264

Gross written premiums excluding third-party captives 3,800 5,994 1,485 11,279

Net written premiums 3,329 4,880 1,237 9,446

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Other performance metrics:

Loss ratio excluding catastrophes

and development 58.6 % 61.5 % 58.5 % 60.0 %

Loss ratio excluding catastrophes and development 58.5 % 61.5 % 57.8 % 59.9 %

Effect of catastrophe impacts 4.5 2.5 2.6

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Combined ratio 90.4 % 96.0 % 92.6 % 93.5 %

Combined ratio excluding catastrophes

and development 89.8 % 92.4 % 90.8 % 91.2 %

Combined ratio excluding catastrophes and development 90.7 % 91.6 % 89.0 % 90.9 %

Rate 7 % 3 % 5 %

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Gross written premiums $ 7,514 $ 5,170 $ 1,394 $ 14,078

Gross written premiums excluding third-

party captives 3,672 4,334 1,297 9,303

Gross written premiums excluding third-party captives 3,814 5,056 1,394 10,264

Net written premiums 3,306 4,193 1,164 8,663

Net earned premiums 3,203 3,923 1,070 8,196

Underwriting gain (loss) 347 (112) 55 290

Underwriting gain 366 106 87 559

Net investment income 431 488 63 982

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Other performance metrics:

Loss ratio excluding catastrophes

and development 59.1 % 61.0 % 59.0 % 60.0 %

Loss ratio excluding catastrophes and development 58.6 % 61.5 % 58.5 % 60.0 %

Effect of catastrophe impacts 0.1 5.6 2.2 3.0

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Combined ratio 88.6 % 97.3 % 91.8 % 93.2 %

Combined ratio excluding catastrophes

and development 89.7 % 92.6 % 92.1 % 91.4 %

Combined ratio excluding catastrophes and development 89.8 % 92.4 % 90.8 % 91.2 %

Rate 6 % 5 % 6 % 5 %

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2023 Compared with 2022

Gross written premiums, excluding third-party captives, for Specialty increased $142 million in 2022 as compared with 2021 driven by retention and rate.

Gross written premiums, excluding third-party captives, for Specialty decreased $14 million in 2023 as compared with 2022 driven by lower new business partially offset by strong retention.

Net written premiums for Specialty increased $23 million in 2023 as compared with 2022.

The increase in net earned premiums was consistent with the trend in net written premiums for Specialty.

Gross written premiums for Commercial increased $725 million in 2022 as compared with 2021 driven by higher new business and retention.

Gross written premiums for Commercial increased $950 million in 2023 as compared with 2022 driven by higher new business and rate.

Net written premiums for Commercial increased $687 million in 2023 as compared with 2022.

The prior period included a one-time written premium catch-up resulting from the addition of a quota share treaty to the property reinsurance program.

Excluding the impact of the prior period written premium catch-up, net written premiums increased $486 million in 2022 as compared with 2021 .

The increase in net earned premiums was consistent with the trend in net written premiums for Commercial.

Gross written premiums for International increased $91 million in 2023 as compared with 2022.

Excluding the effect of foreign currency exchange rates, gross written premiums increased $176 million driven by higher new business, rate and retention.

Excluding the effect of foreign currency exchange rates, gross written premiums increased $102 million driven by favorable renewal premium change.

Net written premiums for International increased $73 million in 2023 as compared with 2022.

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The increase in net earned premiums was consistent with the trend in net written premiums for International.

Core income increased $56 million in 2022 as compared with 2021 primarily due to improved underwriting results and higher net investment income from fixed income securities partially offset by lower net investment income due to unfavorable limited partnership and common stock results.

Core income increased $265 million in 2023 as compared with 2022 driven by higher net investment income and improved underwriting results.

Catastrophe losses were $236 million in 2023 as compared with $247 million in 2022.

For 2022 and 2021 Specialty had catastrophe losses of $2 million and $12 million, Commercial had catastrophe losses of $222 million and $358 million and International had catastrophe losses of $23 million and $27 million.

For 2023 and 2022 Specialty had no catastrophe losses and $2 million of catastrophe losses, Commercial had catastrophe losses of $207 million and $222 million and International had catastrophe losses of $29 million and $23 million.

Favorable net prior year loss reserve development of $23 million and $96 million was recorded in 2023 and 2022.

In 2022 and 2021, Specialty recorded favorable net prior year loss reserve development of $40 million and $45 million, Commercial recorded favorable net prior year loss reserve development of $43 million and $6 million and International recorded favorable net prior year loss reserve development of $13 million as compared with unfavorable net prior year loss reserve development of $2 million.

In 2023 and 2022, Specialty recorded favorable net prior year loss reserve development of $14 million and $40 million, Commercial recorded favorable net prior year loss reserve development of $22 million and $43 million and International recorded unfavorable net prior year loss reserve development of $13 million and favorable net prior year loss reserve development of $13 million.

Further information on net prior year loss reserve development is included in Note 8 of the Notes to Consolidated Financial Statements included under Item 8.

Specialty’s combined ratio improved 0.1 point in 2022 as compared with 2021 primarily due to a 0.7 point improvement in the loss ratio largely offset by a 0.5 point increase in the expense ratio.

The improvement in the loss ratio was largely due to improved current accident year underwriting results.

Catastrophe losses were 0.1 point of the loss ratio in 2022 , as compared with 0.4 points of the loss ratio in 2021.

The increase in the expense ratio was primarily due to an increase in underwriting expenses driven by investments in technology and talent.

Commercial’s combined ratio improved 5.8 points in 2022 as compared with 2021 primarily due to a 5.1 point improvement in the loss ratio and a 0.7 point improvement in the expense ratio.

The improvement in the loss ratio was driven by lower catastrophe losses, which were 5.6 points of the loss ratio in 2022, as compared with 10.0 points of the loss ratio in 2021, and higher favorable net prior year loss reserve development.

The combined ratio excluding catastrophes and development improved 0.2 points in 2022 as compared with 2021.

The improvement in the expense ratio of 0.7 points was driven by higher net earned premiums and lower acquisition costs partially offset by an increase in underwriting expenses.

The loss ratio excluding catastrophes and development increased 0.5 points primarily driven by a shift in mix of business associated with the property quota share treaty purchased during June of 2021.

Property coverages, which have a lower underlying loss ratio than most other commercial coverages, now represent a smaller proportion of net earned premiums.

International’s combined ratio improved 3.0 points in 2022 as compared with 2021 due to a 2.2 point improvement in the loss ratio and a 0.8 point improvement in the expense ratio.

Catastrophe losses were 2.2 points of the loss ratio in 2022 , as compared with 2.6 points of the loss ratio in 2021.

The improvement in the expense ratio was primarily driven by lower acquisition costs.

Specialty’s combined ratio increased 1.8 points in 2023 as compared with 2022 primarily due to a 1.0 point increase in the expense ratio and a 0.8 point increase in the loss ratio.

The increase in the expense ratio was driven by higher employee related and acquisition costs.

The increase in the loss ratio was largely due to lower favorable net prior year loss reserve development.

Commercial’s combined ratio improved 1.3 points in 2023 as compared with 2022 due to a 0.8 point improvement in the expense ratio and a 0.5 point improvement in the loss ratio.

The improvement in the expense ratio was driven by higher net earned premiums partially offset by higher employee related costs.

The improvement in the loss ratio was driven by lower catastrophe losses, which were 4.5 points of the loss ratio in 2023, as compared with 5.6 points of the loss ratio in 2022, partially offset by lower favorable net prior year loss reserve development.

International’s combined ratio increased 0.8 points in 2023 as compared with 2022 due to a 1.9 point increase in the loss ratio partially offset by a 1.1 point improvement in the expense ratio.

The increase in the loss ratio was driven by unfavorable net prior year loss reserve development of $13 million recorded for 2023 compared to favorable net prior year loss reserve development of $13 million recorded for 2022.

Catastrophe losses were 2.5 points of the loss ratio for 2023 , as compared with 2.2 points of the loss ratio for 2022.

The improvement in the expense ratio was driven by higher net earned premiums and a favorable reinsurance acquisition related catch-up adjustment in the third quarter of 2023, partially offset by higher employee related costs.

Other Insurance Operations

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Years Ended December 31 2023

2022 (a) 2021 (a)

(In millions)

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Core loss (221) (404) (96)

(a) As of January 1, 2023, ASU 2018-12 was adopted using the modified retrospective method applied as of the transition date of January 1, 2021.

Prior period amounts presented in the financial statements have been adjusted to reflect application of the new guidance.

Core loss for Other Insurance Operations for the years ended December 31, 2022 and 2021 were adjusted by $(212) and $(18) as a result of adopting the standard.

For additional information see Notes 1 and 9 of the Notes to Consolidated Financial Statements included under Item 8.

2023 Compared with 2022

Core results decreased $114 million in 2022 as compared with 2021 primarily due to a $167 million pretax decline in net investment income from limited partnerships and an increase in expenses as a result of continued investments in technology infrastructure and security.

Core results in 2022 also reflect a $25 million pretax favorable impact from the reduction in long term care claim reserves and a $5 million pretax favorable impact from the reduction in structured settlement claim reserves, both resulting from the annual claim reserve reviews in the third quarter of 2022 as compared with a $40 million pretax favorable impact from the reduction in long term care claim reserves resulting from the annual claim reserve reviews in the third quarter of 2021.

These decreases to core results for 2022 were partially offset by favorability related to the A&EP Loss Portfolio Transfer (“LPT”) and the prior period recognition of a $12 million loss resulting from the legacy excess workers’ compensation loss portfolio transfer (“EWC LPT”).

The application of retroactive reinsurance accounting to additional cessions to the A&EP LPT resulted in a benefit of $3 million in 2022 compared to a charge of $25 million in 2021, both of which have no economic impact.

Core results improved $183 million in 2023 as compared with 2022 primarily due to the unfavorable pretax impact of $181 million in 2022 as a result of the annual reserve reviews and higher net investment income, partially offset by long-term care policy buyouts in 2023.

Policy buyouts generally result in an unfavorable impact on core results, as the cash payments are linked to higher statutory reserve levels.

Excluding the impacts of long-term care policy buyouts, 2023 underwriting results are generally in line with reserving expectations.

Both years are inclusive of cash flow assumption updates as a result of the annual reserve review completed in the third quarter of each year.

Cash flow assumption updates for 2023 resulted in an $8 million pretax increase in long-term care reserves.

Adjusted to reflect the application of ASU 2018-12, the cash flow assumption updates for 2022 resulted in a $186 million pretax increase in long-term care reserves, primarily driven by the unfavorable impact of increased cost of care inflation, partially offset by favorable premium rate assumptions.

Core results for 2023 also include a $19 million charge related to office consolidation, and a $56 million charge related to unfavorable net prior year loss reserve development for legacy mass tort claims compared with a $51 million charge for legacy mass tort claims in 2022.

Further information on net prior year loss reserve development is included in Note 8 of the Notes to Consolidated Financial Statements included under Item 8.

2022 Compared with 2021

Core results decreased $308 million in 2022 as compared with 2021 primarily due to the unfavorable impact of the 2022 annual reserve reviews and lower net investment income.

Cash flow assumption updates, as a result of the annual reserve reviews, for 2022 resulted in an $186 million pretax increase in long-term care reserves compared to a $3 million pretax increase in 2021.

The decreases to core results for 2022 were partially offset by favorability related to the A&EP Loss Portfolio Transfer (“LPT”) and the prior period recognition of a $12 million loss resulting from the legacy excess workers’ compensation loss portfolio transfer (“EWC LPT”).

The application of retroactive reinsurance accounting to additional cessions to the A&EP LPT resulted in a benefit of $3 million in 2022 as compared to a charge of $25 million in 2021, both of which have no economic impact.

For further information on the A&EP LPT and EWC LPT see Note 8 of the Notes to Consolidated Financial Statements included under Item 8.

CNA anticipates a net pension cost of approximately $12 million in 2023 as compared with a benefit of $55 million in 2022.

The change is primarily due to higher interest cost on projected benefit obligations as a result of an increase in discount rates year over year, as well as a lower expected return on plan assets as a result of a lower plan asset base given actual asset returns in 2022.

A portion of this additional cost will result in an unfavorable impact on CNA’s expense ratio in 2023.

Impact of CNA Office Consolidation on 2024 Results

In the first quarter of 2024, CNA committed to consolidate some of its offices.

As a result, CNA anticipates a charge of approximately $16 million pretax in 2024 in Other Insurance Operations.

Non-GAAP Reconciliation of Net Income Attributable to Loews Corporation to Core Income

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Year Ended December 31 2023

2022 (a) 2021 (a)

(In millions)

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Total core income $ 1,284 $ 836 $ 1,088

(a) As of January 1, 2023, ASU 2018-12 was adopted using the modified retrospective method applied as of the transition date of January 1, 2021.

Prior period amounts presented in the financial statements have been adjusted to reflect application of the new guidance.

Core loss for Other Insurance Operations for the years ended December 31, 2022 and 2021 were adjusted by $(212) and $(18) as a result of adopting the standard.

For additional information see Notes 1 and 9 of the Notes to Consolidated Financial Statements included under Item 8.

Boardwalk Pipelines

Boardwalk Pipelines operates in the midstream portion of the natural gas and natural gas liquids (“NGLs”) industry, providing transportation and storage for those commodities.

Boardwalk Pipelines is not in the business of buying and selling natural gas and NGLs other than for system management purposes, but changes in natural gas and NGL prices may impact the volumes of natural gas or NGLs transported and stored by customers on its systems.

It also provides ethane supply and transportation services for industrial customers in Louisiana and Texas.

Boardwalk Pipelines is not in the business of buying and selling natural gas and NGLs other than for system management purposes and to facilitate its ethane supply operations, but changes in natural gas and NGL prices may impact the volumes of natural gas or NGLs transported and stored by customers or the ethane supply requirements on its systems.

The pricing contained in the purchase and sales agreements associated with the supply services is generally based on the same ethane commodity index, plus a fixed delivery fee.

Except for possible timing differences that may occur when volumes are purchased in one month and sold in another month, Boardwalk Pipelines’ ethane supply services, like its other businesses, result in it having little to no direct commodity price exposure.

Due to the capital-intensive nature of its business, Boardwalk Pipelines’ operating costs and expenses do not vary significantly based upon the amount of products transported, with the exception of costs recorded in fuel and transportation expense, which are netted with fuel retained on our Consolidated Statements of Operations.

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Boardwalk Pipelines’ operations and maintenance expenses are impacted by its compliance with the requirements of, among other regulations, the Pipeline and Hazardous Materials Safety Administration Mega Rule (“Mega Rule”) and Boardwalk Pipelines’ efforts to monitor, control and reduce emissions, as further discussed below.

On September 29, 2023, Boardwalk Pipelines acquired 100% of the equity interests of Bayou Ethane from Williams Field Services Group, LLC for $355 million in cash.

Bayou Ethane provides ethane supply and transportation services for industrial customers in Louisiana and Texas.

For further information see Note 2 of the Notes to Consolidated Financial Statements included under Item 8.

Firm Agreements

A substantial portion of Boardwalk Pipelines’ transportation and storage capacity is contracted for under firm agreements.

For the year ended December 31, 2022, approximately 87% of Boardwalk Pipelines’ revenues were derived from capacity reservation fees under firm contracts.

The table below shows a rollforward of projected operating revenues under committed firm agreements in place as of December 31, 2021 to December 31, 2022, including agreements for transportation, storage and other services, over the remaining term of those agreements:

For the year ended December 31, 2023, approximately 89% of Boardwalk Pipelines’ revenues were derived from capacity reservation fees under firm contracts or from contracts with minimum volume commitments.

The table below shows a rollforward of projected operating revenues under committed firm agreements in place as of December 31,

2022 to December 31, 2023, including agreements for transportation, storage, ethane supply and other services, over the remaining term of those agreements:

As of December 31, 2023

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Actual revenues recognized from firm agreements in 2023 (a)

Firm agreements entered into in 2022

Firm agreements entered into or acquired in 2023

Total projected operating revenues under committed firm agreements as of December 31, 2023

(a) Reflects an increase of $96 million in Boardwalk Pipelines’ actual 2022 revenues recognized from fixed fees under firm agreements as compared with its expected 2022 revenues from fixed fees under firm agreements, including agreements for transportation, storage and other services as of December 31, 2021, primarily due to an increase from contract renewals that occurred in 2022.

During 2022 , Boardwalk Pipelines entered into $1.3 billion of new firm agreements, of which approximately 4% were from new growth projects executed in 2022.

(a) Reflects an increase of $76 million in Boardwalk Pipelines’ actual 2023 revenues recognized from fixed fees under firm agreements as compared with its expected 2023 revenues from fixed fees under firm agreements, including agreements for transportation, storage and other services as of December 31, 2022, primarily due to an increase from contract renewals at higher rates that occurred in 2023.

The Bayou Ethane acquisition also contributed $14.3 million to the increase.

During 2023 , Boardwalk Pipelines entered into $1.9 billion of new firm agreements, of which approximately 16% were from new growth projects executed in 2023 and 9%, or $178 million, were from the agreements assumed as part of the Bayou Ethane acquisition.

For firm agreements associated with new growth projects, the associated assets may not be placed into commercial service until sometime in the future.

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The 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).

As of December 31, 2022, Boardwalk Pipelines’ top ten customers holding firm capacity under firm agreements comprised approximately 56% of its total projected operating revenues and the credit profile associated with Boardwalk Pipelines’ customers comprising the total projected operating revenues under firm agreements was 73% rated as investment grade, 10% rated as non-investment grade and 17% not rated.

As of December 31, 2023, Boardwalk Pipelines’ top ten customers under committed firm agreements comprised approximately 53% of its total projected operating revenues and the credit profile associated with Boardwalk Pipelines’ customers comprising the total projected operating revenues under committed firm agreements was 77% rated as investment grade, 7% rated as non-investment grade and 16% not rated.

Pipeline System Maintenance and Greenhouse Gases (“GHGs”) Emission Reduction Initiatives

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These costs are not dependent on the amount of revenues earned from its transportation services.

PHMSA has developed regulations that require transportation pipeline operators to implement integrity management programs to comprehensively evaluate certain high risk areas, known as HCAs, and MCAs, along pipelines and take additional safety measures to protect

people and property in these areas.

The HCAs for natural gas pipelines are predicated on high-population density areas (which, for natural gas transmission lines, include Class 3 and 4 areas and, depending on the potential impacts of a risk event, may include Class 1 and 2 areas) whereas HCAs along Boardwalk Pipelines’ NGL pipelines are based on high-population density areas, areas near certain drinking water sources and unusually sensitive ecological areas.

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In 2021, PHMSA issued a final rule that will impose safety regulations related to onshore gas gathering lines and 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.

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.

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.

PHMSA and state regulators reportedly began their review of these plans in 2022, and in May 2023, PHMSA published a proposed rule that would enhance requirements for detecting and repairing leaks on new and existing natural gas distribution, gas transmission and gas gathering pipelines.

affect the safe operation of the pipeline, and adopting repair criteria for non-HCAs similar to those applicable to HCAs.

In September 2023, PHMSA published a proposed rule that would enhance the safety requirements for gas distribution pipelines and would require updates to distribution integrity management programs, emergency response plans, operations and maintenance manuals, and other safety practices.

Due to the nature of Boardwalk Pipelines’ business, its operations emit various types of GHGs.

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• performing annual leak surveys along Boardwalk Pipelines’ pipelines with the aid of helicopters and fixed-wing planes, and analytical field surveys when appropriate;

• performing leak detection and recovery and Subpart W surveys on all of Boardwalk Pipelines’ compressor stations (the U.S.

Environmental Protection Agency (“EPA”) only requires Boardwalk Pipelines to survey 48 of its 79 compressor stations);

• performing measurement surveys on all of Boardwalk Pipelines’ compressor stations at least twice a year, exceeding Environmental Protection Agency (“EPA”) requirements;

• using optical gas imaging cameras to scan natural gas piping and components at Boardwalk Pipelines’ compressor stations to visualize any leaks in real time;

• installing continuous monitoring emission detection equipment as a pilot project at three compression stations;

• installing continuous monitoring emission detection equipment at three compression stations;

• employing experts in air emissions to develop and monitor efforts in reducing emissions;

• reducing methane emissions vented to the atmosphere from transmission pipeline blowdowns by using existing and portable compression and flaring when feasible;

• installing repair sleeves and composite wraps to avoid pipeline blowdowns;

• installing repair sleeves and composite wraps where appropriate to avoid pipeline blowdowns;

• exploring options to replace high-bleed natural gas pneumatic devices with low or zero flow bleed devices;

• reducing methane emissions from rod packing seals on reciprocating compressors, where appropriate.

However, Boardwalk Pipelines cannot guarantee that it will be able to implement any of the opportunities it may review or explore, or, for any opportunities it chooses to implement, to implement them in their intended manner or within a specific timeframe or across all operational assets.

These new and any future regulations adopted by PHMSA and efforts to reduce GHG emissions are expected to cause Boardwalk Pipelines to incur increased capital and operating costs, may cause Boardwalk Pipelines to experience operational delays and may result in potential adverse impacts to its ability to reliably serve its customers as.

For more information, see Item 1.

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For any given reporting period, the mix of projects that Boardwalk Pipelines undertakes will affect the amounts it records as property, plant and equipment on the Consolidated Balance Sheets or recognizes as expenses, which impacts earnings.

In 2023, Boardwalk Pipelines expects to spend approximately $460 million to maintain its pipeline systems, comply with regulations and monitor, control and reduce its GHG emissions, of which approximately $195 million is expected to be maintenance capital.

In 2022 , Boardwalk Pipelines spent $408 million, of which $157 million was recorded as maintenance capital.

In 2024, Boardwalk

Pipelines expects to spend approximately $505 million to maintain its pipeline systems, comply with regulations and monitor, control and reduce its GHG emissions, of which approximately $215 million is expected to be maintenance capital.

In 2023 , Boardwalk Pipelines spent $446 million on these matters, of which $165 million was recorded as maintenance capital.

Results of Operations

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Operating revenues and other $ 1,625 $ 1,446

Interest income 11

Total 1,636 1,446

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Net income attributable to Loews Corporation and EBITDA increased $36 million and $37 million in 2023 as compared with 2022 , primarily due to the reasons discussed below.

Total revenues increased $97 million in 2022 as compared with 2021, primarily driven by an increase in transportation revenues of $75 million due to recently completed growth projects, re-contracting at higher rates and higher utilization-based revenues and an $18 million increase in Boardwalk Pipelines’ storage and parking and lending revenues due to favorable market conditions.

Operating expenses increased $39 million in 2022 as compared with 2021 primarily due to increased costs of $24 million from maintenance projects associated with the requirements of the Mega Rule, higher utility, materials and supplies and vehicle costs and asset impairment charges of $8 million resulting from an increase in the estimate of existing asset retirement obligations related to retired assets .

Depreciation and amortization expense increased $26 million in 2022 as compared with 2021 primarily due to a change in the estimated life of certain assets and an increased asset base from recently completed growth projects.

Interest expense increased $5 million in 2022 as compared with 2021 primarily due to higher average outstanding long-term debt balances and lower capitalized interest .

Total revenues increased $190 million in 2023 as compared with 2022.

Including fuel and transportation expenses and product costs, operating revenues increased $88 million.

Boardwalk Pipelines’ transportation revenues increased $71 million, primarily due to re-contracting at higher rates and recently completed growth projects, storage and parking and lending revenues increased $23 million due to favorable market conditions and the Bayou Ethane acquisition contributed $11 million, resulting from product sales of $99 million and product costs of $88 million.

These increases were partially offset by $9 million from lower sales of other NGL products.

Operating costs and expenses increased $142 million in 2023 as compared with 2022.

Excluding expenses and product costs offset with operating revenues, operating costs and expenses increased $51 million primarily due to increased costs from maintenance projects associated with the requirements of the Mega Rule, higher materials and supplies, outside services and employee-related costs and expenses from the Bayou Ethane acquisition.

Depreciation and amortization expense increased $16 million in 2023 as compared with 2022 primarily due to an increased asset base from recently completed growth projects, the Bayou Ethane acquisition and a change in the estimated life of certain assets.

Interest expense decreased $11 million in 2023 as compared with 2022, primarily due to lower average outstanding long-term debt.

Non-GAAP Reconciliation of Net Income Attributable to Loews Corporation to EBITDA

The following table for Boardwalk Pipelines presents a reconciliation of net income attributable to Loews Corporation to EBITDA for the years ended December 31, 2022 and 2021 :

The following table reconciles net income attributable to Loews Corporation to EBITDA for the years ended December 31, 2023 and 2022 :

Year Ended December 31 2023 2022

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Net income attributable to Loews Corporation $ 283 $ 247

Interest, net

Income tax expense

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Operating revenue $ 678 $ 596

Other revenues

Gain on acquisition of a joint venture 46

Revenues related to reimbursable expenses 128 125

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Reimbursable expenses 128 125

Depreciation 64 63

Depreciation and amortization expense 69 64

Equity income from joint ventures (129) (148)

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Total 652 560

Income (loss) before income tax 161 (12)

Income before income tax 200 161

Income tax expense (53) (44)

Net income (loss) attributable to Loews Corporation $ 117 $ (14)

Net income attributable to Loews Corporation $ 147 $ 117

2023 Compared with 2022

Net income (loss) attributable to Loews Corporation improved by $131 million in 2022 as compared with 2021.

Loews Hotels & Co’s results significantly improved in 2022 as compared with 2021 primarily due to considerably higher overall occupancy rates in 2022, as travel significantly rebounded from the impacts of the COVID-19 pandemic, and increased overall average daily room rates.

Net income attributable to Loews Corporation improved by $30 million in 2023 as compared with 2022.

Results for 2023 include a gain of $46 million ($36 million after tax) related to the acquisition of an additional equity interest in, and the consolidation of, a previously unconsolidated joint venture property .

Operating revenues improved by $82 million and operating expenses increased by $75 million in 2023 as compared with 2022.

The increase in operating revenues was driven by stronger occupancy levels and higher average daily room rates at many hotels in 2022 as compared to 2021.

Operating expenses have likewise increased, largely due to higher staffing levels, to support the higher demand levels and resumption of additional pre-pandemic services.

Equity income from joint ventures improved $101 million in 2022 as compared to 2021.

The increase in equity income from joint ventures was driven by stronger occupancy levels and higher average daily room rates at many joint venture hotels, particularly at the Universal Orlando Resort, during 2022 as compared to 2021.

Operating expenses have likewise increased, largely due to higher staffing levels, to support the higher demand levels and resumption of additional pre-pandemic services at those joint venture hotels.

Additionally, improvement in 2022 also resulted from having all 9,000 rooms available at the Universal Orlando Resort for the whole year whereas certain rooms were not available during a portion of 2021.

The increase in operating revenues was driven by consolidating the results of a property previously accounted for under the equity method and a higher overall occupancy level at owned hotels.

The increase in operating expenses was largely due to consolidating the results of a property previously accounted for under the equity method in addition to increased staffing costs and higher property taxes.

Equity income from joint ventures decreased $19 million in 2023 as compared to 2022.

The overall occupancy level at joint venture properties was lower in 2023 as compared to 2022, while average daily rates increased nominally for 2023 compared to 2022.

Expenses at joint venture properties increased in 2023 compared to 2022, largely due to increased staffing costs, as well as higher insurance, property taxes and interest costs.

In 2023 and 2022, Loews Hotels & Co recorded impairment charges of $12 million and $25 million to reduce the carrying value of certain assets to their estimated fair value.

Interest expense for 2022 decreased $25 million as compared with 2021 primarily due to the increase in fair value of interest rate caps of $11 million, higher capitalized interest on a project under development, and lower average debt balances.

Other revenues for 2021 included $39 million related to the acceleration of state and local government grant payments, used to retire outstanding debt of an owned hotel prior to maturity and cover certain prepayment costs, and net gains of $8 million related primarily to the sale of undeveloped land.

Interest expense for 2023 increased $3 million as compared with 2022 due primarily to consolidating the results of a property previously accounted for under the equity method, and a lower favorable impact from interest rate caps, offset by the increase in capitalized interest on projects under development.

Corporate operations consist primarily of investment income, interest expense and administrative costs at the Parent Company.

Investment income includes earnings on cash and short-term investments held at the Parent Company to meet current and future liquidity needs, as well as results of the trading portfolio held at the Parent Company.

Corporate also includes the consolidated operations of Altium Packaging through March 31, 2021 and the equity method of accounting for Altium Packaging subsequent to its deconsolidation on April 1, 2021.

See Note 2 of the Notes to Consolidated Financial Statements included under Item 8 for further information.

Corporate also includes the equity method of accounting for Altium Packaging.

The following table summarizes the results of operations for Corporate for the years ended December 31, 2023 and 2022 as presented in Note 21 of the Notes to Consolidated Financial Statements included under Item 8:

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Net investment income (loss) $ 114 $ (7)

Investment gains 540

Operating revenues and other 5

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Total 209 189

Income (loss) before income tax (191) 407

Income tax (expense) benefit 37 (127)

Net income (loss) attributable to Loews Corporation $ (154) $ 280

Loss before income tax (95) (191)

Income tax benefit 5 37

Net loss attributable to Loews Corporation $ (90) $ (154)

2023 Compared with 2022

Net investment loss for the Parent Company was $7 million in 2022 as compared with net investment income of $99 million in 2021 primarily due to the decline in fair value of equity based investments, partially offset by improved results from short term investments in the trading portfolio.

Investment gains of $540 million in 2021 were primarily due to a gain of $555 million ($438 million after tax) on the sale of 47% of Altium Packaging and its deconsolidation on April 1, 2021.

Operating revenues and other for 2021 include $280 million of consolidated operating revenues for Altium Packaging through March 31, 2021.

Operating and other expenses decreased $287 million in 2022 as compared with 2021 primarily due to $279 million of operating expenses for Altium Packaging through March 31, 2021 prior to its deconsolidation and use of the equity method for Altium Packaging since its deconsolidation.

In addition, there were lower corporate expenses at the Parent Company in 2022 as compared with 2021 .

Interest expenses decreased $25 million in 2022 as compared with 2021, due to consolidated interest expenses for Altium Packaging through March 31, 2021, which included a charge of approximately $14 million to write off debt issuance costs for the early retirement of debt.

Income tax expense of $127 million in 2021 included the recognition of $117 million of taxes on the investment gain and the recognition of a $40 million deferred tax liability, both of which were related to the sale of 47% of Altium Packaging.

In 2023, the Company expects to record approximately $50 million in Operating and other expenses to recognize unrealized losses which are included in AOCI due to the planned termination of a non-contributory defined benefit plan.

Net investment income for the Parent Company was $114 million in 2023 as compared with net investment loss of $7 million in 2022, primarily due to higher income from short-term investments and fixed maturity securities and the favorable change in the fair value of equity based investments in the trading portfolio.

Operating and other expenses increased $29 million in 2023 as compared with 2022.

These increases were primarily due to a settlement expense of $47 million in 2023 to recognize previously unrealized losses, which were included in AOCI, due to the termination of a non-contributory defined benefit plan.

This increase is partially offset by higher legal fees and corporate overhead expenses in 2022.

For additional information on the settlement expense see Note 16 of the Notes to Consolidated Financial Statements included under Item 8.

Interest expenses decreased $9 million in 2023 as compared with 2022, due to the retirement of the Parent Company’s $500 million aggregate principal amount of its 2.6% senior notes in May of 2023.

The lower income tax benefit in 2023, as compared to 2022, included an adjustment to deferred state income taxes.

LIQUIDITY AND CAPITAL RESOURCES

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Parent Company cash and investments, net of receivables and payables, totaled $2.6 billion at December 31, 2023 as compared to $3.2 billion at December 31, 2022.

In 2022 , we received $978 million in cash dividends from our subsidiaries, including a special cash dividend of $486 million from CNA.

Cash outflows in 2022 included the payment of $729 million to fund treasury stock purchases, $61 million of cash dividends to our shareholders, $26 million to purchase common shares of CNA and equity contributions of $33 million to Loews Hotels & Co and $79 million to Altium Packaging .

In 2023 , we received $1.0 billion in cash dividends from our subsidiaries, including a special cash dividend of $293 million from CNA.

Cash outflows in 2023 included the payment of $ 849 million to fund treasury stock purchases, $500 million to retire at maturity the outstanding aggregate principal amount of our 2.6% senior notes, $57 million of cash dividends to our shareholders, $178 million to purchase common shares of CNA and equity contributions of $38 million to Loews Hotels & Co.

In March of 2024, we will receive cash dividends of $606 million from CNA.

As a holding company we depend on dividends from our subsidiaries and returns on our investment portfolio to fund our obligations.

We also have an effective shelf registration statement on file with the Securities and Exchange Commission (“SEC”) registering the future sale of an unspecified amount of our debt, equity or hybrid securities from time to time.

We also have an effective shelf registration statement on file with the Securities and Exchange Commission (“SEC”) under which we may publicly issue an unspecified amount of our debt, equity or hybrid securities from time to time.

We are not responsible for the liabilities and obligations of our subsidiaries and there are no Parent Company guarantees.

Depending on market and other conditions, we may purchase our shares and shares of our subsidiaries outstanding common stock in the open market, in privately negotiated transactions or otherwise.

In 2022 , we purchased 12.7 million shares of Loews Corporation common stock and 0.7 million shares of CNA’s common stock.

As of February 3, 2023, we had purchased an additional 1.0 million shares of Loews Corporation common stock in 2023 at an additional aggregate cost of $58 million.

As of February 3, 2023, there were 234,997,673 shares of Loews Corporation common stock outstanding.

Depending on market and other conditions, we may purchase shares of our and our subsidiaries outstanding common stock in the open market, in privately negotiated transactions or otherwise.

In 2023 , we purchased 14.0 million shares of Loews Corporation com mon stock and 4.5 million shares of CNA’s common stock.

As of Feb ruary 2, 2024, there were 222,201,139 shares of Loews Corporation common stock outstanding.

Loews Corporation has a corporate credit and senior debt rating of A with a stable outlook from S&P Global Ratings (“S&P”), a senior debt rating of A3 with a stable outlook from Moody’s Investors Service (“Moody’s”) and a senior debt rating of A- with a stable outlook from Fitch Ratings Inc.

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

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

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

CNA’s cash provided by operating activities was $2.3 billion in 2023 and $2.5 billion in 2022.

The increase in cash provided by operating activities was driven by the prior year payment of the EWC LPT premium.

The decrease in cash provided by operating activities was driven by higher net claim payments, which includes long-term care policy buyouts of $193 million and higher operating expenses, partially offset by an increase in premiums collected.

CNA paid cash dividends of $2.88 per share on its common stock, including a special cash dividend of $1.20 per share, in 2023 .

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The maximum allowable dividend CCC could pay during 2024 that would not be subject to the Department’s prior approval is $1.1 billion, less dividends paid during the preceding twelve months measured at that point in time.

CCC paid dividends of $990 million in 2022 .

CCC paid dividends of $1.1 billion in 2023 .

The actual level of dividends paid in any year is determined after an assessment of available dividend capacity, holding company liquidity and cash needs as well as the impact the dividends will have on the statutory surplus of the applicable insurance company.

In 2023 , CNA completed a public offering of $500 million aggregate principal amount of its 5.5% senior notes due June 15, 2033 and repaid at maturity the $243 million outstanding aggregate principal balance of its 7.3% debenture.

CNA has a financial strength rating of A and senior debt rating of bbb+ from A.M.

Best Company (“A.M.

Best”), a financial strength rating of A2 and senior debt rating of Baa2 from Moody’s, a financial strength rating of A+ and senior

debt rating of A- from S&P and financial strength rating of A+ and senior debt rating of BBB+ from Fitch.

Best”), a financial strength rating of A2 and senior debt rating of Baa2 from Moody’s, a financial strength rating of A+ and senior debt rating of A- from S&P and financial strength rating of A+ and senior debt rating of BBB+ from Fitch.

Best, Moody’s, S&P and Fitch maintain stable outlooks across CNA’s financial strength and senior debt credit ratings.

CNA has an effective shelf registration statement on file with the SEC under which it may publicly issue an unspecified amount of debt, equity or hybrid securities from time to time.

Boardwalk Pipelines’ cash provided by operating activities increased $98 million in 2022 compared to 2021, primarily due to the increase in net income, higher depreciation expense and an increase in Boardwalk Pipelines’ fuel tracker liability.

Boardwalk Pipelines’ cash provided by operating activities increased $91 million in 2023 compared to 2022, primarily due to changes in net income adjusted for depreciation and amortization.

For 2023 and 2022, Boardwalk Pipelines’ capital expenditures were $382 million and $344 million, consisting of growth capital expenditures of $218 million and $180 million and maintenance capital expenditures of $164 million and $157 million.

During 2022, Boardwalk Pipelines also spent $7 million on natural gas to be used in its integrated natural gas pipeline system.

During 2021, Boardwalk Pipelines acquired certain natural gas pipeline assets for approximately $20 million.

Boardwalk Pipelines expects total capital expenditures to be approximately $420 million in 2024, including approximately $215 million for maintenance capital and $205 million related to growth projects.

During 2023, Boardwalk Pipelines acquired Bayou Ethane for $355 million.

Boardwalk Pipelines anticipates that its existing capital resources, including its cash on hand, revolving credit facility and cash flows from operating activities, will be adequate to fund its operations and capital expenditures for 2024 .

Boardwalk Pipelines may seek to access the debt markets to fund some or all capital expenditures for growth projects, acquisitions, to refinance maturing debt or for general partnership purposes.

Boardwalk Pipelines may seek to access the debt markets to fund some or all capital expenditures for growth projects or acquisitions, to refinance maturing debt or for general partnership purposes.

Boardwalk Pipelines has an effective shelf registration statement on file with the SEC under which it may publicly issue $1.5 billion of debt securities, warrants or rights from time to time.

In February of 2022, Boardwalk Pipelines completed a public offering of $500 million aggregate principal amount of its 3.6% senior notes due September 1, 2032, which utilized $500 million of capacity under its shelf registration statement.

Boardwalk Pipelines used the proceeds to retire the outstanding $300 million aggregate principal amount of its 4.0% senior notes due June 2022 in March of 2022, to fund growth capital expenditures and for general corporate purposes.

In November of 2022, Boardwalk Pipelines used its available cash to retire the outstanding $300 million aggregate principal amount of its 3.4% senior notes due in February 2023.

In June of 2022, Boardwalk Pipelines amended its revolving credit facility to, among other things, extend the maturity date by one year to May 27, 2027.

As of December 31, 2022, Boardwalk Pipelines had no outstanding borrowings and all of the $1.0 billion available borrowing capacity under its revolving credit facility.

Boardwalk Pipelines has $600 million outstanding aggregate principal amount of its 5.0% notes maturing in December of 2024, which it expects to retire near or at maturity through available capital resources, including borrowing under its revolving credit facility or publicly issuing debt securities.

In June of 2023, Boardwalk Pipelines’ amended its revolving credit facility to extend the maturity date by one year to May 26, 2028 .

As of December 31, 2023 , Boardwalk Pipelines had $25 million of outstanding borrowings and $975 million of available borrowing capacity under its revolving credit facility.

In December of 2023 , Boardwalk Pipelines paid a distribution of $300 million to the Company.

Boardwalk Pipelines has a senior debt rating of BBB- with a stable outlook from S&P, a senior debt rating of Baa2 with a stable outlook from Moody’s and a senior debt rating of BBB with a stable outlook from Fitch.

As of December 31, 2022, Loews Hotels & Co has a $110 million variable rate mortgage loan that matures within twelve months, which it currently intends to refinance before maturity.

Loews Hotels & Co, through its subsidiaries, has mortgage loans maturing beyond twelve months which it will also work to refinance prior to maturity.

Extending any indebtedness, including loans of unconsolidated joint venture partnerships, may require Loews Hotels & Co to make principal pay downs, establish restricted cash reserves or provide guaranties of the subsidiary’s debt.

Through the date of this Report, none of Loews Hotels & Co’s subsidiaries are in default on any of their loans.

Loews Hotels & Co contributed $41 million to two joint venture development projects expected to open in 2025.

These projects are currently estimated to require an aggregate additional investment of approximately $160 million in capital contributions from Loews Hotels & Co.

Based on the timing of capital calls relative to the seasonality of Loews Hotels & Co’s business, capital contributions from Loews Corporation to Loews Hotels & Co may be required.

In 2022, Loews Hotels & Co received capital contributions of $33 million from Loews Corporation.

In August of 2022, we made a cash contribution of $79 million to our equity method investee, Altium Packaging.

These funds and a pro rata contribution from our joint venture partner were used by Altium Packaging for an acquisition which expanded its offerings and increased its bottle manufacturing capabilities throughout key industries and geographies.

Contractual Obligations

As of December 31, 2023 , Loews Hotels & Co, through its subsidiaries, had $532 million in mortgage loans that mature within twelve months.

Loews Hotels & Co currently intends to refinance or exercise options to extend these loans prior to maturity.

Refinancing or extending any indebtedness, including loans of unconsolidated joint venture partnerships, may require Loews Hotels & Co to make principal pay downs, establish restricted cash reserves or provide guaranties of the subsidiary’s debt.

Through the date of this Report, all Loews Hotels & Co’s subsidiaries are in compliance with their debt covenants.

In 2023, Loews Hotels & Co received capital contributions of $38 million from Loews Corporation to fund development projects.

Cont ractual Obligations

We and our subsidiaries have contractual obligations which arise in the ordinary course of business.

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Claim and claim adjustment expense

$ 26,151 $ 6,239 $ 7,139 $ 3,596 $ 9,177

reserves (a) $ 23,864 $ 5,417 $ 6,441 $ 3,448 $ 8,558

Future policy benefit reserves (b) 27,964 733 1,435 1,629 24,167

25,478 (318) 169 979 24,648

(a) The claim and claim adjustment expense reserves reflected above are not discounted and represent CNA’s estimate of the amount and timing of the ultimate settlement and administration of gross claims based on its assessment of facts and circumstances known as of December 31, 2023.

See the Insurance Reserves section of this MD&A for further information.

(b) The future policy benefit reserves reflected above are not discounted and represent CNA’s estimate of the ultimate amount and timing of the settlement of benefits net of expected premiums, and are based on its assessment of facts and circumstances known as of December 31, 2022.

(b) The future policy benefit reserves reflected above are not discounted, include maintenance costs, represent CNA’s estimate of the ultimate amount and timing of the settlement of benefits net of expected premiums and are based on its assessment of facts and circumstances known as of December 31, 2023.

Additional information on future policy benefit reserves is included in Note 1 of the Notes to Consolidated Financial Statements included under Item 8.

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Investment activities of our non-insurance subsidiaries primarily consist of investments in fixed income securities, including short-term investments.

The Parent Company portfolio also includes equity securities, including short sales and derivative instruments, and investments in limited partnerships.

The Parent Company portfolio also includes equity securities, including short sales and derivative instruments.

Certain of these types of Parent Company investments generally have greater volatility, less liquidity and greater risk than fixed income investments and are included within Results of Operations – Corporate.

The Parent Company enters into short sales and invests in certain derivative instruments that are used for asset and liability management activities, income enhancements to its portfolio management strategy and to benefit from anticipated future movements in the underlying markets.

If such movements do not occur as anticipated, then significant losses may occur.

If such movements do not occur as anticipated, significant losses may occur.

Monitoring procedures include senior management review of daily reports of existing positions and valuation fluctuations to seek to ensure that open positions are consistent with the portfolio strategy.

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Limited partnership and common stock return 9.4 % (1.4) %

CNA’s net investment income decreased $354 million in 2022 as compared with 2021 driven by unfavorable limited partnership and common stock results, partially offset by higher income from fixed income securities.

CNA’s net investment income increased $459 million in 2023 as compared with 2022, driven by favorable limited partnership returns and higher income from fixed income securities as a result of the rising interest rate environment.

Investment Gains (Losses)

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Derivatives, short-term and other (12) 14

Total investment gains (losses) (199) 120

Income tax (expense) benefit 45 (24)

Total investment losses (99) (199)

Income tax benefit 20 45

Amounts attributable to noncontrolling interests 8 16

Investment gains (losses) attributable to Loews Corporation $ (138) $ 86

(a) Excludes the loss in 2022 on the assets supporting the funds withheld liability, which is reflected in the Derivatives, short term and other line.

CNA’s investment gains (losses) decreased $319 million in 2022 as compared with 2021, driven by net losses on fixed maturity securities and the unfavorable change in fair value of non-redeemable preferred stock.

Additionally, Derivatives, short term and other for 2022 includes an $18 million non-economic net gain related to the coinsurance agreement on CNA’s legacy annuity business in its Other Insurance Operations and the associated funds withheld embedded derivative, which was novated in 2022.

Investment losses attributable to Loews Corporation $ (71) $ (138)

CNA’s investment losses decreased $100 million in 2023 as compared with 2022, driven by the favorable change in fair value of non-redeemable preferred stock.

Additionally, Derivatives, short-term and other for 2022 included an $18 million non-economic net gain related to the novation of a coinsurance agreement on CNA’s legacy annuity business in its Other Insurance Operations and the associated funds withheld embedded derivative.

The coinsurance agreement was novated in the fourth quarter of 2022.

Further information on CNA’s investment gains and losses is set forth in Note 3 of the Notes to Consolidated Financial Statements included under Item 8.

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Total $ 25,731 $ 2,995

Commercial Real Estate

CNA’s investment portfolio has exposure to the commercial real estate sector primarily through its fixed maturity securities and mortgage loan portfolios.

The performance of these assets is dependent on a number of factors, including the performance of the underlying collateral (which is influenced by cash flows from underlying property leases), changes in the fair value of collateral, refinancing risk, and the creditworthiness of tenants of credit tenant loan properties (where lease payments directly service the loan).

Within CNA’s fixed maturity securities portfolio, its exposure is primarily through the commercial mortgage-backed securities portfolio and the corporate and other bonds portfolio, which contains obligations of real estate investment trust (“REIT”) issuers.

Commercial mortgage-backed securities include both single asset, single borrower collateral that is securitized independently and conduit collateral that is securitized in diversified pools.

The following tables present the estimated fair value and net unrealized gains (losses) of CNA’s commercial mortgage-backed securities by property type and by ratings distribution:

December 31, 2023

Estimated Fair Value

Net Unrealized Gains (Losses)

(In millions)

Commercial mortgage-backed:

Single asset, single borrower:

Office $ 306 $ (70)

Retail 283 (28)

Lodging 227 (23)

Industrial 93 (4)

Multifamily 59 (3)

Total single asset, single borrower 968 (128)

Conduits (multi property, multi borrower pools) 663 (95)

Total commercial mortgage-backed $ 1,631 $ (223)

December 31, 2023

Estimated Fair Value

Net Unrealized Gains (Losses)

(In millions)

Commercial mortgage backed:

AAA $ 570 $ (27)

Non-investment grade 49 (26)

Total commercial mortgage-backed $ 1,631 $ (223)

The following tables present the estimated fair value and net unrealized gains (losses) of the REIT issuer exposure within CNA’s corporate and other bonds portfolio by property type and by ratings distribution:

December 31, 2023

Estimated Fair Value

Net Unrealized Gains (Losses)

(In millions)

Corporate and other bonds - REITs:

Retail $ 515 $ (25)

Office 250 (20)

Industrial 99 (1)

Other (a) 452 (22)

Total corporate and other bonds - REITs $ 1,316 $ (68)

(a) Other includes a diversified mix of property type strategies including self-storage, healthcare and apartments.

December 31, 2023

Estimated Fair Value

Net Unrealized Gains (Losses)

(In millions)

Corporate and other bonds - REITs:

Non-investment grade 27 (1)

Total corporate and other bonds - REITs $ 1,316 $ (68)

Mortgage loans are commercial in nature and are carried at unpaid principal balance, net of unamortized fees and an allowance for expected credit losses.

The allowance for expected credit losses is developed by assessing the credit quality of pools of mortgage loans in good standing using debt service coverage ratios (“DSCR”) and loan-to-value ratios (“LTV”).

This assessment utilizes historical credit loss experience adjusted to reflect current conditions and reasonable and supportable forecasts.

As of December 31, 2023 the allowance for expected credit losses on CNA’s mortgage portfolio was $35 million, or 3.3% of its amortized cost basis.

The following table presents the amortized cost basis of mortgage loans by property type:

December 31, 2023

Amortized Cost Percentage of Total

(In millions, except %)

Mortgage loans:

Retail $ 520 48 %

Office 245 23

Industrial 124 12

Total mortgage loans 1,070 100 %

Allowance for expected credit losses (35)

Total mortgage loans - net of allowance $ 1,035

In addition to the mortgage loan portfolio, CNA invests in securitized credit tenant loans and ground lease financings that are classified as fixed maturity securities and are largely investment grade quality.

As of December 31, 2023, these holdings had an estimated fair value of $479 million and net unrealized losses of $87 million.

CNA owns other fixed maturity securities which have exposure to cell towers, data centers and other collateral types that could be viewed as having real estate characteristics.

CNA views these securities to have risks more similar to operating enterprises that do not share the same risks as the broader commercial real estate market.

CNA does not hold any direct investments in commercial real estate.

Additionally, CNA does not have significant exposure through its limited partnership portfolio to funds whose primary strategy is real estate focused.

A primary objective in the management of CNA’s investment portfolio is to optimize return relative to the corresponding liabilities and respective liquidity needs.

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Total $ 43,118 6.5 $ 39,956 6.6

The effective duration of investments supporting Other Insurance Operations liabilities at December 31, 2022 lengthened as compared with December 31, 2021, reflecting strategic repositioning to capitalize on higher rates and reduce reinvestment risk.

CNA’s investment portfolio is periodically analyzed for changes in duration and related price risk.

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As noted below, CNA reviews its reserves for each segment of its business periodically, and any such review could result in the need to increase reserves in amounts which could be material and could adversely affect our results of operations and equity and CNA’s equity, business and insurer financial strength and corporate debt ratings.

Further information on reserves is provided in Note 8 of the Notes to Consolidated Financial Statements included under Item 8.

Further information on reserves is provided in Notes 8 and 9 of the Notes to Consolidated Financial Statements included under Item 8.

Property and Casualty Claim and Claim Adjustment Expense Reserves

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There is a risk that CNA’s recorded reserves are insufficient to cover its estimated ultimate unpaid liability for claims and claim adjustment expenses.

Unforeseen emerging or potential claims and coverage issues are also difficult to predict and could materially adversely affect the adequacy of CNA’s claim and claim adjustment expense reserves and could lead to future reserve additions.

In addition, CNA’s property and casualty insurance subsidiaries also have actual and potential exposures related to A&EP claims, which could result in material losses.

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Establishing Property & Casualty Reserve Estimates

In developing claim and claim adjustment expense (“loss” or “losses”) reserve estimates, CNA’s actuaries perform detailed reserve analyses that are staggered throughout the year.

In developing claim and claim adjustment expense reserve estimates, CNA’s actuaries perform detailed reserve analyses that are staggered throughout the year.

The data is organized at a reserve group level.

A reserve group typically can be a line of business covering a subset of insureds such as commercial automobile liability for small or middle market customers, or it can be a particular type of claim such as construction defect.

A reserve group typically can be a

line of business covering a subset of insureds such as commercial automobile liability for small or middle market customers, or it can be a particular type of claim such as construction defect.

Every reserve group is reviewed at least once during the year, but most are reviewed more frequently.

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Selection of the paid loss pattern may require consideration of several factors including the impact of economic, social and medical inflation on claim costs, the rate at which claims professionals make claim payments and close claims, the impact of judicial decisions, the impact of underwriting changes, the impact of large claim payments and other factors.

Claim cost inflation itself may require evaluation of changes in the cost of repairing or replacing property, changes in the cost of medical care, changes in the cost of wage replacement,

judicial decisions, legislative changes and other factors.

Claim cost inflation itself may require evaluation of changes in the cost of repairing or replacing property, changes in the cost of medical care, changes in the cost of wage replacement, judicial decisions, legislative changes and other factors.

Because this method assumes that losses are paid at a consistent rate, changes in any of these factors can affect the results.

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In such a case, CNA’s actuaries typically assign more weight to the incurred development method than to the paid development method.

claims continue to settle and the volume of paid loss increases, the actuaries may assign additional weight to the paid development method.

As claims continue to settle and the volume of paid loss increases, the actuaries may assign additional weight to the paid development method.

For most of CNA’s products, even the incurred losses for accident or policy years that are early in the claim settlement process will not be of sufficient volume to produce a reliable estimate of ultimate losses.

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These significant factors are the ones that CNA believes could most likely materially affect the reserves.

This discussion covers the major types of business for which CNA believes a material deviation to its reserves is reasonably possible.

This discussion covers

the major types of business for which CNA believes a material deviation to its reserves is reasonably possible.

There can be no assurance that actual experience will be consistent with the current assumptions or with the variation indicated by the discussion.

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For workers’ compensation, since many years will pass from the time the business is written until all claim payments have been made, the most significant factor affecting workers’ compensation reserve estimates is claim cost inflation on claim payments.

Workers’ compensation claim cost inflation is driven by the cost of medical care, the cost of wage

replacement, expected claimant lifetimes, judicial decisions, legislative changes and other factors.

Workers’ compensation claim cost inflation is driven by the cost of medical care, the cost of wage replacement, expected claimant lifetimes, judicial decisions, legislative changes and other factors.

If estimated workers’ compensation claim cost inflation increases by 100 basis points for the entire period over which claim payments will be made, CNA estimates that its net reserves would increase by approximately $250 million.

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CNA’s Life & Group business includes its run-off long-term care business as well as structured settlement obligations not funded by annuities related to certain property and casualty claimants.

Long term care policies provide benefits for nursing homes, assisted living facilities and home health care subject to various daily and lifetime caps.

Long-term care policies may provide benefits for nursing homes, assisted living facilities and home health care subject to various daily and lifetime caps.

Generally, policyholders must continue to make periodic premium payments to keep the policy in force and CNA has the ability to increase policy premiums, subject to state regulatory approval.

CNA maintains both claim and claim adjustment expense reserves as well as future policy benefit reserves for policyholder benefits for its Life & Group business.

Claim and claim adjustment expense reserves consist of estimated reserves for long term care policyholders that are currently receiving benefits, including claims that have been incurred but are not yet reported.

In developing the claim and claim adjustment expense reserve estimates for CNA’s long term care policies, its actuaries perform a detailed claim reserve review on an annual basis.

The review analyzes the sufficiency of existing reserves for policyholders currently on claim and includes an evaluation of expected benefit utilization and claim duration.

In addition, claim and claim adjustment expense reserves are also maintained for the structured settlement obligations.

In developing the claim and claim adjustment expense reserve estimates for CNA’s structured settlement obligations, CNA’s actuaries monitor mortality experience on an annual basis.

CNA maintains future policy benefit reserves for its long-term care policies.

Future policy benefit reserves for long-term care policies relate to policyholders that are currently receiving benefits, including claims that have been incurred but are not yet reported, as well as policyholders that are not yet receiving benefits.

In developing the future policy benefit reserves, CNA’s actuaries perform a reserve review on an annual basis.

During the annual review, historical policyholder morbidity, persistency (inclusive of mortality), anticipated future premium rate increases and expense experience is reviewed and compared to the current best estimate actuarial assumption set for potential revision.

On a quarterly basis, actuaries perform experience studies that monitor the appropriateness of best estimate actuarial assumptions against emerging experience to assess whether any updates to those assumptions are warranted.

The determination of these reserves requires management to make estimates and assumptions about expected policyholder experience over the remaining life of the policies.

Since policies may be in force for several decades, these assumptions are subject to significant estimation risk.

In addition, claim and claim adjustment expense reserves are maintained for CNA’s structured settlement obligations.

In developing the claim and claim adjustment expense reserve estimates for CNA’s structured settlement obligations, CNA’s actuaries monitor mortality and expense experience on an annual basis.

CNA’s recorded claim and claim adjustment expense reserves reflect CNA’s best estimate after incorporating the results of the most recent reviews.

Claim and claim adjustment expense reserves for long term care policies and structured settlement obligations are discounted as discussed in Note 1 to the Consolidated Financial Statements included under Item 8.

Future policy benefit reserves consist of the active life reserves related to CNA’s long term care policies for policyholders that are not currently receiving benefits and represent the present value of expected future benefit payments and expenses less expected future premium.

The determination of these reserves requires management to make estimates and assumptions about expected investment and policyholder experience over the life of the contract.

Since many of these contracts may be in force for several decades, these assumptions are subject to significant estimation risk.

The actuarial assumptions that management believes are subject to the most variability are morbidity, persistency, discount rates and anticipated future premium rate increases.

Claim and claim adjustment expense reserves for structured settlement obligations are discounted as discussed in Note 1 to the Consolidated Financial Statements included under Item 8.

The actuarial assumptions related to future policy benefit reserves for long-term care policies that management believes are subject to the most variability are morbidity, persistency and anticipated future premium rate increases.

Morbidity is the frequency and severity of injury, illness, sickness and diseases contracted.

Persistency is the percentage of policies remaining in force and can be affected by policy lapses, benefit reductions and death.

Discount rates are influenced by the investment yield on assets supporting long term care reserves which is subject to interest rate and market volatility and may also be affected by changes to the Internal Revenue Code.

Future premium rate increases are generally subject to regulatory approval, and therefore the exact timing and size of the approved rate increases are unknown.

As a result of this variability, CNA’s long-term care reserves may be subject to material increases if actual experience develops adversely to its expectations.

Annually, in the third quarter, CNA assesses the adequacy of its long term care future policy benefit reserves by performing a gross premium valuation (“GPV”) to determine if there is a premium deficiency.

Under the GPV, management estimates required reserves using best estimate assumptions as of the date of the assessment without provisions for adverse deviation.

The GPV required reserves are then compared to the existing recorded reserves.

If the GPV required reserves are greater than the existing recorded reserves, the existing assumptions are unlocked and future policy benefit reserves are increased to the greater amount.

Any such increase is reflected in CNA’s results of operations in the period in which the need for such adjustment is determined.

If the GPV required reserves are less than the existing recorded reserves, the assumptions remain locked in and no adjustment is required.

Information regarding Accounting Standards Update (“ASU”) 2018-12, which, beginning in 2023, will require changes in the measurement and disclosure of long-duration contracts, including CNA’s long term care business, is provided in the Accounting Standards Update section of this MD&A and in Note 1 of the Notes to Consolidated Financial Statements included under Item 8.

The September 30, 2022 GPV indicated that the recorded reserves included a margin of approximately $125 million.

A summary of the changes in the estimated reserve margin is presented in the table below:

(In millions)

Long term care active life reserve - change in estimated reserve margin

September 30, 2021 estimated margin

Changes in underlying economic assumptions (a)

Changes in underlying morbidity assumptions (30)

Changes in underlying persistency assumptions 40

Changes in underlying premium rate action assumptions 190

Changes in underlying expense and other assumptions (17)

September 30, 2022 Estimated Margin

(a) Economic assumptions include the impact of interest rates and cost of care inflation.

The increase in the margin in 2022 was primarily driven by changes in discount rate assumptions due to higher near term expected reinvestment rates and higher than previously estimated rate increases on active rate increase programs.

These favorable drivers were partially offset by changes in cost of care inflation assumptions.

CNA has determined that additional future policy benefit reserves for profits followed by losses are not currently required based on the most recent projection.

The table below summarizes the estimated pretax impact on CNA’s results of operations from various hypothetical revisions to its future policy benefit reserve assumptions.

The annual GPV process involves updating all assumptions to management’s then current best estimate, and historically all significant assumptions have been revised each year.

In the table below, CNA has assumed that revisions to such assumptions would occur in each policy type, age and duration within each policy group.

The table below summarizes the estimated pretax impact on CNA’s results of operations from various hypothetical revisions to its liability for future policyholder benefits reserve assumptions.

CNA has assumed that revisions to such assumptions would occur in each policy type, age and duration within each policy group.

The impact of each sensitivity is discrete and does not reflect the impact one factor may have on another or the mitigating impact from management actions, which may include additional future premium rate increases.

Although such hypothetical revisions are not currently required or anticipated, CNA believes they could occur based on past variances in experience and its expectations of the ranges of future experience that could reasonably occur.

Any required increase in the recorded reserves resulting from a hypothetical revision in the table below would first reduce the margin in the carried reserves before it would affect results from operations.

Any actual adjustment would be dependent on the specific policies affected and, therefore, may differ from the estimates summarized below.

The estimated impacts to results of operations in the table below are after consideration of the existing margin.

The estimated impacts to results of operations in the table below are after consideration of any net premium ratio impacts.

For the year ended December 31, 2023

Estimated Reduction to Pretax Income

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Hypothetical revisions

Morbidity (a):

2.5% increase in morbidity $ 275

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10% decrease in active life mortality and lapse 300

Discount rates:

25 basis point decline in new money interest rates $ —

50 basis point decline in new money interest rates 100

(a) Represents a sensitivity in future paid claims.

Premium rate actions:

25% decrease in anticipated future premium rate increases $ 25

50% decrease in anticipated future premium rate increases 50

As part of the annual reserve review, statutory long-term care reserve adequacy is evaluated by premium deficiency testing, by comparing carried statutory reserves with best estimate reserves, which incorporates best estimate discount rate and liability assumptions in its determination.

Statutory margin is the excess of carried reserves over best estimate reserves.

As of September 30, 2023, statutory long-term care margin increased $1.3 billion, primarily driven by a more favorable interest rate environment resulting in a higher yielding investment portfolio.

The following tables summarize policyholder reserves for CNA’s long-term care operations:

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Long-term care $ 13,959 $ 13,959

Structured settlement obligations 508 508

Structured settlement annuities and other $ 582 582

Total 582 13,959 14,541

Shadow adjustments (a)

Ceded reserves (b)

Ceded reserves 93 93

Total gross reserves $ 675 $ 13,959 $ 14,634

December 31, 2022

Long term care $ 2,905 $ 10,012 $ 12,917

Structured settlement obligations 526 526

Long-term care (a)(b) $ 13,480 $ 13,480

Structured settlement annuities and other $ 594 594

Total 594 13,480 14,074

Shadow adjustments (a)

200 2,936 3,136

Ceded reserves (b)

Ceded reserves 101 101

Total gross reserves $ 695 $ 13,480 $ 14,175

(a) To the extent that unrealized gains on fixed maturity securities supporting long term care reserves would result in a premium deficiency if realized, a related increase in Insurance reserves is recorded, after tax and noncontrolling interests, as a reduction of net unrealized gains (losses), through Other comprehensive income (loss).

To the extent that unrealized gains or losses on fixed maturity securities supporting structured settlements not funded by annuities would impact the reserve balance if realized, a related increase or decrease in Insurance reserves is recorded, after tax and noncontrolling interests, as a reduction or increase of net unrealized gains (losses) through Other comprehensive income (“Shadow Adjustments”).

(b) Ceded reserves relate to claim or policy reserves fully reinsured in connection with a sale or exit from the underlying business.

In the fourth quarter of 2022, CNA novated its block of legacy annuity business resulting in the reduction of all associated gross and ceded future policy benefit reserves.

(a) As of January 1, 2023, ASU 2018-12 was adopted using the modified retrospective method applied as of the transition date of January 1, 2021.

Prior period amounts presented in the financial statements have been adjusted to reflect application of the new guidance.

For additional information see Notes 1 and 9 of the Notes to Consolidated Financial Statements included under Item 8.

(b) In conjunction with the adoption of ASU 2018-12, at January 1, 2023 the long-term care reserves for policyholders currently receiving benefits were reclassified from Claim and claim adjustment expenses to Future policy benefits.

This change was applied retrospectively as of January 1, 2021.

CATASTROPHES AND RELATED REINSURANCE

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Catastrophe losses, net of reinsurance, of $236 million and $247 million were recorded for the years ended December 31, 2023 and 2022.

Catastrophe losses for the years ended December 31, 2022 and 2021 were driven by severe weather related events, primarily Winter Storm Elliott and Hurricane Ian for 2022 and Hurricane Ida and Winter Storms Uri and Viola for 2021.

CNA uses various analyses and methods, including using one of the industry standard natural catastrophe models to estimate hurricane and earthquake losses at various return periods, to inform underwriting and reinsurance decisions designed to manage its exposure to catastrophic events.

CNA generally seeks to manage its exposure through the purchase of catastrophe reinsurance and has catastrophe reinsurance treaties that cover property and workers’ compensation losses.

Catastrophe losses for the years ended December 31, 2023 and 2022 were driven by severe weather related events, primarily Winter Storm Elliott and Hurricane Ian for 2022.

CNA uses various analyses and methods, including using one of the industry standard natural catastrophe models, to estimate hurricane and earthquake losses at various return periods and to inform underwriting and reinsurance decisions designed to manage its exposure to catastrophic events.

CNA generally seeks to manage its exposure through the purchase

of catastrophe reinsurance and utilize various reinsurance programs to mitigate catastrophe losses, including excess-of-loss occurrence and aggregate treaties covering property and workers’ compensation, a property quota share treaty and the Terrorism Risk Insurance Program Reauthorization Act of 2019 (“TRIPRA”), as well as individual risk agreements that reinsure from losses from specific classes or lines of business.

CNA conducts an ongoing review of its risk and catastrophe reinsurance coverages and from time to time makes changes as it deems appropriate.

In 2021, CNA added a quota share treaty to its property reinsurance program, which covers policies written during the treaty term and in-force as of June 1, 2021.

As a result of the coverage of in-force policies, net written premiums were reduced by $122 million during the second quarter of 2021 for the one-time catch-up under the treaty of unearned premium on policies previously written as of the treaty inception.

The treaty was renewed for a term of June 1, 2022 to June 1, 2023.

The following discussion summarizes CNA’s most significant catastrophe reinsurance coverage at January 1, 2024.

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Exposures underwritten through Hardy are excluded and covered under a separate treaty.

The treaty has a term of June 1, 2022 to June 1, 2023 and provides coverage for the accumulation of covered losses from catastrophe occurrences above CNA’s per occurrence retention of $190 million up to $900 million for all losses other than earthquakes.

The treaty has a term of June 1, 2023 to June 1, 2024 and provides coverage for the accumulation of covered losses from catastrophe occurrences above CNA’s per occurrence retention of $235 million up to $1.1 billion for all losses other than earthquakes.

Earthquakes are covered up to $1.2 billion.

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CNA also purchased corporate Workers’ Compensation catastrophe excess-of-loss treaty reinsurance for the period January 1, 2024 to January 1, 2025 providing $275 million of coverage for the accumulation of covered losses related to natural catastrophes above CNA’s per occurrence retention of $25 million.

The treaty provides $600 million of coverage for the accumulation of covered losses related to terrorism events above CNA’s retention of $25 million.

The treaty provides $775 million of coverage for the accumulation of covered losses related to terrorism events above CNA’s per occurrence retention of $25 million.

Of the $775 million in terrorism coverage, $200 million is provided for nuclear, biological, chemical and radiation events.

One full reinstatement is available for the first $275 million above the retention, regardless of the covered peril.

Terrorism Risk Insurance Program Reauthorization Act of 2019 (“TRIPRA”)

Terrorism Risk Insurance Program Reauthorization Act of 2019

CNA’s principal reinsurance protection against large-scale terrorist attacks, including nuclear, biological, chemical or radiological attacks, is the coverage currently provided through TRIPRA which runs through the end of 2027.

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Short-duration contracts are primarily related to property and casualty insurance policies where the reserving process is based on actuarial estimates of the amount of loss, including amounts for known and unknown claims.

Long-duration contracts are primarily related to long term care policies and are estimated using actuarial estimates about morbidity and persistency as well as assumptions about expected investment returns and future premium rate increases.

Long-duration contracts are primarily related to long-term care policies and the reserves are recorded as Future policy benefits reserves as discussed below.

The reserve for unearned premiums represents the portion of premiums written related to the unexpired terms of coverage.

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Long Term Care Reserves

Future policy benefit reserves for CNA’s long term care policies are based on certain assumptions including morbidity, persistency, inclusive of mortality, discount rates and future premium rate increases.

The adequacy of the reserves is contingent upon actual experience and CNA’s future expectations related to these key assumptions.

If actual or CNA’s expected future experience differs from these assumptions, the reserves may not be adequate, requiring CNA to add to reserves.

A prolonged period during which investment returns remain at levels lower than those anticipated in CNA’s reserving discount rate assumption could result in shortfalls in investment income on assets supporting CNA’s obligations under long term care policies, which may require increases to CNA’s reserves.

In addition, CNA may not receive regulatory approval for the level of premium rate increases it requests.

These changes to CNA’s reserves could materially adversely impact our results of operations, financial condition and equity.

The reserving process is discussed in further detail in the Insurance Reserves section of this MD&A.

Future policy benefits reserves for long-term care policies are based on certain actuarial assumptions, including morbidity, persistency (inclusive of mortality), anticipated future premium rate increases and expenses.

The adequacy of the reserves is contingent upon actual experience and future expectations related to these key assumptions.

If actual or expected future experience differs from these assumptions, the reserves may not be adequate, requiring an increase to reserves.

The reserves are discounted using upper-medium grade fixed income instrument yields as of each reporting date.

In addition, regulatory approval may not be received for the level of premium rate increases requested.

The reserving process is discussed in further detail in the Insurance Reserve section of this MD&A.

Reinsurance and Other Receivables

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Additionally, exposure exists with respect to the collectibility of amounts due from customers on other receivables.

An allowance for doubtful accounts is recorded on the basis of periodic evaluations of balances due, currently as well as in the future, historical reinsurer default data, management’s experience and current and forecast economic conditions.

An allowance for doubtful accounts is recorded on the basis of periodic evaluations of balances due, currently as well as in the future, historical business default data, management’s experience and current and forecast economic conditions.

If actual experience differs from the estimates made by management in determining the allowances for doubtful accounts on reinsurance and other receivables, net receivables as reflected on our Consolidated Balance Sheets may not be collected.

Therefore, our results of operations, financial condition and/or equity could be materially adversely affected.

Further information on CNA’s process for determining the allowance for doubtful accounts on reinsurance and insurance receivables is in Note 1 to the Consolidated Financial Statements included under Item 8.

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ACCOUNTING STANDARDS UPDATE

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

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

For the Company, this includes CNA’s long term care business.

The Company will adopt the new guidance effective January 1, 2023, using the modified retrospective method applied as of the transition date of January 1, 2021.

The most significant impact will be the effect of updating the discount rate assumption quarterly to reflect an upper-medium grade fixed-income instrument yield, rather than the expected investment portfolio yield.

This will be partially offset by the de-recognition of Shadow Adjustments associated with long-duration contracts.

The net impact of these changes is expected to be a decrease of approximately $2.1 billion (after tax and noncontrolling interests) in AOCI as of the transition date of January 1, 2021.

To illustrate the sensitivity of this adjustment, had the interest rates in effect as of December 31, 2022 been used in the calculation, the transition impact to AOCI would have been a decrease of approximately $225 million (after tax and noncontrolling interests).

The requirement to review, and update if there is a change, cash flow assumptions at least annually is expected to change the pattern of earnings being recognized.

Under current accounting guidance, the third quarter 2022 gross premium valuation assessment indicated a pretax reserve margin of $125 million, with no unlocking event.

However under the new guidance, the effect of changes in cash flow assumptions from the assessment would be recorded in results of operations (except for discount rate changes which would be recorded quarterly through AOCI).

For a discussion of accounting standards updates that have been adopted or will be adopted in the future, please read Note 1 of the Notes to Consolidated Financial Statements included under Item 8.

For a discussion of accounting standards updates that have been adopted, please read Note 1 of the Notes to Consolidated Financial Statements included under Item 8.

RECENT TAX LEGISLATION

Corporate Alternative Minimum Tax

The Inflation Reduction Act was enacted on August 16, 2022, and includes, among other provisions, a new 15% corporate alternative minimum tax (“CAMT”), effective January 1, 2023, imposed on the adjusted financial statement income (“AFSI”) of an applicable corporation whose average annual AFSI over three prior years exceeds $1 billion.

Based on interpretations of the CAMT and current guidance, the Company believes that the CAMT has no impact on its consolidated financial results for the year ended December 31, 2023.

The Company will continue to monitor as additional technical guidance from the U.S.

Department of Treasury, including forthcoming proposed regulations, becomes available.

The Organization for Economic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting has introduced rules to establish a global minimum corporate tax rate of 15%, commonly referred to as the Pillar Two rules.

Numerous foreign countries have enacted legislation to implement the Pillar Two rules, effective beginning in 2024, or are expected to enact similar legislation.

The Company is currently evaluating the potential impacts that Pillar Two may have on future periods and will continue to monitor the implementation of the Pillar Two rules in the jurisdictions in which it operates.

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.

What changed 10-K

Item 7. Management’s Discussion and Analysis