What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-06 compared with 2023-10-30 · 140 added, 560 removed, 624 unchanged (53% of the section changed)

2 unchanged sentences

CONSOLIDATED CONDENSED BALANCE SHEETS

September 30, December 31,

March 31, December 31,

(Dollar amounts in millions, except per share data)

37 unchanged sentences

Less treasury stock, at cost ( 335,123 and 100,000 shares)

( 722 ) ( 12 )

Total shareholders’ equity 16,184 15,704

5 unchanged sentences

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended March 31 2024 2023

(In millions, except per share data)

5 unchanged sentences

Total 4,231 3,783

Insurance claims and policyholders’ benefits

(re-measurement loss of $( 41 ), $( 211 ), $( 75 ), and $( 205 ))

1,826 1,880 5,258 4,959

Insurance claims and policyholders’ benefits (re-measurement gain (loss) of $( 15 ) and $ 1 )

Amortization of deferred acquisition costs 444 379

4 unchanged sentences

Total 3,602 3,264

Income (loss) before income tax 356 ( 25 ) 1,383 649

Income before income tax 629 519

Income tax expense ( 144 ) ( 115 )

Net income (loss) 276 ( 27 ) 1,068 512

Net income 485 404

Amounts attributable to noncontrolling interests ( 28 ) ( 29 )

Net income (loss) attributable to Loews Corporation $ 253 $ ( 22 ) $ 988 $ 467

Basic net income (loss) per share $ 1.12 $ ( 0.09 ) $ 4.32 $ 1.91

Diluted net income (loss) per share $ 1.12 $ ( 0.09 ) $ 4.31 $ 1.90

Net income attributable to Loews Corporation $ 457 $ 375

Basic and diluted net income per share $ 2.05 $ 1.61

Weighted average shares outstanding:

5 unchanged sentences

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended March 31 2024 2023

(In millions)

Net income (loss) $ 276 $ ( 27 ) $ 1,068 $ 512

Net income $ 485 $ 404

Other comprehensive income (loss), after tax

Net unrealized losses on investments with an allowance for credit losses ( 1 ) ( 2 ) ( 10 ) ( 8 )

Net unrealized losses on other investments ( 1,084 ) ( 1,735 ) ( 827 ) ( 6,604 )

Total unrealized losses on investments ( 1,085 ) ( 1,737 ) ( 837 ) ( 6,612 )

Net unrealized gains (losses) on investments with an allowance for credit losses 2 ( 8 )

Net unrealized gains (losses) on other investments ( 217 ) 670

Total unrealized gains (losses) on investments ( 215 ) 662

Impact of changes in discount rates used to measure long-duration contract liabilities 341 ( 396 )

2 unchanged sentences

Foreign currency translation ( 33 ) 16

Other comprehensive loss ( 283 ) ( 839 ) ( 103 ) ( 2,619 )

Comprehensive income (loss) ( 7 ) ( 866 ) 965 ( 2,107 )

Other comprehensive income 101 289

Comprehensive income 586 693

Amounts attributable to noncontrolling interests ( 36 ) ( 60 )

Total comprehensive income (loss) attributable to Loews Corporation $ 1 $ ( 788 ) $ 896 $ ( 1,892 )

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF EQUITY

Loews Corporation Shareholders

Total Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Common Stock

Held in Treasury Noncontrolling Interests

(In millions)

Balance, July 1, 2022, as reported

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

Cumulative effect adjustments from changes in

accounting standards (Note 1) ( 507 ) ( 51 ) ( 403 ) ( 53 )

Balance, July 1, 2022, as adjusted

15,714 2 2,869 15,210 ( 2,913 ) ( 386 ) 932

Net loss ( 27 ) ( 22 ) ( 5 )

Other comprehensive loss ( 839 ) ( 766 ) ( 73 )

Dividends paid ($ 0.0625 per share)

( 23 ) ( 15 ) ( 8 )

Purchase of subsidiary stock from noncontrolling interests ( 45 ) 5 ( 50 )

Purchases of Loews Corporation treasury stock ( 230 ) ( 230 )

Stock-based compensation 9 8 1

Other 4 4 ( 1 ) 1

Balance, September 30, 2022

$ 14,563 $ 2 $ 2,886 $ 15,172 $ ( 3,679 ) $ ( 616 ) $ 798

Balance, July 1, 2023

$ 15,470 $ 2 $ 2,728 $ 15,637 $ ( 3,160 ) $ ( 604 ) $ 867

Net income 276 253 23

Other comprehensive income (loss) ( 283 ) ( 252 ) ( 31 )

Dividends paid ($ 0.0625 per share)

( 24 ) ( 14 ) ( 10 )

Purchase of subsidiary stock from noncontrolling interests ( 177 ) 27 ( 61 ) ( 143 )

Purchases of Loews Corporation treasury stock ( 118 ) ( 118 )

Stock-based compensation 11 10 1

Other 3 ( 1 ) 1 3

Balance, September 30, 2023

$ 15,158 $ 2 $ 2,764 $ 15,877 $ ( 3,473 ) $ ( 722 ) $ 710

Total comprehensive income attributable to Loews Corporation $ 550 $ 633

See accompanying Notes to Consolidated Condensed Financial Statements.

8 unchanged sentences

Cumulative effect adjustments from changes in

accounting standards (Note 1) ( 1,704 ) ( 22 ) ( 1,506 ) ( 176 )

accounting standards ( 277 ) ( 213 ) ( 36 ) ( 28 )

Balance, January 1, 2023, as adjusted

1 unchanged sentence

Net income 404 375 29

Other comprehensive loss ( 2,619 ) ( 2,359 ) ( 260 )

Other comprehensive income 289 258 31

Dividends paid ($ 0.0625 per share)

4 unchanged sentences

Other ( 7 ) ( 6 ) 2 ( 3 )

Balance, September 30, 2022

$ 14,563 $ 2 $ 2,886 $ 15,172 $ ( 3,679 ) $ ( 616 ) $ 798

Balance, January 1, 2023, as reported

Balance, March 31, 2023

$ 15,314 $ 2 $ 2,716 $ 15,293 $ ( 3,062 ) $ ( 498 ) $ 863

Cumulative effect adjustments from changes in

accounting standards (Note 1) ( 277 ) ( 213 ) ( 36 ) ( 28 )

Balance, January 1, 2023, as adjusted

Balance, January 1, 2024

$ 16,525 $ 2 $ 2,589 $ 15,617 $ ( 2,497 ) $ ( 7 ) $ 821

Net income 485 457 28

Other comprehensive income (loss) ( 103 ) ( 92 ) ( 11 )

Other comprehensive income 101 93 8

Dividends paid ($ 0.0625 per share)

( 70 ) ( 14 ) ( 56 )

Purchase of subsidiary stock from noncontrolling interests ( 203 ) 27 ( 61 ) ( 169 )

Purchases of Loews Corporation treasury stock ( 17 ) ( 17 )

1 unchanged sentence

Other ( 12 ) ( 9 ) 3 ( 6 )

Balance, September 30, 2023

Balance, March 31, 2024

$ 16,998 $ 2 $ 2,547 $ 16,060 $ ( 2,401 ) $ ( 24 ) $ 814

2 unchanged sentences

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30

Three Months Ended March 31

(In millions)

19 unchanged sentences

Purchases of property, plant and equipment ( 159 ) ( 159 )

Acquisitions ( 348 )

Dispositions 23

Investment in Altium Packaging ( 79 )

Change in short-term investments ( 455 ) 647

9 unchanged sentences

Other, net ( 17 ) ( 15 )

Net cash flow used by financing activities ( 947 ) ( 621 )

Net cash flow provided by (used by) financing activities 987 ( 524 )

Effect of foreign exchange rate on cash ( 2 ) 1

8 unchanged sentences

Its consolidated operating subsidiaries are engaged in the following lines of business:

commercial property and casualty insurance (CNA Financial Corporation (“CNA”), a 91.7 % owned subsidiary);

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

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

In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of September 30, 2023 and December 31, 2022, results of operations, comprehensive income (loss) and changes in shareholders’ equity for the three and nine months ended September 30, 2023 and 2022 and cash flows for the nine months ended September 30, 2023 and 2022, in each case in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

commercial property and casualty insurance (CNA Financial Corporation (“CNA”), an approximately 92 % owned subsidiary);

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

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

In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of March 31, 2024 and December 31, 2023 and results of operations, comprehensive income (loss), changes in shareholders’ equity and cash flows for the three months ended March 31, 2024 and 2023, in each case in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Results for the interim periods are not necessarily indicative of results for the entire year.

3 unchanged sentences

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

For the three and nine months ended September 30, 2023 and 2022 there were no shares attributable to employee stock-based compensation awards excluded from the diluted weighted average shares outstanding amounts because the effect would have been antidilutive.

Accounting changes – In August of 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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.

Entities are required to review, and update if there is a change, cash flow assumptions (including morbidity and persistency) used to measure the liability for future policyholder benefits (“LFPB”) at least annually.

The LFPB must also be updated for actual experience at least annually.

The LFPB is reflected as Insurance reserves:

Future policy benefits on the Consolidated Condensed Balance Sheets.

The discount rate assumption used to measure the LFPB must be updated quarterly using an upper-medium grade (low credit risk) fixed-income instrument yield, commonly interpreted as a single-A rate.

The effect of changes in cash flow assumptions and actual variances from expected experience are recorded in results of operations within Insurance claims and policyholders’ benefits.

The effect of changes in discount rate assumptions are recorded in Other comprehensive income (loss) (“OCI”).

In contrast, under legacy accounting guidance, cash flow and discount rate assumptions were locked in unless a premium deficiency emerged.

The discount rate assumption under legacy accounting guidance was determined using CNA’s internal investment portfolio yield, which was generally higher than a single-A yield.

The new guidance eliminates the need to hold shadow reserves associated with long term care reserves.

Under legacy accounting guidance, to the extent that unrealized gains on fixed maturity securities supporting long term care reserves would have resulted in a premium deficiency if realized, a related increase to Insurance reserves was recorded, net of tax, as a reduction of net unrealized gains (losses), through Other comprehensive income (loss) (shadow reserves).

The unit of account is the level at which reserves are measured.

Under the new guidance, the unit of account used to measure the LFPB is the cohort.

Cohorts are comprised of insurance contracts issued no more than one year apart, and must be further disaggregated according to policy benefit and insurance risk characteristics.

Under legacy accounting guidance, the LFPB was generally measured at the individual policy level.

Under the new guidance, the net premium ratio (“NPR”) is capped at 100%.

To the extent that NPR would otherwise exceed 100%, the LFPB is increased, and a loss is recognized immediately in the results of operations.

The NPR cap is applied at the cohort level each quarter when NPR is updated.

In contrast, under legacy accounting guidance, premium deficiency testing was performed annually at the product level.

See Note 6 to the Consolidated Condensed Financial Statements for further explanation of the NPR and LFPB calculations.

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

CNA’s run-off long term care business is in scope of the new guidance.

All prior periods presented in the financial statements have been adjusted to reflect application of the new guidance.

The original locked in discount rate, utilized for purposes of calculating the NPR under the new guidance, was based on the discount rate assumption used to calculate the LFPB immediately prior to the transition date.

While the requirements of the new guidance represent a material change from legacy accounting, the new guidance does not impact capital and surplus under statutory accounting practices, cash flows or the underlying economics of the business.

In December of 2022, the FASB issued ASU 2022-05, “Financial Services-Insurance (Topic 944):

Transition for Sold Contracts” (“ASU 2022-05”).

This guidance permits companies to make an election to exclude from the scope of ASU 2018-12 any insurance contracts that have been de-recognized prior to the effective date of ASU 2018-12, assuming that the company has no significant continuing involvement with the de-recognized contracts.

In the fourth quarter of 2022, CNA novated its block of legacy annuity business, which was fully-ceded prior to novation.

The Company has elected the ASU 2022-05 transition relief, and has excluded the novated legacy annuity business from the scope of ASU 2018-12.

Explanation of ASU 2018-12 Transition Impacts:

The following table presents a roll-forward of the pre-transition LFPB balance as of January 1, 2021:

(In millions)

Balance as of December 31, 2020, as reported $ 13,318

Reclassification of reserves for policyholders currently receiving benefits to Future policy benefits (a)

De-recognition of shadow reserves ( 3,293 )

Re-measurement using an upper-medium grade fixed income instrument yield discount rate 6,255

Other adjustments

Balance as of January 1, 2021, as adjusted $ 19,132

(a) 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 expense to Future policy benefits.

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

Shadow reserves associated with the long term care business were de-recognized as of the transition date in Accumulated other comprehensive income (“AOCI”).

The effect of re-measuring the LFPB at the single-A discount rate as of the transition date was similarly recorded in AOCI.

There are no cohorts for which the NPR exceeded 100% at the transition date.

CNA’s practice under legacy accounting guidance was to calculate and record premium deficiency reserves at the policy level.

Accordingly, an allocation methodology was not required to assign historical premium deficiency reserves to cohorts upon transition to ASU 2018-12.

The following table presents after tax adjustments to the opening balance of Shareholders’ equity and Noncontrolling interests resulting from adoption of ASU 2018-12:

Accumulated other comprehensive income (loss) Retained earnings Noncontrolling interests

(In millions)

Balance as of December 31, 2020, as reported $ 581 $ 14,150 $ 1,321

De-recognition of shadow reserves 2,331 270

Re-measurement of LFPB using an upper-medium grade fixed

income instrument yield discount rate ( 4,428 ) ( 513 )

Other adjustments ( 5 ) ( 1 )

Balance as of January 1, 2021, as adjusted $ ( 1,516 ) $ 14,145 $ 1,077

The effects of adoption of ASU 2018-12 on the Consolidated Condensed Statement of Operations were as follows:

Three Months Ended September 30, 2022 As Reported Effect of Adoption As Adjusted

(In millions)

Insurance claims and policyholders’ benefits (a) $ 1,665 $ 215 $ 1,880

Income (loss) before income tax 190 ( 215 ) ( 25 )

Income tax expense ( 47 ) 45 ( 2 )

Net income (loss) 143 ( 170 ) ( 27 )

Amounts attributable to noncontrolling interests ( 13 ) 18 5

Net income (loss) attributable to Loews Corporation 130 ( 152 ) ( 22 )

Basic net income (loss) per share 0.54 ( 0.63 ) ( 0.09 )

Diluted net income (loss) per share 0.54 ( 0.63 ) ( 0.09 )

(a) The effect of adopting ASU 2018-12 on Insurance claims and policyholders’ benefits is inclusive of the re-measurement loss of $ 211 million, which is presented parenthetically on the Consolidated Condensed Statement of Operations.

Nine Months Ended September 30, 2022 As Reported Effect of Adoption As Adjusted

(In millions)

Insurance claims and policyholders’ benefits (a) $ 4,703 $ 256 $ 4,959

Income before income tax 905 ( 256 ) 649

Income tax expense ( 190 ) 53 ( 137 )

Net income 715 ( 203 ) 512

Amounts attributable to noncontrolling interests ( 67 ) 22 ( 45 )

Net income attributable to Loews Corporation 648 ( 181 ) 467

Basic net income per share 2.65 ( 0.74 ) 1.91

Diluted net income per share 2.64 ( 0.74 ) 1.90

(a) The effect of adopting ASU 2018-12 on Insurance claims and policyholders’ benefits is inclusive of the re-measurement loss of $ 205 million, which is presented parenthetically on the Consolidated Condensed Statement of Operations.

The effects of adoption of ASU 2018-12 on the Consolidated Condensed Balance Sheet were as follows:

December 31, 2022 As Reported Effect of Adoption As Adjusted

(In millions)

Other assets $ 3,941 $ 73 $ 4,014

Total assets 75,494 73 75,567

Claim and claim adjustment expenses (a) 25,099 ( 2,979 ) 22,120

Future policy benefits (a) 10,151 3,329 13,480

Total liabilities 60,016 350 60,366

Retained earnings 15,144 ( 213 ) 14,931

Accumulated other comprehensive income (loss) ( 3,284 ) ( 36 ) ( 3,320 )

Noncontrolling interests 880 ( 28 ) 852

Total equity 15,478 ( 277 ) 15,201

(a) 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 expense to Future policy benefits.

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

The effects of adoption of ASU 2018-12 on the Consolidated Condensed Statement of Comprehensive Income (Loss) were as follows:

Three Months Ended September 30, 2022 As Reported Effect of Adoption As Adjusted

(In millions)

Net unrealized losses on other investments $ ( 1,327 ) $ ( 408 ) $ ( 1,735 )

Total unrealized losses on investments ( 1,329 ) ( 408 ) ( 1,737 )

Impact of changes in discount rates used to measure long-duration

contract liabilities 994 994

Other comprehensive (loss) ( 1,425 ) 586 ( 839 )

Comprehensive (loss) ( 1,282 ) 416 ( 866 )

Amounts attributable to noncontrolling interests 119 ( 41 ) 78

Total comprehensive (loss) attributable to Loews Corporation ( 1,163 ) 375 ( 788 )

Nine Months Ended September 30, 2022 As Reported Effect of Adoption As Adjusted

(In millions)

Net unrealized losses on other investments $ ( 4,284 ) $ ( 2,320 ) $ ( 6,604 )

Total unrealized losses on investments ( 4,292 ) ( 2,320 ) ( 6,612 )

Impact of changes in discount rates used to measure long-duration

contract liabilities 4,136 4,136

Other comprehensive (loss) ( 4,435 ) 1,816 ( 2,619 )

Comprehensive (loss) ( 3,720 ) 1,613 ( 2,107 )

Amounts attributable to noncontrolling interests 379 ( 164 ) 215

Total comprehensive (loss) attributable to Loews Corporation ( 3,341 ) 1,449 ( 1,892 )

The effects of adoption of ASU 2018-12 on the Consolidated Condensed Statements of Cash Flows were as follows:

Nine Months Ended September 30, 2022 As Reported Effect of Adoption As Adjusted

(In millions)

Net income $ 715 $ ( 203 ) $ 512

Adjustments to reconcile net income to net cash provided by operating

activities, net 779 ( 53 ) 726

Insurance reserves 1,743 256 1,999

The effects of adoption of ASU 2018-12 on segment results of operations of CNA were as follows:

Three Months Ended September 30, 2022 As Reported Effect of Adoption As Adjusted

(In millions)

Insurance claims and policyholders’ benefits (a) $ 1,665 $ 215 $ 1,880

Income (loss) before income tax 164 ( 215 ) ( 51 )

Income tax (expense) benefit ( 36 ) 45 9

Net income (loss) 128 ( 170 ) ( 42 )

Amounts attributable to noncontrolling interests ( 13 ) 18 5

Net income (loss) attributable to Loews Corporation 115 ( 152 ) ( 37 )

Nine Months Ended September 30, 2022 As Reported Effect of Adoption As Adjusted

(In millions)

Insurance claims and policyholders’ benefits (a) $ 4,703 $ 256 $ 4,959

Income before income tax 787 ( 256 ) 531

Income tax expense ( 141 ) 53 ( 88 )

Net income 646 ( 203 ) 443

Amounts attributable to noncontrolling interests ( 67 ) 22 ( 45 )

Net income attributable to Loews Corporation 579 ( 181 ) 398

Boardwalk Pipelines

On September 29, 2023, Boardwalk Pipelines acquired 100 % of the equity interests of Williams Olefins Pipeline Holdco LLC (“Bayou Ethane”) from Williams Field Services Group, LLC for $ 348 million in cash, including working capital.

Bayou Ethane owns an approximately 380-mile ethane pipeline system from Mont Belvieu, Texas, to the Mississippi River corridor in Louisiana and two 15-mile pipelines in the Houston Ship Channel area that carry ammonia and hydrogen chloride.

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

The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition.

As of September 29, 2023, Boardwalk Pipelines recorded $ 369 million of assets and $ 21 million of

liabilities, which include $ 296 million of property, plant and equipment and $ 34 million of finite lived intangible assets.

The purchase price allocation is preliminary and is expected to be finalized by the first quarter of 2024.

Loews Hotels & Co

During the second quarter of 2023, Loews Hotels & Co paid $ 46 million to acquire an additional equity interest in a previously unconsolidated joint venture property.

The acquisition resulted in Loews Hotels & Co consolidating the joint venture property and recording a gain of $ 46 million ($ 36 million after tax) .

Upon acquisition, $ 232 million in assets and $ 120 million in liabilities, including mezzanine equity representing the remaining noncontrolling owner’s interest, were consolidated at fair value .

For the three months ended March 31, 2024 and 2023 there were no shares attributable to employee stock-based compensation awards excluded from the diluted weighted average shares outstanding amounts because the effect would have been antidilutive.

Recently issued Accounting Standards Updates (“ASUs”) - In November of 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” The updated accounting guidance requires enhanced reportable segment disclosures, primarily related to significant segment expenses which are regularly provided to the chief operating decision maker.

The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Retrospective application is required and early adoption is permitted.

The Company is currently evaluating the effect the updated guidance will have on its financial statement disclosures.

In December of 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” The updated accounting guidance requires expanded income tax disclosures, including the disaggregation of existing disclosures related to the effective tax rate reconciliation and income taxes paid.

The guidance is effective for fiscal years beginning after December 15, 2024.

Prospective application is required, with retrospective application permitted.

The Company is currently evaluating the effect the updated guidance will have on its financial statement disclosures.

Net investment income is as follows:

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended March 31 2024 2023

(In millions)

3 unchanged sentences

Equity securities (a) 22 12

Income (loss) from trading portfolio (a) 32 ( 18 ) 91 ( 95 )

Other 30 19 78 47

Income from trading portfolio (a) 58 45

Total investment income 693 590

1 unchanged sentence

Net investment income $ 669 $ 569

(a) Net investment income (loss) recognized due to the change in fair value of equity and trading portfolio securities held as of September 30, 2023 and 2022

$ ( 14 ) $ ( 68 ) $ 3 $ ( 179 )

(a) Net investment income recognized due to the change in fair value of equity and trading portfolio securities held as of March 31, 2024 and 2023

Investment gains (losses) are as follows:

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended March 31 2024 2023

(In millions)

4 unchanged sentences

Equity securities (a) 11 ( 14 )

Derivative instruments 24 79

Short-term investments and other ( 1 ) 1

Gain on acquisition of a joint venture (see Note 2) 46

Investment losses $ ( 22 ) $ ( 35 )

(a) Investment gains (losses) recognized due to the change in fair value of non-redeemable preferred stock included within equity securities held as of September 30, 2023 and 2022

$ 2 $ ( 2 ) $ 2 $ ( 109 )

Net investment losses for the three months ended September 30, 2022 in the table above included a $ 35 million net loss related to the novation of a coinsurance agreement on CNA’s legacy annuity business, which was transacted on a funds withheld basis and gave rise to an embedded derivative.

The net loss of $ 35 million was comprised of a $ 59 million loss on the fixed maturity securities supporting the funds withheld liability to recognize unrealized losses which had been included in AOCI since the inception of the coinsurance agreement, partially offset by a $ 24 million gain on the associated embedded derivative.

Taken together, this net loss was the final recognition of changes in the valuation of the funds held assets and offsets previously recognized net investment gains on the associated embedded derivative.

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

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

(a) Investment gains (losses) recognized due to the change in fair value of non-redeemable preferred stock included within equity securities held as of March 31, 2024 and 2023

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

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

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended March 31 2024 2023

(In millions)

3 unchanged sentences

Impairment losses recognized in earnings $ 14 $ 8

T here were $ 5 million and $ 11 million of losses recognized on mortgage loans during the three and nine months ended September 30, 2023 due to changes in expected credit losses.

There were $ 8 million of losses recognized on mortgage loans during the three and nine months ended September 30, 2022.

T here were no losses recognized on mortgage loans during the three months ended March 31, 2024 or 2023.

The following tables present a summary of fixed maturity securities:

September 30, 2023 Cost or Amortized Cost Gross Unrealized

March 31, 2024 Cost or Amortized Cost Gross Unrealized

Gains Gross Unrealized

30 unchanged sentences

Foreign government 741 6 34 713

Redeemable preferred stock 3 3

Fixed maturities available-for-sale $ 42,414 $ 1,022 $ 2,995 $ 16 $ 40,425

3 unchanged sentences

Less than 12 Months 12 Months or Longer Total

September 30, 2023 Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses

March 31, 2024 Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses

(In millions)

27 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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

7 unchanged sentences

Total $ 27,012 $ 3,096 $ 25,731 $ 2,995

Based on current facts and circumstances, the unrealized losses presented in the September 30, 2023 securities in the gross unrealized loss position table above are not believed to be indicative of the ultimate collectibility of the current amortized cost of the securities, but rather are primarily attributable to changes in risk-free interest rates.

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

Based on current facts and circumstances, the unrealized losses presented in the March 31, 2024 securities in the gross unrealized loss position table above are not believed to be indicative of the ultimate collectibility of the current amortized cost of the securities, but rather are primarily attributable to changes in risk-free interest rates.

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

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

accordingly, it was determined that there are no additional impairment losses to be recorded as of September 30, 2023.

accordingly, it was determined that there are no additional impairment losses to be recorded as of March 31, 2024.

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

Accrued interest receivables on available-for-sale fixed maturity securities totaled $ 430 million, $ 394 million and $ 401 million as of September 30, 2023, December 31, 2022 and September 30, 2022 and are excluded from the estimate of expected credit losses and the amortized cost basis in the tables within this Note.

Three months ended September 30, 2023 Corporate and Other Bonds

Asset-backed Total

(In millions)

Allowance for credit losses:

Balance as of July 1, 2023

$ 13 $ 9 $ 22

Additions to the allowance for credit losses:

Securities for which credit losses were not previously recorded 5 5

Available-for-sale securities accounted for as PCD assets 2 2

Reductions to the allowance for credit losses:

Write-offs charged against the allowance 15 15

Additional increases to the allowance for credit losses

on securities that had an allowance recorded in a previous period

Total allowance for credit losses $ 5 $ 13 $ 18

Three months ended September 30, 2022 Corporate and Other Bonds Asset-backed Total

Accrued interest receivables on available-for-sale fixed maturity securities totaled $ 437 million, $ 435 million and $ 407 million as of March 31, 2024, December 31, 2023 and March 31, 2023 and are excluded from the estimate of expected credit losses and the amortized cost basis in the tables within this Note.

Three months ended March 31, 2024 Corporate and Other Bonds Asset-backed Total

(In millions)

Allowance for credit losses:

Balance as of July 1, 2022

Additional decreases to the allowance for credit losses

on securities that had an allowance recorded in a previous period

Total allowance for credit losses $ — $ 3 $ 3

Nine months ended September 30, 2023

Allowance for credit losses:

Balance as of January 1, 2024

$ 4 $ 12 $ 16

Additions to the allowance for credit losses:

Securities for which credit losses were not previously recorded 6 7 13

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

2 unchanged sentences

Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis 1 1

Write-offs charged against the allowance 15 15

Additional increases to the allowance for credit

1 unchanged sentence

Total allowance for credit losses $ 3 $ 17 $ 20

Nine months ended September 30, 2022

Three months ended March 31, 2023 Corporate and Other Bonds Asset-backed Total

(In millions)

Allowance for credit losses:

Balance as of January 1, 2023

$ 11 $ 7 $ 18

Additions to the allowance for credit losses:

1 unchanged sentence

Reductions to the allowance for credit losses:

Write-offs charged against the allowance 12 12

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

Securities sold during the period (realized) 6 6

Intent to sell or more likely than not will be required to sell the

security before recovery of its amortized cost basis 3 3

Additional increases to the allowance for credit losses

on securities that had an allowance recorded in a previous period

1 ( 7 ) ( 6 )

Total allowance for credit losses $ 1 $ 1 $ 2

1 unchanged sentence

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Cost or Amortized Cost Estimated Fair

12 unchanged sentences

Mortgage Loans Amortized Cost Basis by Origination Year (a)

As of September 30, 2023

As of March 31, 2024

(In millions)

15 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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

12 unchanged sentences

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

As of September 30, 2023, commitments to purchase or fund were approximately $ 1.6 billion and to sell were approximately $ 65 million under the terms of these investments.

As of March 31, 2024, commitments to purchase or fund were approximately $ 1.6 billion and to sell were approximately $ 25 million under the terms of these investments.

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

Corporate bonds and other includes obligations of the United States of America (“U.S.”) Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.

September 30, 2023 Level 1

March 31, 2024 Level 1

Level 3 Total

23 unchanged sentences

Payable to brokers ( 62 ) ( 62 )

The following tables present reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2023 and 2022:

Net Realized Investment Gains (Losses) and Net Change in Unrealized Investment Gains (Losses) Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and Liabilities Held at September 30

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

2023 Balance, July 1 Included in Net Income

Included in OCI Purchases Sales

Transfers into

Level 3 Transfers out of Level 3

Balance, September 30

(In millions)

Fixed maturity securities:

Corporate bonds and other $ 971 $ ( 36 ) $ 29 $ ( 19 ) $ 945 $ ( 36 )

States, municipalities and political

subdivisions 43 ( 2 ) 41 ( 2 )

Asset-backed 883 $ 1 ( 28 ) 61 ( 13 ) $ ( 7 ) 897 ( 28 )

Fixed maturities available-for-sale $ 1,897 $ 1 $ ( 66 ) $ 90 $ — $ ( 32 ) $ — $ ( 7 ) $ 1,883 $ — $ ( 66 )

Equity securities $ 26 $ ( 1 ) $ ( 2 ) $ 23 $ ( 1 )

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

2022 Balance, July 1 Included in Net Income Included in OCI Purchases Sales Settlements Transfers into

Level 3 Transfers out of Level 3 Balance, September 30

(In millions)

Fixed maturity securities:

Corporate bonds and other $ 846 $ 1 $ ( 50 ) $ 9 $ ( 4 ) $ 802 $ ( 51 )

States, municipalities and political

subdivisions 46 ( 4 ) 42 ( 4 )

Asset-backed 641 7 ( 38 ) 116 ( 14 ) $ 47 $ ( 43 ) 716 ( 38 )

Fixed maturities available-for-sale $ 1,533 $ 8 $ ( 92 ) $ 125 $ — $ ( 18 ) $ 47 $ ( 43 ) $ 1,560 $ — $ ( 93 )

Equity securities $ 47 $ ( 7 ) $ ( 10 ) $ 30 $ ( 7 )

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

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

2024 Balance, January 1 Included in Net Income

2 unchanged sentences

Level 3 Transfers out of Level 3

Balance, September 30

Balance, March 31

(In millions)

6 unchanged sentences

Equity securities $ 24 $ 6 $ ( 19 ) $ 11 $ 1

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

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

2023 Balance, January 1 Included in Net Income Included in OCI Purchases Sales Settlements Transfers into

Level 3 Transfers out of Level 3 Balance, September 30

Level 3 Transfers out of Level 3 Balance, March 31

(In millions)

19 unchanged sentences

The weighted average rate is calculated based on fair value.

September 30, 2023 Estimated

March 31, 2024 Estimated

Fair Value Valuation Techniques Unobservable Inputs Range (Weighted Average)

9 unchanged sentences

Carrying Amount Estimated Fair Value

September 30, 2023 Level 1 Level 2 Level 3 Total

March 31, 2024 Level 1 Level 2 Level 3 Total

(In millions)

9 unchanged sentences

Reserve projections are based primarily on detailed analysis of the facts in each case, experience with similar cases and various historical development patterns.

Consideration is given to historical patterns such as claim reserving trends and settlement practices, loss payments, pending levels of unpaid claims and product mix, as well as court decisions and economic conditions, economic, medical and social inflation, and public attitudes.

Consideration is given to historical patterns such as claim reserving trends and settlement practices, loss payments, pending levels of unpaid claims and product mix, economic, medical and social inflation, and public attitudes.

All of these factors can affect the estimation of claim and claim adjustment expense reserves.

9 unchanged sentences

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

The Company reported catastrophe losses, net of reinsurance, of $ 94 million and $ 114 million for the three months ended September 30, 2023 and 2022 and $ 214 million and $ 171 million for the nine months ended September 30, 2023 and 2022.

Catastrophe losses for the three and nine months ended September 30, 2023 were driven primarily by severe weather related events.

Catastrophe losses for the three and nine months ended September 30, 2022 were driven primarily by severe weather related events, including $ 87 million for Hurricane Ian.

The Company reported catastrophe losses, net of reinsurance, of $ 88 million and $ 52 million for the three months ended March 31, 2024 and 2023 primarily related to severe weather related events.

Liability for Unpaid Claim and Claim Adjustment Expenses

The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves.

Nine Months Ended September 30

2023 2022 (a)

Three Months Ended March 31

(In millions)

7 unchanged sentences

Amortization of discount 10 11

Total net incurred (b)

Total net incurred (a)

Net payments attributable to:

6 unchanged sentences

Gross reserves, end of period $ 23,588 $ 22,409

(a) In conjunction with the adoption of ASU 2018-12, at January 1, 2023, long term care reserves for policyholders currently receiving benefits were reclassified from Claim and claim adjustment expenses into Future policy benefits and this change was applied retrospectively as of January 1, 2021.

For additional information see Note 1.

(b) Total net incurred above does not agree to Insurance claims and policyholders’ benefits as reflected on the Consolidated Condensed Statements of Operations due to amounts related to retroactive reinsurance deferred gain accounting and uncollectible reinsurance, which are not reflected in the table above.

(a) Total net incurred does not agree to Insurance claims and policyholders’ benefits as reflected on the Consolidated Condensed Statements of Operations due to amounts related to retroactive reinsurance deferred gain accounting, uncollectible reinsurance, benefit expenses related to future policy benefits and policyholders’ dividends, which are not reflected in the table above.

Net Prior Year Development

1 unchanged sentence

These changes can be favorable or unfavorable.

Favorable net prior year loss reserve development of $ 7 million and $ 17 million was recorded for CNA’s commercial property and casualty operations (“Property & Casualty Operations”) for the three months ended September 30, 2023 and 2022 and favorable net prior year loss reserve development of $ 11 million and $ 66 million was recorded for the nine months ended September 30, 2023 and 2022.

Unfavorable net prior year loss reserve development of $ 20 million was recorded for CNA’s operations outside of Property & Casualty Operations (“Other Insurance Operations”) for the three months ended September 30, 2023 and unfavorable net prior year loss reserve development of $ 55 million and $ 64 million was recorded for the nine months ended September 30, 2023 and 2022.

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

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

CNA’s commercial property and casualty operations (“Property & Casualty Operations”) recorded favorable net prior year loss reserve development of $ 7 million and unfavorable net prior year loss reserve development of $ 13 million for the three months ended March 31, 2024 and 2023.

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

Three Months Ended March 31

(In millions)

Medical professional liability $ 9

Other professional liability and management liability $ 17 9 16 22

Surety $ ( 18 )

Commercial auto 11 21

General liability 70 41

Workers’ compensation ( 2 ) ( 2 ) ( 100 ) ( 86 )

Warranty 13 ( 9 )

Property and other 1 1 22 ( 11 )

Other insurance operations 20 55 64

Workers’ compensation ( 2 ) ( 2 )

Other property and casualty operations 15

Total pretax (favorable) unfavorable development $ ( 7 ) $ 13

Unfavorable development in other professional liability and management liability was primarily due to higher than expected claim severity and frequency in CNA’s cyber and professional errors and omissions (“E&O”) businesses in multiple accident years.

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

Unfavorable development in other insurance operations was primarily driven by higher than expected frequency and severity in legacy mass tort abuse claims in older accident years.

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

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

Unfavorable development in general liability was due to higher than expected claim severity in CNA’s construction and middle market businesses across multiple accident years.

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

Unfavorable development in property and other was due to higher than expected large loss emergence in CNA’s professional liability business in accident year 2017.

Unfavorable development in other insurance operations was primarily driven by higher than expected frequency and severity in legacy mass tort abuse claims in older accident years.

Unfavorable development in medical professional liability was due to higher than expected large loss activity in recent accident years.

Unfavorable development in other professional liability and management liability was due to higher than expected claim severity and frequency in CNA’s cyber and professional E&O businesses in multiple accident years.

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

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

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

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

Favorable development in warranty was due to lower than expected loss emergence in a recent accident year.

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

Unfavorable development in warranty was primarily due to higher than expected frequency and severity in a recent accident year.

Unfavorable development in other property and casualty operations was due to higher than expected large loss emergence in CNA’s professional liability business in accident year 2017.

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

9 unchanged sentences

In a period in which a change in the estimate of A&EP reserves is recognized that increases or decreases the amounts ceded under the LPT, the proportion of actual paid recoveries to total ceded losses is affected and the change in the deferred gain is recognized in earnings as if the revised estimate of ceded losses was available at the effective date of the LPT.

The effect of the deferred retroactive reinsurance benefit is recorded in Insurance claims and policyholders’ benefits on the Consolidated Condensed Statements of Operations.

The impact of the LPT on the Consolidated Condensed Statements of Operations was the recognition of a retroactive reinsurance benefit of $ 15 million and $ 17 million for the three months ended September 30, 2023 and 2022 and $ 38 million and $ 40 million for the nine months ended September 30, 2023 and 2022 .

As of September 30, 2023 and December 31, 2022, the cumulative amounts ceded under the LPT were $ 3.5 billion.

The unrecognized deferred retroactive reinsurance benefit was $ 388 million and $ 425 million as of September 30, 2023 and December 31, 2022 and is included within Other liabilities on the Consolidated Condensed Balance Sheets.

The effect of the deferred retroactive reinsurance benefit is recorded in Insurance claims and policyholders’ benefits in the Consolidated Condensed Statements of Operations.

The impact of the LPT on the Consolidated Condensed Statements of Operations was the recognition of a retroactive reinsurance benefit of $ 12 million and $ 8 million for the three months ended March 31, 2024 and 2023 .

As of March 31, 2024 and December 31, 2023, the cumulative amounts ceded under the LPT were $ 3.6 billion.

The unrecognized deferred retroactive reinsurance benefit was $ 405 million and $ 417 million as of March 31, 2024 and December 31, 2023 and is included within Other liabilities on the Consolidated Condensed Balance Sheets.

NICO established a collateral trust account as security for its obligations under the LPT.

The fair value of the collateral trust account was $ 2.3 billion as of September 30, 2023.

The fair value of the collateral trust account was $ 2.6 billion as of March 31, 2024.

In addition, Berkshire Hathaway Inc.

6 unchanged sentences

Future Policy Benefits Reserves

Future policy benefits reserves are related to CNA’s run-off long term care business, which is included in Other Insurance Operations.

Future policy benefits reserves are associated with CNA’s run-off long-term care business, included in Other Insurance Operations, and 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.

Future policy benefits reserves are comprised of the liability for future policyholder benefits (“LFPB”) which is reflected as Insurance reserves:

Future policy benefits on the Consolidated Condensed Balance Sheet.

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

1 unchanged sentence

As a result of this variability, CNA’s future policy benefits reserves may be subject to material increases if actual experience develops adversely to its expectations.

The LFPB is computed using the net level premium method, which incorporates cash flow assumptions and discount rate assumptions.

Under the net level premium method, the LFPB is equal to the present value of future benefits and claim settlement expenses less the present value of future net premiums.

Net premiums are equal to gross premiums multiplied by the NPR.

The NPR is generally the ratio of the present value of benefits and expense payments to the present value of gross premiums, expected over the lifetime of the policy.

As a result of the modified retrospective adoption of ASU 2018-12, the NPR calculation incorporates the original locked in discount rate and the reserve balance as of the transition date of January 1, 2021.

The key cash flow assumptions used to estimate the LFPB are morbidity, persistency (inclusive of mortality), anticipated future premium rate increases and expenses.

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.

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

Expense assumptions relate to claim adjudication.

The practical expedient that allows locking in the expense assumption has not been elected.

The discount rate is determined using the upper-medium grade fixed income instrument yield curve.

CNA has elected to update the NPR and the LFPB for actual experience on a quarterly basis.

A quarterly assessment is also made as to whether evidence suggests that cash flow assumptions should be updated.

Annually in the third quarter, actuarial analysis is performed on policyholder morbidity, persistency, premium rate increases and expense experience.

This analysis, combined with judgment, informs the setting of updated cash flow assumptions used to estimate the LFPB.

Actuarial analysis includes predictive modeling, actual to expected experience comparisons and trend analysis.

Applicable industry research is also considered.

The cash flow assumption updates for the third quarter of 2023 resulted in an $ 8 million pretax increase in the LFPB.

Persistency updates were unfavorable due to revisions to lapse rates.

Morbidity updates were favorable, driven by claim severity assumption updates, and there was a favorable impact from outperformance on premium rate assumptions.

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

Quarterly, to derive the upper-medium grade fixed income instrument yield discount rate assumption, a published spot rate curve constructed from single-A rated U.S.

dollar denominated corporate bonds is used.

Linear interpolation is used to determine yield assumptions for tenors that fall between points for which observable rates are available.

For cash flows that are projected to occur beyond the tenor for which market-observable rates are available, judgment is applied to estimate a normative rate which is graded to over 10 years.

Quarterly, the updated NPR is used to derive an updated LFPB as of the beginning of the current quarter measured at the original locked in discount rate.

The updated LFPB is then compared to the existing carrying amount of the liability as of the same date (measured at the original locked in discount rate) to determine the re-measurement gain (loss), which is

presented parenthetically within the Insurance claims and policyholders’ benefits line on the Consolidated Condensed Statements of Operations.

Insurance contracts are grouped into cohorts according to issue year.

Contracts assumed through reinsurance are generally included within the same cohorts as contracts issued directly by CNA, according to issue year.

The issue year for assumed contracts is defined according to the date that the assumption of insurance risk incepted.

For assumed contracts that were reinsured concurrently with the issuance of the underlying direct contract, issue year is defined as the year that the underlying policy was issued.

For contracts that were already in-force when assumed, issue year is defined as the year in which the reinsurance agreement incepted.

For group long term care business, issue year is defined as the year the individual insurance certificate was issued.

Long term care is CNA’s only long-duration product line, therefore, cohorts are not further disaggregated by product.

For further information on the long-term care reserving process see Note 1 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The following table summarizes balances and changes in the LFPB:

12 unchanged sentences

Effect of changes in discount rate 56 154

Balance, September 30

Balance, March 31

$ 3,553 $ 3,965

10 unchanged sentences

Effect of changes in discount rate 78 704

Balance, September 30

Balance, March 31

$ 17,066 $ 17,941

Net LFPB, September 30 $ 12,654 $ 13,181

(a) As of September 30, 2023 and 2022 , the re-measurement loss of $( 75 ) million and $( 205 ) million presented parenthetically on the Consolidated Condensed Statement of Operations is comprised of the effect of changes in cash flow assumptions and the effect of actual variances from expected experience.

The following table presents earned premiums and interest expense associated with the long term care business recognized on the Condensed Consolidated Statement of Operations.

Three Months Ended Nine Months Ended

September 30, September 30,

Net LFPB, March 31

$ 13,513 $ 13,976

(a) As of March 31, 2024 and 2023 , the re-measurement gain (loss) of $( 15 ) million and $ 1 million presented parenthetically on the Consolidated Condensed Statement of Operations is comprised of the effect of changes in cash flow assumptions and the effect of actual variances from expected experience.

The following table presents earned premiums and interest expense associated with the long-term care business recognized on the Condensed Consolidated Statement of Operations.

Three Months Ended March 31 2024 2023

(In millions)

2 unchanged sentences

The following table presents undiscounted expected future benefit and expense payments and undiscounted expected future gross premiums.

September 30,

(In millions)

1 unchanged sentence

Expected future gross premiums 5,270 5,729

Discounted expected future gross premiums at the upper-medium grade fixed income instrument yield discount rate were $ 3.7 billion and $ 4.1 billion as of September 30, 2023 and 2022.

The weighted average effective duration of the LFPB calculated using the original locked in discount rate was 12 years as of September 30, 2023 and 2022.

Discounted expected future gross premiums at the upper-medium grade fixed income instrument yield discount rate were $ 3.7 billion and $ 4.0 billion as of March 31, 2024 and 2023.

The weighted average effective duration of the LFPB calculated using the original locked in discount rate was 11 years and 12 years as of March 31, 2024 and 2023.

The weighted average interest rates in the table below are calculated based on the rate used to discount all future cash flows.

September 30, December 31,

March 31, December 31,

2024 2023 2023

1 unchanged sentence

Upper-medium grade fixed income instrument discount rate 5.20 4.92 4.94

For the three and nine months ended September 30, 2023, immediate charges to net income resulting from adverse development that caused the NPR to exceed 100% for certain cohorts were $ 109 million and $ 152 million.

For each of the three and nine months ended September 30, 2022, immediate charges to net income resulting from adverse development that caused the NPR to exceed 100% for certain cohorts were $ 154 million.

For the three and nine months ended September 30, 2023, the portion of losses recognized in a prior period due to NPR exceeding 100% for certain cohorts which, due to favorable development, was reversed through net income were $ 26 million and $ 37 million.

For the three and nine months ended September 30, 2022, the portion of losses recognized in a prior period due to NPR exceeding 100% for certain cohorts which, due to favorable development, was reversed through net income was less than $ 1 million and $ 1 million.

For the three months ended March 31, 2024 and 2023, immediate charges to net income resulting from adverse development that caused the net premium ratio (“NPR”) to exceed 100% for certain cohorts were $ 20 million and $ 13 million.

For the three months ended March 31, 2024 and 2023, the portion of losses recognized in a prior period due to NPR exceeding 100% for certain cohorts which, due to favorable development, was reversed through net income were $ 2 million and $ 11 million.

Shareholders’ Equity

Accumulated other comprehensive income (loss)

The tables below present the changes in AOCI by component for the three and nine months ended September 30, 2022 and 2023 :

Net Unrealized Gains (Losses) on Investments with an Allowance for Credit Losses Net Unrealized Gains (Losses) on Other Investments Cumulative

rates used to

contracts Unrealized Gains (Losses) on Cash Flow Hedges Pension and Postretirement Benefits Foreign Currency Translation Total Accumulated Other Comprehensive Income (Loss)

(In millions)

Balance, July 1, 2022, as reported

$ ( 7 ) $ ( 1,721 ) $ — $ 18 $ ( 625 ) $ ( 175 ) $ ( 2,510 )

Cumulative effect adjustments from changes in accounting standards (Note 1), after tax of $ 0 , $( 108 ), $ 228 , $ 0 , $ 0 and $ 0

365 ( 768 ) ( 403 )

Balance, July 1, 2022, as adjusted

( 7 ) ( 1,356 ) ( 768 ) 18 ( 625 ) ( 175 ) ( 2,913 )

Other comprehensive income (loss) before reclassifications, after tax of $ 1 , $ 487 , $( 265 ), $ 0 , $ 0 , and $ 0

( 1,837 ) 994 6 ( 106 ) ( 943 )

Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $ 0 , $( 11 ), $ 0 , $( 1 ), $( 2 ) and $ 0

( 2 ) 102 ( 2 ) 6 104

Other comprehensive income (loss) ( 2 ) ( 1,735 ) 994 4 6 ( 106 ) ( 839 )

Amounts attributable to noncontrolling interests ( 1 ) 169 ( 104 ) ( 1 ) 10 73

Balance, September 30, 2022

$ ( 10 ) $ ( 2,922 ) $ 122 $ 22 $ ( 620 ) $ ( 271 ) $ ( 3,679 )

Balance, July 1, 2023

$ ( 16 ) $ ( 2,238 ) $ ( 163 ) $ 20 $ ( 609 ) $ ( 154 ) $ ( 3,160 )

Other comprehensive income (loss) before reclassifications, after tax of $ 3 , $ 295 , $( 217 ), $( 2 ), $ 0 and $ 0

( 9 ) ( 1,105 ) 818 ( 1 ) ( 55 ) ( 352 )

Reclassification of losses from accumulated other comprehensive loss, after tax of $( 2 ), $( 6 ), $ 0 , $ 0 , $( 11 ) and $ 0

Other comprehensive income (loss) ( 1 ) ( 1,084 ) 818 ( 1 ) 40 ( 55 ) ( 283 )

Amounts attributable to noncontrolling interests 1 95 ( 69 ) ( 1 ) 5 31

Purchase of CNA shares ( 46 ) ( 1 ) ( 10 ) ( 4 ) ( 61 )

Balance, September 30, 2023

$ ( 16 ) $ ( 3,273 ) $ 585 $ 19 $ ( 580 ) $ ( 208 ) $ ( 3,473 )

The tables below present the changes in Accumulated other comprehensive income (loss) (“AOCI”) by component for the three months ended March 31, 2023 and 2024 :

Net Unrealized Gains (Losses) on Investments with an Allowance for Credit Losses Net Unrealized Gains (Losses) on Other Investments Cumulative

4 unchanged sentences

$ ( 7 ) $ ( 2,469 ) $ — $ 14 $ ( 622 ) $ ( 200 ) $ ( 3,284 )

Cumulative effect adjustments from changes in accounting standards (Note 1), after tax of $ 0 , $( 617 ), $ 1,063 , $ 0 , $ 0 and $ 0

Cumulative effect adjustments from changes in accounting standard s, after tax of $ 0 , $ 0 , $ 11 , $ 0 , $ 0 and $ 0

( 36 ) ( 36 )

3 unchanged sentences

( 8 ) 652 ( 396 ) ( 2 ) 16 262

Reclassification of (gains) losses from accumulated other comprehensive loss, after tax of $ 1 , $( 15 ), $ 0 , $ 0 , $( 5 ) and $ 0

( 3 ) 117 1 18 133

Reclassification of losses from accumulated other comprehensive loss, after tax of $ 0 , $( 4 ), $ 0 , $ 0 , $( 2 ) and $ 0

Other comprehensive income (loss) ( 8 ) 670 ( 396 ) ( 2 ) 9 16 289

Amounts attributable to noncontrolling interests 1 ( 68 ) 39 ( 1 ) ( 2 ) ( 31 )

Balance, September 30, 2022

$ ( 10 ) $ ( 2,922 ) $ 122 $ 22 $ ( 620 ) $ ( 271 ) $ ( 3,679 )

Balance, January 1, 2023, as reported

$ ( 7 ) $ ( 2,469 ) $ — $ 14 $ ( 622 ) $ ( 200 ) $ ( 3,284 )

Cumulative effect adjustments from changes in accounting standards (Note 1), after tax of $ 0 , $ 0 , $ 11 , $ 0 , $ 0 and $ 0

Balance, March 31, 2023

$ ( 14 ) $ ( 1,867 ) $ ( 393 ) $ 12 $ ( 614 ) $ ( 186 ) $ ( 3,062 )

Balance, January 1, 2023, as adjusted

Balance, January 1, 2024

$ ( 12 ) $ ( 1,483 ) $ ( 329 ) $ 9 $ ( 533 ) $ ( 149 ) $ ( 2,497 )

4 unchanged sentences

Amounts attributable to noncontrolling interests 19 ( 29 ) ( 1 ) 3 ( 8 )

Purchase of CNA shares ( 46 ) ( 1 ) ( 10 ) ( 4 ) ( 61 )

Balance, September 30, 2023

Other 1 5 ( 1 ) ( 2 ) 3

Balance, March 31, 2024

$ ( 9 ) $ ( 1,676 ) $ ( 17 ) $ 10 $ ( 530 ) $ ( 179 ) $ ( 2,401 )

5 unchanged sentences

Stock Purchases

Loews Corporation repurchased 11.9 million and 10.5 million shares of its common stock at aggregate costs of $ 711 million and $ 614 million during the nine months ended September 30, 2023 and 2022.

Loews Corporation purchased 4.5 million shares of CNA’s common stock at an aggregate cost of $ 178 million during the nine months ended September 30, 2023.

In June of 2023, Boardwalk Pipelines entered into an amendment to its revolving credit agreement, which extended the maturity date of its revolving credit facility from May 27, 2027 to May 26, 2028, while preserving the two one-year extensions that can be exercised at Boardwalk Pipelines’ election.

The available borrowing capacity under the credit agreement will decrease from $ 1 billion to $ 912 million after May 27, 2027.

In May of 2023 , CNA completed a public offering of $ 400 million aggregate principal amount of its 5.5 % senior notes due June 15, 2033 and in August of 2023, CNA completed a public offering of an additional $ 100 million aggregate principal amount of its 5.5 % senior notes due June 15, 2033.

In May of 2023, Loews Corporation retired at maturity with available cash the outstanding $ 500 million aggregate principal amount of its 2.6 % senior notes.

Loews Corporation repurchased 0.2 million and 8.2 million shares of its common stock at aggregate costs of $ 17 million and $ 486 million during the three months ended March 31, 2024 and 2023.

In February of 2024 , CNA completed a public offering of $ 500 million aggregate principal amount of its 5.1 % senior notes due February 15, 2034 .

CNA intends to use the net proceeds towards retiring the outstanding $ 550 million aggregate principal amount of its 4.0 % senior notes due May 2024.

In February of 2024 , Boardwalk Pipelines completed a public offering of $ 600 million aggregate principal amount of its 5.6 % senior notes due August 1, 2034 .

Boardwalk Pipelines intends to use the net proceeds to retire the outstanding $ 600 million aggregate principal amount of its 5.0 % notes due December 2024 .

Revenue from Contracts with Customers

1 unchanged sentence

The following table presents revenues from contracts with customers disaggregated by revenue type along with the reportable segment and a reconciliation to Operating revenues and other as reported in Note 12 :

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended March 31 2024 2023

(In millions)

Non-insurance warranty – CNA Financial $ 407 $ 407

Transportation and storage of natural gas and NGLs and other services – Boardwalk Pipelines $ 347 $ 329 $ 1,083 $ 1,013

Transportation and storage of natural gas and NGLs and ethane supply and transportation services – Boardwalk Pipelines $ 501 $ 386

Lodging and related services – Loews Hotels & Co 209 185

2 unchanged sentences

Operating revenues and other $ 736 $ 594

Receivables from contracts with customers – As of September 30, 2023 and December 31, 2022, receivables from contracts with customers were approximately $ 194 million and $ 168 million and are included within Receivables on the Consolidated Condensed Balance Sheets.

Deferred revenue – As of September 30, 2023 and December 31, 2022, deferred revenue resulting from contracts with customers was approximately $ 4.8 billion and is reported as Deferred non-insurance warranty revenue and within Other liabilities on the Consolidated Condensed Balance Sheets.

Approximately $ 905 million and $ 1.0 billion of revenues recognized during the nine months ended September 30, 2023 and 2022 were included in deferred revenue as of December 31, 2022 and 2021.

Performance obligations – As of September 30, 2023, approximately $ 14.0 billion of estimated operating revenues is expected to be recognized in the future related to outstanding performance obligations.

The balance relates primarily to revenues for transportation and storage services for natural gas and natural gas liquids and other hydrocarbons (“NGLs”) at Boardwalk Pipelines and non-insurance warranty revenue at CNA.

Approximately $ 0.8 billion will be recognized during

the remaining three months of 2023 , $ 2.6 billion in 2024 and the remainder in following years.

Receivables from contracts with customers – As of March 31, 2024 and December 31, 2023, receivables from contracts with customers were approximately $ 201 million and $ 228 million and are included within Receivables on the Consolidated Condensed Balance Sheets.

Deferred revenue – As of March 31, 2024 and December 31, 2023, deferred revenue resulting from contracts with customers was approximately $ 4.7 billion and $ 4.8 billion and is reported as Deferred non-insurance warranty revenue and within Other liabilities on the Consolidated Condensed Balance Sheets.

Approximately $ 410 million and $ 397 million of revenues recognized during the three months ended March 31, 2024 and 2023 were included in deferred revenue as of December 31, 2023 and 2022.

Performance obligations – As of March 31, 2024, approximately $ 15.1 billion of estimated operating revenues is expected to be recognized in the future related to outstanding performance obligations.

The balance relates primarily to revenues for transportation and storage services for natural gas and natural gas liquids and other hydrocarbons (“NGLs”) and certain ethane supply contracts at Boardwalk Pipelines and non-insurance warranty revenue at CNA.

Approximately $ 2.2 billion will be recognized during the remaining nine months of 2024 , $ 2.5 billion in 2025 and the remainder in following years.

The actual timing of recognition may vary due to factors outside of the Company’s control.

1 unchanged sentence

The Company has several non-contributory defined benefit plans and postretirement benefit plans covering eligible employees and retirees.

The following tables present the components of net periodic (benefit) cost for the defined benefit plans:

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

Pension Benefits

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

(In millions)

Service cost $ 1 $ 1 $ 2 $ 2

Interest cost 28 20 84 57

Expected return on plan assets ( 32 ) ( 41 ) ( 96 ) ( 124 )

Amortization of unrecognized net loss 9 8 27 24

Settlements 47 48 2

Regulatory asset decrease ( 1 ) 1

Net periodic (benefit) cost $ 53 $ ( 13 ) $ 65 $ ( 38 )

During the third quarter of 2023 , the Company terminated a non-contributory defined benefit plan through lump sum settlement payments to certain participants and the transfer of the remaining liability to a third party insurance company through the purchase of group annuity contracts.

The Company recorded a settlement expense of $ 47 million ($ 37 million after-tax) to recognize unrealized losses which were previously included in AOCI.

What changed 10-Q

Item 1. Financial Statements