2 unchanged sentences
CONSOLIDATED CONDENSED BALANCE SHEETS
−Removed: September 30, 2020
+Added: March 31, 2021
December 31, 2020
9 unchanged sentences
Deferred acquisition costs of insurance subsidiaries
+Added: Assets held for sale
Liabilities and Equity:
10 unchanged sentences
Other liabilities
+Added: Liabilities held for sale
Total liabilities
7 unchanged sentences
Retained earnings
−Removed: Accumulated other comprehensive income (loss)
+Added: Accumulated other comprehensive income
Less treasury stock, at cost ( 5,708,164 and 150,000 shares)
5 unchanged sentences
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
−Removed: Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
+Added: Three Months Ended March 31
(In millions, except per share data)
1 unchanged sentence
Net investment income
−Removed: Investment gains (losses) (Note 2)
+Added: Investment gains (losses)
Non-insurance warranty revenue
9 unchanged sentences
Net income (loss) attributable to Loews Corporation
−Removed: Basic and diluted net income (loss) per share
+Added: Basic net income (loss) per share
+Added: Diluted net income (loss) per share
Weighted average shares outstanding:
4 unchanged sentences
Loews Corporation and Subsidiaries
−Removed: CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
−Removed: Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
+Added: CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
+Added: Three Months Ended March 31
(In millions)
Net income (loss)
−Removed: Other comprehensive income (loss), after tax
−Removed: Net unrealized gains (losses) on investments with an allowance for credit losses
−Removed: Net unrealized gains on other investments
−Removed: Total unrealized gains on investments
+Added: Other comprehensive loss, after tax
+Added: Net unrealized losses on investments with an allowance for credit losses
+Added: Net unrealized losses on other investments
+Added: Total unrealized losses on investments
Unrealized gains (losses) on cash flow hedges
1 unchanged sentence
Foreign currency translation
−Removed: Other comprehensive income
−Removed: Comprehensive income (loss)
+Added: Other comprehensive loss
+Added: Comprehensive loss
Amounts attributable to noncontrolling interests
−Removed: Total comprehensive income (loss) attributable to Loews Corporation
+Added: Total comprehensive loss attributable to Loews Corporation
See accompanying Notes to Consolidated Condensed Financial Statements.
6 unchanged sentences
(In millions)
−Removed: Balance, July 1, 2019
−Removed: Other comprehensive income
−Removed: Dividends paid ($ 0.0625 per share)
−Removed: Purchases of Loews Corporation treasury stock
−Removed: Purchases of subsidiary stock from noncontrolling interests
−Removed: Stock-based compensation
−Removed: Balance, September 30, 2019
−Removed: Balance, July 1, 2020
−Removed: Other comprehensive income
+Added: Balance, January 1, 2020, as reported
+Added: Cumulative effect adjustment from change in accounting standards
+Added: Balance, January 1, 2020, as adjusted
+Added: Other comprehensive loss
Dividends paid ($ 0.0625 per share)
Purchases of Loews Corporation treasury stock
+Added: Purchases of subsidiary stock from non- controlling interests
Stock-based compensation
−Removed: Balance, September 30, 2020
−Removed: See accompanying Notes to Consolidated Condensed Financial Statements.
−Removed: Loews Corporation and Subsidiaries
−Removed: CONSOLIDATED CONDENSED STATEMENTS OF EQUITY
−Removed: Loews Corporation Shareholders
−Removed: Comprehensive
−Removed: Income (Loss)
−Removed: Noncontrolling
−Removed: (In millions)
+Added: Balance, March 31, 2020
Balance, January 1, 2021
−Removed: Other comprehensive income
−Removed: Dividends paid ($ 0.1875 per share)
−Removed: Purchases of Loews Corporation treasury stock
−Removed: Purchases of subsidiary stock from noncontrolling interests
−Removed: Stock-based compensation
−Removed: Balance, September 30, 2019
−Removed: Balance, December 31, 2019, as reported
−Removed: Cumulative effect adjustment from change in accounting standards (Note 1)
−Removed: Balance, January 1, 2020, as adjusted
−Removed: Other comprehensive income
+Added: Other comprehensive loss
Dividends paid ($ 0.0625 per share)
−Removed: Deconsolidation of Diamond Offshore
Purchases of Loews Corporation treasury stock
−Removed: Purchases of subsidiary stock from noncontrolling interests
+Added: Purchases of subsidiary stock from non-controlling interests
Stock-based compensation
−Removed: Balance, September 30, 2020
+Added: Balance, March 31, 2021
See accompanying Notes to Consolidated Condensed Financial Statements.
1 unchanged sentence
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31
(In millions)
1 unchanged sentence
Net income (loss)
−Removed: Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities, net
+Added: Adjustments to reconcile net income (loss) to net cash provided by operating activities, net
Changes in operating assets and liabilities, net:
8 unchanged sentences
Proceeds from maturities of fixed maturities
+Added: Purchases of equity securities
+Added: Proceeds from sales of equity securities
Purchases of limited partnership investments
1 unchanged sentence
Purchases of property, plant and equipment
−Removed: Deconsolidation of Diamond Offshore
Change in short term investments
−Removed: Net cash flow used by investing activities
+Added: Net cash flow provided by investing activities
Financing Activities:
5 unchanged sentences
Issuance of debt
−Removed: Net cash flow provided (used) by financing activities
+Added: Net cash flow used by financing activities
Effect of foreign exchange rate on cash
8 unchanged sentences
Its consolidated subsidiaries are engaged in the following lines of business:
−Removed: commercial property and casualty insurance (CNA Financial Corporation (“CNA”), a 89.6 % owned subsidiary);
+Added: commercial property and casualty insurance (CNA Financial Corporation (“CNA”), an 89.5 % owned subsidiary);
transportation and storage of natural gas and natural gas liquids (Boardwalk Pipeline Partners, LP (“Boardwalk Pipelines”), a wholly owned subsidiary);
1 unchanged sentence
and the manufacture of rigid plastic packaging solutions (Altium Packaging LLC (“Altium Packaging”), a 99 % owned subsidiary).
−Removed: Unless the context otherwise requires, the term “Company” as used herein means Loews Corporation including its consolidated subsidiaries and the term “Net income (loss) attributable to Loews Corporation” as used herein means Net income (loss) attributable to Loews Corporation shareholders.
−Removed: In the second quarter of 2020, Diamond Offshore Drilling, Inc.
−Removed: (“Diamond Offshore”) was deconsolidated from the Company’s consolidated financial statements.
+Added: Unless the context otherwise requires, the term “Company” as used herein means Loews Corporation including its consolidated subsidiaries, the term “Net income (loss) attributable to Loews Corporation” as used herein means Net income (loss) attributable to Loews Corporation shareholders and the term “subsidiaries” means Loews Corporation’s consolidated subsidiaries.
+Added: On April 1, 2021, Loews Corporation sold 47 % of its interest in Altium Packaging.
See Note 2 for further discussion.
−Removed: 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, 2020 and December 31, 2019 and results of operations, comprehensive income and changes in shareholders’ equity for the three and nine months ended September 30, 2020 and 2019 and cash flows for the nine months ended September 30, 2020 and 2019.
−Removed: Net income (loss) for the third quarter and first nine months of each of the years is not necessarily indicative of net income (loss) for that entire year.
+Added: As a result of the April 26, 2020 bankruptcy filing of Diamond Offshore Drilling, Inc.
+Added: (“Diamond Offshore”) and certain of its subsidiaries and applicable accounting principles generally accepted in the United States of America (“GAAP”), Diamond Offshore was deconsolidated from Loews Corporation’s consolidated financial statements in the second quarter of 2020.
+Added: Loews Corporation’s operating results for the first quarter of 2020 include the operations of Diamond Offshore.
+Added: During the first quarter of 2020, Diamond Offshore recorded an aggregate asset impairment charge of $ 774 million ($ 408 million after tax and noncontrolling interests), which is reported within Operating expenses and other on the Consolidated Condensed Statements of Operations.
+Added: For additional information regarding the deconsolidation of Diamond Offshore and the Diamond Offshore asset impairments, see Notes 2 and 6 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
+Added: 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, 2021 and December 31, 2020 and results of operations, comprehensive loss and changes in shareholders’ equity and cash flows for the three months ended March 31, 2021 and 2020.
+Added: Net income (loss) for the first quarter of each of the years is not necessarily indicative of net income (loss) for that entire year.
These Consolidated Condensed Financial Statements should be read in conjunction with the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
2 unchanged sentences
Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
−Removed: For the three months ended September 30, 2020 there were 0.4 million shares attributable to employee stock-based compensation awards excluded from the diluted weighted average shares outstanding amounts because the effect would have been antidilutive.
−Removed: For the three months ended September 30, 2019 and the nine months ended September 30, 2020 and 2019 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.
−Removed: Accounting changes – In June of 2016 , the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13 , “Financial Instruments-Credit Losses (Topic 326 ) :
−Removed: Measurement of Credit Losses on Financial Instruments.” The updated accounting guidance requires changes to the recognition of credit losses on financial instruments not accounted for at fair value through net income.
−Removed: For financial assets measured at cost, the expected credit loss model requires immediate recognition of estimated credit losses over the life of the asset and presentation of the asset at the net amount expected to be collected.
−Removed: This new guidance applies to mortgage loan investments, reinsurance and insurance receivables and other financing and trade receivables.
−Removed: For available-for-sale fixed maturity securities carried at fair value, estimated credit losses will continue to be measured at the present value of expected cash flows, however, the other than temporary impairment (“OTTI”) concept has been eliminated.
−Removed: Under the previous guidance, estimated credit impairments resulted in a write down of amortized cost.
−Removed: Under the new guidance, estimated credit losses are recognized through an allowance and reversals of the allowance are permitted if the estimate of credit losses declines.
−Removed: For available-for-sale fixed maturity securities where there is an intent to sell, impairment will continue to result in a write down of amortized cost.
−Removed: On January 1, 2020 , the Company adopted the updated guidance using a modified retrospective method with a cumulative effect adjustment recorded to beginning Retained earnings.
−Removed: Prior period amounts have not been adjusted and continue to be reported in accordance with the previous accounting guidance.
−Removed: A prospective transition approach is required for available-for-sale fixed maturity securities that were purchased with credit deterioration (“PCD assets”) or have recognized an OTTI write down prior to the effective date.
−Removed: The cumulative effect of the accounting change resulted in a $ 5 million decrease in Retained earnings, after tax and noncontrolling interests.
−Removed: The allowance for doubtful accounts for insurance, reinsurance and trade receivables was unchanged as a result of adopting the new guidance.
−Removed: At adoption, an allowance for credit losses of $ 6 million was established for available-for-sale fixed maturity securities that were PCD assets, with a corresponding increase to amortized cost, resulting in no adjustment to the carrying value of the securities.
−Removed: Below is a summary of the significant accounting policies impacted by the adoption of ASU 2016-13 .
−Removed: The allowance for credit losses is a valuation account that is reported as a reduction of a financial asset’s cost basis and is measured on a pool basis when similar risk characteristics exist.
−Removed: The allowance is estimated using relevant available information from both internal and external sources.
−Removed: Historical credit loss experience provides the basis for the estimation of expected credit losses and adjustments may be made to reflect current conditions and reasonable and supportable forecasts.
−Removed: Adjustments to historical loss information are made for additional factors that come to the Company’s attention.
−Removed: This could include significant shifts in counterparty financial strength ratings, aging of past due receivables, amounts sent to collection agencies, or other underlying portfolio changes.
−Removed: Current and forecast economic conditions are considered, using a variety of economic metrics and forecast indices.
−Removed: The sensitivity of expected credit losses relative to changes to the forecast of economic conditions can vary by financial asset class.
−Removed: A reasonable and supportable forecast period is up to 24 months from the balance sheet date.
−Removed: After the forecast period, the Company reverts to historical credit experience.
−Removed: Collateral arrangements such as letters of credit and amounts held in beneficiary trusts to mitigate credit risk are considered in the estimate of the net amount expected to be collected.
−Removed: A policy election has been made to present accrued interest balances separately from the amortized cost basis of assets, and a practical expedient has been elected to exclude the accrued interest from the tabular disclosures for mortgage loans and available-for-sale securities.
−Removed: An election has been made not to estimate an allowance for credit losses on accrued interest receivables.
−Removed: The accrual of interest income is discontinued and the asset is placed on nonaccrual status within 90 days of the interest becoming delinquent.
−Removed: Interest accrued but not received for assets on nonaccrual status is reversed through Net investment income.
−Removed: Interest received for assets that are on nonaccrual status is recognized as payment is received.
−Removed: The asset is returned to accrual status when the principal and interest amounts contractually due are brought current, and future payments are expected.
−Removed: Interest receivables are presented in Receivables on the Consolidated Condensed Balance Sheet.
−Removed: See Notes 3 and 10 for more information on credit losses.
−Removed: Recently issued ASUs – In August of 2018 , the FASB issued ASU 2018-12 , “Financial Services – Insurance (Topic 944 ) :
+Added: For the three months ended March 31, 2021 there were no shares attributable to employee stock-based compensation awards excluded from the diluted weighted average shares outstanding amounts because the effect would have been antidilutive.
+Added: Recently issued ASUs – 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.
1 unchanged sentence
The effect of changes in cash flow assumptions will be recorded in Net income and the effect of changes in discount rate assumptions will be recorded in Other comprehensive income (“OCI”).
−Removed: This guidance is effective for interim and annual periods beginning after December 15, 2021, however the FASB has approved a one year deferral of the effective date.
−Removed: Early adoption is permitted.
−Removed: The Company may elect to apply the guidance using either a modified retrospective transition method or a full retrospective transition method.
+Added: This guidance is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted.
+Added: The guidance may be applied using either a modified retrospective transition method or a full retrospective transition method.
The guidance requires restatement of prior periods presented.
−Removed: The Company plans to use the modified retrospective transition method at adoption and is currently evaluating the effect the updated guidance will have on its consolidated financial statements, including increased disclosure requirements.
+Added: The Company plans to adopt on the effective date, using the modified retrospective transition method and is currently evaluating the effect the updated guidance will have on its consolidated financial statements, including the increased disclosure requirements.
The annual updating of cash flow assumptions is expected to increase income statement volatility.
While the requirements of the new guidance represent a material change from existing accounting guidance, the underlying economics of the business and related cash flows will be unchanged.
−Removed: Deconsolidation of Diamond Offshore
−Removed: On April 26, 2020 (the “Filing Date”), Diamond Offshore and certain of its direct and indirect subsidiaries filed voluntary petitions in the United States Bankruptcy Court for the Southern District of Texas seeking relief under Chapter 11 of the United States Bankruptcy Code (the “Chapter 11 Filing”).
−Removed: As a result of Diamond Offshore’s Chapter 11 Filing and applicable U.S.
−Removed: generally accepted accounting principles, Loews Corporation no longer controls Diamond Offshore for accounting purposes and, therefore, Diamond Offshore was deconsolidated from its consolidated financial statements effective as of the Filing Date.
−Removed: See Note 14 for Diamond Offshore’s revenues and expenses through the Filing Date.
−Removed: Through the Filing Date, Diamond Offshore’s results were included in Loews Corporation’s consolidated financial statements and Loews Corporation recognized in its earnings its proportionate share of Diamond Offshore’s losses through such date.
−Removed: The deconsolidation resulted in the recognition of a loss of $ 1.2 billion ($ 957 million after tax) during the nine months ended September 30, 2020, which is reported within Investment gains (losses) on the Consolidated Condensed Statements of Operations.
−Removed: This loss represents the difference between the carrying value and the estimated fair value, which was immaterial, of Loews Corporation’s investment in equity securities of Diamond Offshore as of the Filing Date.
+Added: Significant Transaction
+Added: Altium Packaging
+Added: On March 12, 2021, Loews Corporation entered into a definitive agreement to sell 47 % of its interest in Altium Packaging to GIC, Singapore’s sovereign wealth fund.
+Added: On April 1, 2021, the transaction closed and Loews Corporation received approximately $ 420 million in cash consideration, subject to expenses and post-closing adjustments.
+Added: Loews Corporation will share certain participating rights with GIC related to capital allocation and other decisions by Altium Packaging.
+Added: Therefore, in accordance with Accounting Standards Codification (“ASC”) 810, “Consolidation,” Altium Packaging will be deconsolidated from Loews Corporation’s consolidated financial statements effective as of April 1, 2021.
+Added: The assets and liabilities of Altium Packaging have been classified as held for sale at March 31, 2021, and a deferred tax liability of $ 35 million was recorded in the three months ended March 31, 2021.
+Added: Assets held for sale of $ 1.8 billion primarily consist of property, plant and equipment of $ 0.5 billion, goodwill of $ 0.4 billion, intangible assets of $ 0.5 billion and other assets of $ 0.4 billion.
+Added: Liabilities held for sale of $ 1.5 billion primarily consist of $ 1.1 billion of long term debt and other liabilities of $ 0.4 billion.
+Added: The transaction will result in a pretax gain of approximately $ 560 million to be recorded in the second quarter of 2021 and the retained 53 % investment in Altium Packaging will initially be recorded at an estimated fair value of $ 475 million.
+Added: The gain will be recorded in Investment gains (losses) on the Consolidated Condensed Statement of Operations.
+Added: Effective April 1, 2021, Loews Corporation’s investment in Altium Packaging will be accounted for under the equity method of accounting.
Net investment income is as follows:
−Removed: Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
+Added: Three Months Ended March 31
(In millions)
3 unchanged sentences
Equity securities
−Removed: Income from trading portfolio (a)
+Added: Income (loss) from trading portfolio (a)
Total investment income
1 unchanged sentence
Net investment income
−Removed: Net unrealized gains (losses) related to changes in fair value on securities still held were $ 11 and $ 17 for the three months ended September 30, 2020 and 2019 and $ 13 and $ 55 for the nine months ended September 30, 2020 and 2019 .
+Added: Net unrealized gains (losses) related to changes in fair value on securities still held were $ 32 and $( 117 ) for the three months ended March 31, 2021 and 2020.
Investment gains (losses) are as follows:
−Removed: Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
+Added: Three Months Ended March 31
(In millions)
3 unchanged sentences
Short term investments and other
−Removed: Deconsolidation of Diamond Offshore (see Note 2)
Investment gains (losses) (a)
−Removed: Gross investment gains on available-for-sale securities were $ 44 and $ 34 for the three months ended September 30, 2020 and 2019 and $ 175 and $ 98 for the nine months ended September 30, 2020 and 2019 .
−Removed: Gross investment losses on available-for-sale securities were $ 18 and $ 31 for the three months ended September 30, 2020 and 2019 and $ 207 and $ 104 for the nine months ended September 30, 2020 and 2019.
−Removed: During the three and nine months ended September 30, 2020 , $ 25 of investment gains and $ 44 of investment losses were recognized due to the change in fair value of non-redeemable preferred stock still held as of September 30, 2020.
−Removed: During the three and nine months ended September 30, 2019, $ 7 and $ 60 of investment gains were recognized due to the change in fair value of non-redeemable preferred stock still held as of September 30, 2019 .
−Removed: The allowance for credit loss related to available-for-sale fixed maturity securities is the difference between the present value of cash flows expected to be collected and the amortized cost basis.
−Removed: All available evidence is considered when determining whether an investment requires a credit loss write-down or allowance to be recorded.
−Removed: Examples of such evidence may include the financial condition and near term prospects of the issuer, whether the issuer is current with interest and principal payments, credit ratings on the security or changes in ratings over time, general market conditions and industry, sector or other specific factors and whether it is likely that the amortized cost will be recovered through the collection of cash flows.
−Removed: Changes in the allowance are presented as a component of Investment gains (losses) on the Consolidated Condensed Statements of Operations.
−Removed: The following tables present the activity related to the allowance on available-for-sale securities with credit impairments and PCD assets.
−Removed: Accrued interest receivables on available-for-sale fixed maturity securities totaled $ 390 million and is excluded from the estimate of expected credit losses and the amortized cost basis in the tables within this Note.
−Removed: Three months ended September 30 , 2020
+Added: Gross investment gains on available-for-sale securities were $ 58 and $ 29 for the three months ended March 31, 2021 and 2020.
+Added: Gross investment losses on available-for-sale securities were $ 20 and $ 104 for the three months ended March 31, 2021 and 2020.
+Added: During the three months ended March 31, 2021 and 2020, $ 2 of investment gains and $ 133 of investment losses were recognized due to the change in fair value of non-redeemable preferred stock still held as of March 31, 2021 and 2020 .
+Added: The following tables present the activity related to the allowance on available-for-sale securities with credit impairments and purchased credit-deteriorated (“PCD”) assets.
+Added: Accrued interest receivables on available-for-sale fixed maturity securities totaled $ 389 million, $ 371 million and $ 390 million as of March 31, 2021, December 31, 2020 and March 31, 2020 and are excluded from the estimate of expected credit losses and the amortized cost basis in the tables within this Note.
+Added: Three months ended March 31, 2021
Corporate and
1 unchanged sentence
Allowance for credit losses:
−Removed: Balance as of July 1, 2020
+Added: Balance as of January 1, 2021
Additions to the allowance for credit losses:
−Removed: For securities for which credit losses were not previously recorded
−Removed: For available-for-sale securities accounted for as PCD assets
+Added: Securities for which credit losses were not previously recorded
+Added: Available-for-sale securities accounted for as PCD assets
Reductions to the allowance for credit losses:
Securities sold during the period (realized)
−Removed: Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period
+Added: Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis
+Added: Additional decreases to the allowance for credit losses on securities that had an allowance recorded in a previous period
Total allowance for credit losses
−Removed: Nine months ended September 30 , 2020
+Added: Three months ended March 31, 2020
Allowance for credit losses:
−Removed: Balance as of December 31, 2019
+Added: Balance as of January 1, 2020
Additions to the allowance for credit losses:
Impact of adopting ASC 326
−Removed: For securities for which credit losses were not previously recorded
−Removed: For available-for-sale securities accounted for as PCD assets
+Added: Securities for which credit losses were not previously recorded
+Added: Available-for-sale securities accounted for as PCD assets
Reductions to the allowance for credit losses:
1 unchanged sentence
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis
−Removed: Additional increases or (decrease) to the allowance for credit losses on securities that had an allowance recorded in a previous period
Total allowance for credit losses
1 unchanged sentence
The table includes losses on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date:
−Removed: Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
+Added: Three Months Ended March 31
(In millions)
2 unchanged sentences
Impairment losses recognized in earnings
+Added: There were no losses recognized on mortgage loans during the three months ended March 31, 2021.
+Added: During the three months ended March 31, 2020, $ 13 million of losses were recognized related to mortgage loans due to changes in expected credit losses.
The amortized cost and fair values of fixed maturity securities are as follows:
−Removed: September 30, 2020
+Added: March 31 , 2021
(In millions)
9 unchanged sentences
Foreign government
+Added: Redeemable preferred stock
Fixed maturities available-for-sale
12 unchanged sentences
Foreign government
−Removed: Redeemable preferred stock
Fixed maturities available-for-sale
Fixed maturities trading
−Removed: Total fixed maturities
−Removed: On January 1, 2020, the Company adopted ASU 2016-13;
−Removed: The Unrealized OTTI Losses (Gains) column that tracked subsequent valuation changes on securities for which a credit loss had previously been recorded has been replaced with the Allowance for Credit Losses column.
−Removed: Prior period amounts were not adjusted for the adoption of this standard.
+Added: Total fixed maturity securities
The net unrealized gains on available-for-sale investments included in the tables above are recorded as a component of Accumulated other comprehensive income (loss) (“AOCI”).
1 unchanged sentence
To the extent that unrealized gains on fixed income securities supporting long term care products and structured settlements not funded by annuities would result in a premium deficiency if those gains were realized, a related increase in Insurance reserves is recorded, net of tax and noncontrolling interests, as a reduction of net unrealized gains through Other comprehensive income (loss) (“Shadow Adjustments”).
−Removed: As of September 30, 2020 and December 31, 2019, the net unrealized gains on investments included in AOCI were correspondingly reduced by Shadow Adjustments of $ 2.3 billion and $ 2.0 billion (after tax and noncontrolling interests).
+Added: As of March 31, 2021 and December 31, 2020, the net unrealized gains on investments included in AOCI were correspondingly reduced by Shadow Adjustments of $ 2.1 billion and $ 2.5 billion (after tax and noncontrolling interests).
The available-for-sale securities in a gross unrealized loss position for which an allowance for credit losses has not been recorded are as follows:
−Removed: September 30, 2020
+Added: March 31 , 2021
(In millions)
22 unchanged sentences
Total fixed maturity securities
−Removed: Based on current facts and circumstances, the Company believes the unrealized losses presented in the September 30, 2020 securities in a gross unrealized loss position table above are not indicative of the ultimate collectability of the current amortized cost of the securities, but rather are attributable to changes in interest rates, credit spreads and other factors.
−Removed: The Company has no current intent to sell securities with unrealized losses, nor is it more likely than not that it will be required to sell prior to recovery of amortized cost;
−Removed: accordingly, the Company has determined that there are no additional impairment losses to be recorded as of September 30, 2020.
+Added: Based on current facts and circumstances, the Company believes the unrealized losses presented in the March 31, 2021 securities in a gross unrealized loss position table above are not indicative of the ultimate collectability of the current amortized cost of the securities, but rather are attributable to changes in interest rates, credit spreads and other factors.
+Added: 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;
+Added: accordingly, it was determined that there are no additional impairment losses to be recorded at March 31, 2021.
Contractual Maturity
The following table presents available-for-sale fixed maturity securities by contractual maturity.
−Removed: September 30, 2020
+Added: March 31, 2021
December 31, 2020
7 unchanged sentences
Mortgage Loans
−Removed: The allowance for expected credit losses on mortgage loans 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 (“LTV”) ratios.
−Removed: The DSCR compares a property’s net operating income to its debt service payments, including principal and interest.
−Removed: The LTV ratio compares the current unpaid principal balance of the loan to the estimated fair value of the underlying property collateralizing the loan.
−Removed: The pools developed to measure the credit loss allowance use increments of DSCR and LTV to draw distinctions between risk levels.
−Removed: Changes in the allowance for mortgage loans are presented as a component of Investment gains (losses) on the Consolidated Condensed Statements of Operations.
−Removed: Mortgage loans are included in Other invested assets on the Consolidated Condensed Balance Sheets.
The following table presents the amortized cost basis of mortgage loans for each credit quality indicator by year of origination.
+Added: The primary credit quality indicators utilized are debt service coverage ratios (“DSCR”) and loan-to-value (“LTV”) ratios:
Mortgage Loans Amortized Cost Basis by Origination Year (a)
−Removed: As of September 30, 2020
+Added: As of March 31 , 2021
(In millions)
9 unchanged sentences
LTV greater than 65%
−Removed: The values in the table above reflect DSCR on a standardized amortization period and LTV based on the most recent appraised values trended forward using changes in a commercial real estate price index.
+Added: The values in the table above reflect DSCR on a standardized amortization period and LTV ratios based on the most recent appraised values trended forward using changes in a commercial real estate price index.
Derivative Financial Instruments
2 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.
−Removed: September 30, 2020
+Added: March 31, 2021
December 31, 2020
3 unchanged sentences
With hedge designation:
−Removed: Interest rate swaps
+Added: Interest rate swaps (a)
Without hedge designation:
−Removed: Equity Options – purchased
+Added: Equity markets:
+Added: Options – purchased
Interest rate swaps
Embedded derivative on funds withheld liability
+Added: As of March 31, 2021, Interest rate swaps exclude amounts classified as held for sale.
+Added: See Note 2 for further discussion.
Investment Commitments
1 unchanged sentence
These investments are recorded once funded, and the related commitments may include future capital calls from various third-party limited partnerships, signed and accepted mortgage loan applications and obligations related to private placement securities.
−Removed: As of September 30, 2020, commitments to purchase or fund were approximately $ 1.2 billion and to sell were approximately $ 55 million under the terms of these investments.
+Added: As of March 31, 2021, commitments to purchase or fund were approximately $ 1.4 billion and to sell were approximately $ 100 million under the terms of these investments.
Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
6 unchanged sentences
Prices may fall within Level 1, 2 or 3 depending upon the methodology and inputs used to estimate fair value for each specific security.
−Removed: In general, the Company seeks to price securities using third party pricing services.
+Added: In general, securities are priced using third party pricing services.
Securities not priced by pricing services are submitted to independent brokers for valuation and, if those are not available, internally developed pricing models are used to value assets using a methodology and inputs the Company believes market participants would use to value the assets.
2 unchanged sentences
Procedures may include:
−Removed: (i) the review of pricing service methodologies or broker pricing qualifications, (ii) back-testing, where past fair value estimates are compared to actual transactions executed in the market on similar dates, (iii) exception reporting, where period-over-period changes in price are reviewed and challenged with the pricing service or broker based on exception criteria and (iv) detailed analysis, where the Company performs an independent analysis of the inputs and assumptions used to price individual securities.
+Added: (i) the review of pricing service methodologies or broker pricing qualifications, (ii) back-testing, where past fair value estimates are compared to actual transactions executed in the market on similar dates, (iii) exception reporting, where period-over-period changes in price are reviewed and challenged with the pricing service or broker based on exception criteria and (iv) detailed analysis, where an independent analysis of the inputs and assumptions used to price individual securities is performed.
Assets and liabilities measured at fair value on a recurring basis are summarized in the following tables.
1 unchanged sentence
Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.
−Removed: September 30, 2020
+Added: March 31, 2021
(In millions)
6 unchanged sentences
Equity securities
−Removed: Short term and other
−Removed: Payable to brokers
+Added: Short term and other (a)
+Added: Payable to brokers (a)
+Added: As of March 31, 2021, Short term and other and Payable to brokers exclude amounts classified as held for sale.
+Added: See Note 2 for further discussion.
December 31, 2020
9 unchanged sentences
Payable to brokers
−Removed: 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, 2020 and 2019:
−Removed: Investment Gains
−Removed: (Losses) and Net Change
−Removed: in Unrealized Investment
−Removed: Gains (Losses)
−Removed: Recognized in
−Removed: (Loss) on Level
−Removed: Recognized in
−Removed: Comprehensive
−Removed: Income (Loss)
−Removed: (In millions)
−Removed: Fixed maturity securities:
−Removed: Corporate bonds and other
−Removed: States, municipalities and political subdivisions
−Removed: Fixed maturities available-for-sale
−Removed: Fixed maturities trading
−Removed: Total fixed maturities
−Removed: Equity securities
−Removed: Investment Gains
−Removed: (Losses) and Net Change
−Removed: in Unrealized Investment
−Removed: Gains (Losses)
−Removed: Recognized in
−Removed: (Loss) on Level
−Removed: Recognized in
−Removed: Comprehensive
−Removed: Income (Loss)
−Removed: (In millions)
−Removed: Fixed maturity securities:
−Removed: Corporate bonds and other
−Removed: Fixed maturities available-for-sale
−Removed: Fixed maturities trading
−Removed: Total fixed maturities
−Removed: Equity securities
−Removed: Investment Gains
−Removed: (Losses) and Net Change
−Removed: in Unrealized Investment
−Removed: Gains (Losses)
+Added: The following tables present reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2021 and 2020:
+Added: Net Realized Investment
+Added: Gains (Losses) and Net
+Added: Change in Unrealized
+Added: Investment Gains (Losses)
Recognized in
11 unchanged sentences
Equity securities
−Removed: Investment Gains
−Removed: (Losses) and Net Change
−Removed: in Unrealized Investment
−Removed: Gains (Losses)
+Added: Net Realized Investment
+Added: Gains (Losses) and Net
+Added: Change in Unrealized
+Added: Investment Gains (Losses)
Recognized in
56 unchanged sentences
The weighted average rate is calculated based on fair value.
−Removed: September 30, 2020
+Added: March 31 , 2021
(In millions)
14 unchanged sentences
Estimated Fair Value
−Removed: September 30, 2020
+Added: March 31 , 2021
(In millions)
Other invested assets, primarily mortgage loans
−Removed: Short term debt
−Removed: Long term debt
+Added: Short term debt (a)
+Added: Long term debt (a)
December 31 , 2020
2 unchanged sentences
Long term debt
−Removed: Property, Plant and Equipment
−Removed: Asset Impairments
−Removed: During the first quarter of 2020, the offshore drilling business climate experienced a significant adverse change, primarily as a result of the market impacts of the oil price war between Saudi Arabia and Russia and regulatory, market and commercial challenges arising as a result of the COVID-19 pandemic and efforts to mitigate the spread of the virus, both of which resulted in a dramatic decline in oil prices.
−Removed: During the first quarter of 2020, five drilling rigs that
−Removed: had indicators of impairment were evaluated.
−Removed: Based on the assumptions and analysis at that time, it was determined that the carrying values of four of these rigs were impaired.
−Removed: The fair values of these rigs were estimated using an income approach, whereby the fair value of each rig was estimated based on a calculation of the rig’s future net cash flows.
−Removed: These calculations utilized significant unobservable inputs, including management’s assumptions related to estimated dayrate revenue, rig utilization, estimated capital expenditures, repair and regulatory survey costs, as well as estimated proceeds that may be received on ultimate disposition of each rig.
−Removed: These fair value estimates were representative of Level 3 fair value measurements due to the significant level of estimation involved and the lack of transparency as to the inputs used.
−Removed: An aggregate asset impairment charge of $ 774 million ( $ 408 million after tax and noncontrolling interests) was recorded for the nine months ended September 30, 2020 and is reported within Operating expenses and other on the Consolidated Condensed Statements of Operations.
+Added: As of March 31, 2021, Short and Long term debt exclude amounts classified as held for sale.
+Added: See Note 2 for further discussion.
Claim and Claim Adjustment Expense Reserves
1 unchanged sentence
Reserve projections are based primarily on detailed analysis of the facts in each case, experience with similar cases and various historical development patterns.
−Removed: 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, including inflation and public attitudes.
+Added: Consideration is given to historical patterns such as claim reserving
+Added: trends and settlement practices, loss payments, pending levels of unpaid claims and product mix, as well as court decisions and economic conditions, including inflation and public attitudes.
All of these factors can affect the estimation of claim and claim adjustment expense reserves.
7 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.
−Removed: The Company reported catastrophe losses, net of reinsurance, of $ 160 million and $ 32 million for the three months ended September 30, 2020 and 2019 and $ 536 million and $ 128 million for the nine months ended September 30, 2020 and 2019.
−Removed: Net catastrophe losses for the three months ended September 30, 2020 were driven by severe weather-related events, primarily Hurricanes Laura, Isaias and Sally and the Midwest derecho.
−Removed: Net catastrophe losses for the nine months ended September 30, 2020 included $ 273 million primarily related to severe weather-related events, $ 195 million related to the COVID-19 pandemic and $ 68 million related to civil unrest.
−Removed: Net catastrophe losses in 2019 primarily related to U.S.
+Added: The Company reported catastrophe losses, net of reinsurance, of $ 125 million and $ 75 million for the three months ended March 31, 2021 and 2020.
+Added: Net catastrophe losses for the three months ended March 31, 2021 were primarily driven by Winter Storms Uri and Viola.
+Added: Net catastrophe losses for the three months ended March 31, 2020 included $ 13 million related to the coronavirus (“COVID-19”) pandemic, with the remaining $ 62 million related primarily to U.S.
weather related events.
1 unchanged sentence
The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of other insurance operations.
−Removed: Nine Months Ended September 30
+Added: Three Months Ended March 31
(In millions)
1 unchanged sentence
Net reserves, beginning of year
+Added: Reduction of net reserves due to the excess workers’ compensation loss portfolio transfer
Net incurred claim and claim adjustment expenses:
11 unchanged sentences
Gross reserves, end of period
−Removed: 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, uncollectible reinsurance and benefit expenses related to future policy benefits, which are not reflected in the table above.
+Added: 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, the loss on the excess workers’ compensation loss portfolio transfer, uncollectible reinsurance and benefit expenses related to future policy benefits, which are not reflected in the table above .
Net Prior Year Development
1 unchanged sentence
These changes can be favorable or unfavorable.
−Removed: Favorable net prior year development of $ 15 million and unfavorable net prior year development of $ 16 million was recorded for commercial property and casualty operations (“Property & Casualty Operations”) for the three months ended September 30, 2020 and 2019 and favorable net prior year development of $ 8 million and $ 29 million was recorded for the nine months ended September 30, 2020 and 2019.
+Added: Favorable net prior year development of $ 15 million was recorded for commercial property and casualty operations (“Property & Casualty Operations”) for the three months ended March 31, 2021 and 2020.
The following table and discussion present details of the net prior year claim and claim adjustment expense reserve development in Property & Casualty Operations:
−Removed: Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
+Added: Three Months Ended March 31
(In millions)
2 unchanged sentences
Commercial auto
−Removed: General liability
Workers’ compensation
1 unchanged sentence
Total pretax (favorable) unfavorable development
−Removed: Unfavorable development in medical professional liability was primarily due to higher than expected frequency of large losses in recent accident years and unfavorable development on a latent claim for an older accident year.
−Removed: Favorable development in surety was due to lower than expected frequency and lack of systemic activity for accident years 2019 and prior.
−Removed: Unfavorable development in general liability was primarily due to increased bodily injury severities in accident years 2012 through 2016 and higher than expected frequency and severity in CNA’s umbrella business in accident years 2015 through 2019.
−Removed: Favorable development in workers’ compensation was due to favorable medical trends driving lower than expected severity in multiple accident years.
−Removed: Unfavorable development in medical professional liability was primarily due to higher than expected indemnity severity in accident years 2016 through 2018 in CNA’s aging services business.
−Removed: Favorable development in other professional liability and management liability was due to lower than expected large claim losses in recent accident years in CNA’s public company directors and officers liability (“D&O”) business.
−Removed: Favorable development in surety was due to lower than expected frequency for accident years 2015 through 2018.
−Removed: Favorable development in commercial auto was primarily due to a decline in bodily injury frequency in accident year 2018 and continued lower than expected severity across accident years 2013 through 2016.
−Removed: Unfavorable development in general liability was primarily due to higher than expected emergence in mass tort exposures related to accident years 2009 and prior, 2015 and 2016.
−Removed: Unfavorable development in other was primarily due to higher than expected severity in aging services related to auto liability coverages.
−Removed: Unfavorable development in medical professional liability was primarily due to higher than expected frequency of large losses in recent accident years, unfavorable development on a latent claim for an older accident year and unfavorable outcomes on specific claims in accident years 2015 and 2016 in CNA’s aging services business.
−Removed: Favorable development in surety was due to lower than expected frequency and lack of systemic activity for accident years 2019 and prior.
−Removed: Unfavorable development in commercial auto was due to unfavorable claim severity in CNA’s middle market and construction business in accident years 2017 through 2019.
−Removed: Unfavorable development in general liability was driven by higher than expected emergence in mass tort exposures, primarily due to New York reviver statute-related claims from accident years prior to 2010, increased bodily injury severities in accident years 2012 through 2016 and higher than expected frequency and severity in CNA’s umbrella business in accident years 2015 through 2019.
−Removed: Favorable development in workers’ compensation was due to favorable medical trends driving lower than expected severity in multiple accident years.
−Removed: Unfavorable development in property and other was primarily due to higher than expected large loss activity in accident year 2019 in CNA’s middle market, national accounts and marine business units.
−Removed: Unfavorable development in medical professional liability was primarily due to higher than expected indemnity severity in accident years 2016 through 2018 in CNA’s aging services business, higher than expected severity in accident year 2013 in CNA’s allied healthcare business, unfavorable outcomes on individual claims and higher than expected severity in accident year 2017 in CNA’s dentists business.
−Removed: Favorable development in other professional liability and management liability was primarily due to lower than expected claim frequency and favorable outcomes on individual claims in accident years 2017 and prior related to financial institutions and lower than expected large claim losses in recent accident years in CNA’s public company D&O business.
−Removed: Favorable development in surety was due to lower than expected frequency for accident years 2018 and prior.
−Removed: Favorable development in commercial auto was primarily due to a decline in bodily injury frequency in accident year 2018 and continued lower than expected severity across accident years 2016 and prior.
−Removed: Unfavorable development in general liability was primarily due to higher than expected emergence in mass tort exposures as well as higher than expected large loss experience in CNA’s excess and umbrella business in accident year 2017.
−Removed: Unfavorable development in other was primarily due to higher than expected severity in aging services related to auto liability coverages and higher than expected claims in Hardy on 2018 accident year catastrophes in property partially offset by favorable development in casualty, driven by lower than expected large losses and claim severity in accident years 2014 and prior in Hardy and Europe.
−Removed: Asbestos and Environmental Pollution (“A&EP”) Reserves
−Removed: In 2010, Continental Casualty Company (“CCC”) together with several insurance subsidiaries completed a transaction with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc., under which substantially all of the legacy A&EP liabilities were ceded to NICO through a loss portfolio transfer (“loss portfolio transfer” or “LPT”).
+Added: Favorable development in surety was primarily due to lower than expected frequency and lack of systemic activity in recent accident years.
+Added: Unfavorable development in medical professional liability was primarily due to unfavorable outcomes on specific claims in accident years 2015 and 2016 in the aging services business.
+Added: Favorable development in surety was primarily due to lower than expected frequency for accident years 2017 and prior.
+Added: Favorable development in workers’ compensation was due to favorable medical trends driving lower than expected severity in accident years 2016 through 2018.
+Added: Asbestos & Environmental Pollution (“A&EP”) Reserves
+Added: In 2010, Continental Casualty Company (“CCC”) together with several insurance subsidiaries completed a transaction with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc., under which substantially all of the legacy A&EP liabilities were ceded to NICO through a loss portfolio transfer (“LPT”).
At the effective date of the transaction, approximately $ 1.6 billion of net A&EP claim and allocated claim adjustment expense reserves were ceded to NICO under a retroactive reinsurance agreement with an aggregate limit of $ 4.0 billion.
8 unchanged sentences
The effect of the deferred retroactive reinsurance benefit is recorded in Insurance claims and policyholders’ benefits on the Consolidated Condensed Statements of Operations.
−Removed: The impact of the LPT on the Consolidated Condensed Statements of Operations was the recognition of a retroactive reinsurance benefit of $ 9 million and $ 7 million for the three months ended September 30, 2020 and 2019 and $ 43 million for the nine months ended September 30, 2020 and 2019.
−Removed: As of September 30, 2020 and December 31, 2019, the cumulative amounts ceded under the LPT were $ 3.2 billion.
−Removed: The unrecognized deferred retroactive reinsurance benefit was $ 349 million and $ 392 million as of September 30, 2020 and December 31, 2019 and is included within Other liabilities on the Consolidated Condensed Balance Sheets.
+Added: The impact of the LPT on the Consolidated Condensed Statements of Operations was the recognition of a retroactive reinsurance benefit of $ 10 million and $ 14 million for the three months ended March 31, 2021 and 2020.
+Added: As of March 31, 2021 and December 31, 2020, the cumulative amounts ceded under the LPT were $ 3.3 billion.
+Added: The unrecognized deferred retroactive reinsurance benefit was $ 388 million and $ 398 million as of March 31, 2021 and December 31, 2020 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.
−Removed: The fair value of the collateral trust account was $ 3.5 billion and $ 3.7 billion as of September 30, 2020 and December 31, 2019.
+Added: The fair value of the collateral trust account was $ 4.6 billion and $ 4.2 billion as of March 31, 2021 and December 31, 2020.
In addition, Berkshire Hathaway Inc.
1 unchanged sentence
NICO is responsible for claims handling and billing and collection from third-party reinsurers related to the majority of the Company’s A&EP claims.
−Removed: Life & Group Policyholder Reserves
−Removed: 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.
−Removed: Long term care policies provide benefits for nursing homes, assisted living facilities and home health care subject to various daily and lifetime caps.
−Removed: 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.
−Removed: CNA maintains both claim and claim adjustment expense reserves as well as future policy benefit reserves for policyholder benefits for its long term care business.
−Removed: 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.
−Removed: In developing the claim and claim adjustment expense reserve estimates for long term care policies, CNA’s actuaries perform a detailed claim experience study on an annual basis.
−Removed: The study reviews the sufficiency of existing reserves for policyholders currently on claim and includes an evaluation of expected benefit utilization and claim duration.
−Removed: In addition, claim and claim adjustment expense reserves are also maintained for the structured settlement obligations.
−Removed: In developing the claim and claim adjustment expense reserve estimates for structured settlement obligations, CNA’s actuaries monitor mortality experience on an annual basis.
−Removed: CNA’s recorded claim and claim adjustment expense reserves reflect management’s best estimate after incorporating the results of the most recent studies.
−Removed: CNA’s most recent annual claim experience studies were completed in the third quarter of 2020 and resulted in a $ 46 million pretax increase in claim and claim adjustment expense reserve estimates for structured settlement obligations primarily due to lower discount rate assumptions and mortality assumption changes and a $ 37 million pretax reduction in claim and claim adjustment expense reserves for long term care policies primarily due to lower claim severity than anticipated in the reserve estimates.
−Removed: CNA’s 2019 annual claim experience studies were completed in the third quarter of 2019 and resulted in a $ 56 million pretax reduction in claim and claim adjustment expense reserves for long term care policies primarily due to lower claim severity than anticipated in the reserve estimates.
−Removed: Future policy benefit reserves represent the active life reserves related to CNA’s long term care policies for policyholders that are not currently receiving benefits, which represent the present value of expected future benefit payments and expenses less expected future premium.
−Removed: The determination of these reserves requires management to make estimates and assumptions about expected investment and policyholder experience over the life of the contract.
−Removed: Since many of these contracts may be in force for several decades, these assumptions are subject to significant estimation risk.
−Removed: The actuarial assumptions that management believes are subject to the most variability are morbidity, persistency, discount rates and anticipated future premium rate increases.
−Removed: Morbidity is the frequency and severity of injury, illness, sickness and diseases contracted.
−Removed: Persistency is the percentage of policies remaining in force and can be affected by policy lapses, benefit reductions and death.
−Removed: 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.
−Removed: Future premium rate increases are generally subject to regulatory approval, and therefore the exact timing and size of the approved rate increases are unknown.
−Removed: As a result of this variability, CNA’s long term care future policy benefit reserves may be subject to material increases if actual experience develops adversely to CNA’s expectations.
−Removed: Annually, in the third quarter, management assesses the adequacy of its long term care future policy benefit reserves by performing a gross premium valuation (“GPV”) to determine if there is a premium deficiency.
−Removed: Under the GPV, management estimates required reserves using best estimate assumptions as of the date of the assessment without provisions for adverse deviation.
−Removed: The GPV required reserves are then compared to the existing recorded reserves.
−Removed: 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.
−Removed: Any such increase is reflected in the Company’s results of operations in the period in which the need for such adjustment is determined.
−Removed: If the GPV required reserves are less than the existing recorded reserves, assumptions remain locked in and no adjustment is required.
−Removed: Periodically, management engages independent third parties to assess the appropriateness of its best estimate assumptions.
−Removed: The most recent third party assessment, performed in 2019, validated the assumption setting process and confirmed the best estimate assumptions appropriately reflected the experience data at that time.
−Removed: The GPV for the long term care future policy benefit reserves performed in the third quarter of 2020 and 2019 indicated a premium deficiency primarily driven by lower discount rate assumptions.
−Removed: Recognition of the premium deficiency resulted in a $ 74 million and a $ 216 million pretax increase in policyholders’ benefits reflected in the Company’s results of operations for the three and nine months ended September 30, 2020 and 2019.
−Removed: In May of 2020, Loews Corporation completed a public offering of $ 500 million aggregate principal amount of 3.2 % senior notes due May 15, 2030 .
−Removed: The proceeds of this offering are available for general corporate purposes.
−Removed: In August of 2020, CNA completed a public offering of $ 500 million aggregate principal amount of its 2.1 % senior notes due August 15, 2030 and used the net proceeds to redeem the entire $ 400 million outstanding aggregate principal balance of its 5.8 % senior notes due August 15, 2021 and for general corporate purposes.
−Removed: In August of 2020, Boardwalk Pipelines completed a public offering of $ 500 million aggregate principal amount of its 3.4 % senior notes due February 15, 2031 .
−Removed: Boardwalk Pipelines intends to use the proceeds to retire the outstanding $ 440 million aggregate principal amount of its 4.5 % senior notes due 2021 in November of 2020, to fund growth capital expenditures and for general corporate purposes.
−Removed: Initially, the proceeds were used to reduce outstanding borrowings under its revolving credit facility.
−Removed: As of September 30, 2020, Boardwalk Pipelines had no outstanding borrowings under its revolving credit facility and had available the full borrowing capacity of $ 1.5 billion.
−Removed: As of October 30, 2020, Boardwalk Pipelines had $ 80 million of outstanding borrowings under its revolving credit facility and had $ 1.4 billion of available borrowing capacity.
+Added: Excess Workers’ Compensation LPT
+Added: On February 5, 2021, CNA completed a transaction with Cavello Bay Reinsurance Limited (“Cavello”), a subsidiary of Enstar Group Limited, under which certain legacy excess workers’ compensation (“EWC”) liabilities were ceded to Cavello.
+Added: Under the terms of the transaction, based on reserves in place as of January 1, 2020, approximately $ 690 million of net EWC claim and allocated claim adjustment expense reserves were ceded to Cavello under a loss portfolio transfer (“EWC LPT”) with an aggregate limit of $ 1.0 billion.
+Added: Cavello was paid a reinsurance premium of $ 697 million, less claims paid between January 1, 2020 and the closing date of the agreement of $ 64 million.
+Added: After transaction costs, a loss of approximately $ 11 million (after tax and noncontrolling interest) was recognized in the Other Insurance Operations business for the three months ended March 31, 2021 related to the EWC LPT.
+Added: Cavello established a collateral trust account as security for its obligations, which will be maintained at 105 % of outstanding reserves.
+Added: As of March 31, 2021, the remaining amount available under the $ 1.0 billion aggregate limit of the EWC LPT was $ 310 million on an incurred basis.
+Added: Credit Risk for Ceded Reserves
+Added: The majority of CNA’s outstanding voluntary reinsurance receivables are due from reinsurers with financial strength ratings of A- or higher.
+Added: Receivables due from reinsurers with lower financial strength ratings are primarily due from captive reinsurers and are backed by collateral arrangements.
+Added: On February 3, 2021, Altium Packaging entered into a $ 1.05 billion seven-year secured term loan.
+Added: The term loan is a variable rate facility which bears interest at a floating rate equal to the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 2.75 % , subject to a 0.5 % LIBOR floor.
+Added: The proceeds were used to pay the outstanding principal balances of its variable rate term loans and lending facility and a dividend of $ 200 million .
Shareholders’ Equity
Accumulated other comprehensive income (loss)
−Removed: The tables below present the changes in AOCI by component for the three and nine months ended September 30, 2019 and 2020:
−Removed: Net Unrealized
−Removed: Gains (Losses)
−Removed: on Investments
−Removed: Net Unrealized
−Removed: Gains (Losses)
−Removed: Gains (Losses)
−Removed: Postretirement
−Removed: Comprehensive
−Removed: Income (Loss)
−Removed: (In millions)
−Removed: Balance, July 1, 2019
−Removed: Other comprehensive income (loss) before reclassifications, after tax of $ 0 , $( 11 ), $ 1 , $ 0 and $ 0
−Removed: Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $ 0 , $ 0 , $ 0 , $( 2 ) and $ 0
−Removed: Other comprehensive income (loss)
−Removed: Amounts attributable to noncontrolling interests
−Removed: Balance, September 30, 2019
+Added: The tables below present the changes in AOCI by component for the three months ended March 31, 2020 and 2021:
Net Unrealized
10 unchanged sentences
(In millions)
−Removed: Balance, July 1, 2020
−Removed: Other comprehensive income (loss) before reclassifications, after tax of $ 0 , $( 63 ), $ 0 , $ 0 and $ 0
−Removed: Reclassification of (income) losses from accumulated other comprehensive income, after tax of $ ( 1 ) , $ 7 , $ 0 , $ ( 3 ) and $ 0
−Removed: Other comprehensive income
−Removed: Amounts attributable to noncontrolling interests
−Removed: Balance, September 30, 2020
−Removed: Net Unrealized
−Removed: Gains (Losses)
−Removed: on Investments
−Removed: Net Unrealized
−Removed: Gains (Losses)
−Removed: Gains (Losses)
−Removed: Postretirement
−Removed: Comprehensive
−Removed: Income (Loss)
−Removed: (In millions)
Balance, January 1, 2020
3 unchanged sentences
Amounts attributable to noncontrolling interests
−Removed: Balance, September 30, 2019
−Removed: Net Unrealized
−Removed: Gains (Losses)
−Removed: on Investments
−Removed: Allowance for
−Removed: Credit Losses
−Removed: Net Unrealized
−Removed: Gains (Losses)
−Removed: Gains (Losses)
−Removed: Postretirement
−Removed: Comprehensive
−Removed: Income (Loss)
−Removed: (In millions)
−Removed: Balance, January 1, 2020 (a)
+Added: Balance, March 31, 2020
+Added: Balance, January 1, 2021
Other comprehensive income (loss) before reclassifications, after tax of $ 1 , $ 154 , $( 2 ), $ 0 and $ 0
−Removed: Reclassification of (income) losses from accumulated other comprehensive income, after tax of $( 12 ), $ 5 , $( 1 ), $( 8 ) and $ 0
+Added: Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $ ( 1 ) , $ 8 , $ ( 1 ) , $ ( 2 ) and $ 0
Other comprehensive income (loss)
Amounts attributable to noncontrolling interests
−Removed: Balance, September 30, 2020
−Removed: On January 1, 2020, the Company adopted ASU 2016-13;
−Removed: The Net Unrealized Gains (Losses) on Investments with OTTI Losses column that tracked the change in unrealized gains (losses) on investments with OTTI losses has been replaced with the Net Unrealized Gains (Losses) on Investments with an Allowance for Credit Losses column.
−Removed: The balance as of January 1, 2020 in the Net Unrealized Gains (Losses) on Investments with OTTI Losses column is now reported in the Net Unrealized Gains (Losses) on Other Investments column.
−Removed: Prior period amounts were not adjusted for the adoption of this standard.
+Added: Balance, March 31, 2021
Amounts reclassified from AOCI shown above are reported in Net income (loss) as follows:
8 unchanged sentences
Treasury Stock
−Removed: Loews Corporation repurchased 16.1 million and 13.2 million shares of its common stock at an aggregate cost of $ 673 million and $ 642 million during the nine months ended September 30, 2020 and 2019 .
+Added: Loews Corporation repurchased 5.6 million and 9.7 million shares of its common stock at an aggregate cost of $ 274 million and $ 445 million during the three months ended March 31, 2021 and 2020 .
Revenue from Contracts with Customers
−Removed: Disaggregation of revenues – Revenue from contracts with customers, other than insurance premiums, is reported as Non-insurance warranty revenue and within Operating revenues and other on the Consolidated Condensed Statements of Operations.
−Removed: 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 14:
−Removed: Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
+Added: Disaggregation of revenues – Revenue from contracts with customers, other than insurance premiums, is reported as Non-insurance warranty revenue and within Operating revenues and other on the Consolidated Condensed Statements of Operations.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:
+Added: Three Months Ended March 31
(In millions)
3 unchanged sentences
Rigid plastic packaging and recycled resin – Corporate
−Removed: Contract drilling – Diamond Offshore (a)
+Added: Contract drilling – Diamond Offshore
Total revenues from contracts with customers
1 unchanged sentence
Operating revenues and other
−Removed: Revenues presented for Diamond Offshore reflect the periods prior to the deconsolidation.
−Removed: See Notes 2 and 14 for further discussion.
−Removed: Receivables from contracts with customers – As of September 30, 2020 and December 31, 2019, receivables from contracts with customers were approximately $ 223 million and $ 458 million and are included within Receivables on the Consolidated Condensed Balance Sheets.
−Removed: Deferred revenue – As of September 30, 2020 and December 31, 2019, deferred revenue resulting from contracts with customers was approximately $ 4.0 billion and $ 3.9 billion and is reported as Deferred non-insurance warranty revenue and within Other liabilities on the Consolidated Condensed Balance Sheets.
−Removed: Approximately $ 839 million and $ 778 million of revenues recognized during the nine months ended September 30, 2020 and 2019 were included in deferred revenue as of December 31, 2019 and 2018.
−Removed: Performance obligations – As of September 30, 2020, approximately $ 13.0 billion of estimated operating revenues is expected to be recognized in the future related to outstanding performance obligations.
+Added: Receivables from contracts with customers – As of March 31, 2021 and December 31, 2020, receivables from contracts with customers were approximately $ 251 million and $ 246 million and are included within Receivables on the Consolidated Condensed Balance Sheets.
+Added: Deferred revenue – As of March 31, 2021 and December 31, 2020, deferred revenue resulting from contracts with customers was approximately $ 4.2 billion and $ 4.1 billion and is reported as Deferred non-insurance warranty revenue and within Other liabilities on the Consolidated Condensed Balance Sheets.
+Added: Approximately $ 316 million and $ 297 million of revenues recognized during the three months ended March 31, 2021 and 2020 were included in deferred revenue as of December 31, 2020 and 2019.
+Added: Performance obligations – As of March 31, 2021, approximately $ 13.3 billion of estimated operating revenues is expected to be recognized in the future related to outstanding performance obligations.
The balance relates primarily to transportation and storage of natural gas and natural gas liquids and hydrocarbons (“NGLs”) services and non-insurance warranty revenue.
−Removed: Approximately $ 0.6 billion will be recognized during the remaining three months of 2020, $ 2.2 billion in 2021 and the remainder in following years.
+Added: Approximately $ 1.9 billion will be recognized during the remaining nine months of 2021, $ 2.1 billion in 2022 and the remainder in following years.
The actual timing of recognition may vary due to factors outside of the Company’s control.
−Removed: Expected Credit Losses – Reinsurance and Insurance Receivables
−Removed: As of September 30, 2020, an allowance for doubtful accounts of $ 24 million for reinsurance receivables has been established which relates to both amounts already billed on ceded paid losses as well as ceded reserves that will be billed when losses are paid in the future.
−Removed: For assessing expected credit losses, reinsurance receivables are separated into two pools;
−Removed: voluntary reinsurance receivables and involuntary reinsurance exposures to mandatory pools.
−Removed: An allowance for involuntary pools has not been recorded as there is no perceived credit risk.
−Removed: The principal credit quality indicator used in the valuation of the allowance on voluntary reinsurance receivables is the financial strength rating of the reinsurer sourced from major rating agencies.
−Removed: If the reinsurer is unrated, an internal financial strength rating is assigned based on historical loss experience and assessment of the reinsurance counterparty risk profile, which generally corresponds with a B rating.
−Removed: Changes in the allowance are presented as a component of Insurance claims and policyholders’ benefits on the Consolidated Condensed Statements of Operations.
−Removed: The following table summarizes the outstanding amount of voluntary reinsurance receivables, gross of any collateral arrangements, by financial strength rating:
−Removed: As of September 30, 2020
−Removed: (In millions)
−Removed: Total voluntary reinsurance outstanding balance (a)
−Removed: Expected credit losses for legacy A&EP receivables are ceded to NICO and the reinsurance limit on the LPT has not been exhausted, therefore no allowance is recorded for these receivables and they are excluded from the table above.
−Removed: See Note 6 for more information on the LPT.
−Removed: Also excluded are receivables from involuntary pools.
−Removed: Voluntary reinsurance receivables within the B- to B++ rating distribution are primarily due from captive reinsurers and backed by collateral arrangements.
−Removed: As of September 30, 2020, an allowance for doubtful accounts of $ 32 million for insurance receivables has been established using a loss rate methodology to determine expected credit losses for premium receivables.
−Removed: This methodology uses historical annual credit losses relative to gross premium written to develop a range of credit loss rates for each dollar of gross written premium underwritten.
−Removed: The expected credit loss for loss sensitive business in good standing is calculated on a pool basis, using historical default rate data obtained from major rating agencies.
−Removed: Changes in the allowance are presented as a component of Operating expenses and other on the Consolidated Condensed Statements of Operations .
Benefit Plans
The Company has several non-contributory defined benefit plans and postretirement benefit plans covering eligible employees and retirees.
−Removed: The following table presents the components of net periodic (benefit) cost for the plans:
+Added: The following table presents the components of net periodic benefit for these plans:
Pension Benefits
−Removed: Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
+Added: Postretirement Benefits
+Added: Three Months Ended March 31
(In millions)
2 unchanged sentences
Amortization of unrecognized net loss
−Removed: Amortization of unrecognized prior service cost
Settlement charge
−Removed: Curtailment gain
−Removed: Net periodic (benefit) cost
−Removed: Other Postretirement Benefits
−Removed: Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: (In millions)
−Removed: Interest cost
−Removed: Expected return on plan assets
−Removed: Amortization of unrecognized net gain
Net periodic benefit
11 unchanged sentences
In October of 2019, the Court ruled on the motion and granted a partial dismissal, with certain aspects of the case proceeding to trial.
−Removed: In October of 2020, after completion of fact discovery, Plaintiffs filed an amended complaint.
−Removed: In light of the amended complaint, Defendants have moved to vacate the trial date scheduled in January of 2021 and have also filed a motion to dismiss Plaintiffs’ new claims.
+Added: A trial was held the week of February 22, 2021 and post-trial oral arguments are scheduled for July 14, 2021 .
The Company is from time to time party to other litigation arising in the ordinary course of business.
−Removed: While it is difficult to predict the outcome or effect of any such litigation, management does not believe that the outcome of any such pending litigation will materially affect the Company’s results of operations or equity.
+Added: While it is difficult to predict the outcome or effect of any litigation, management does not believe that the outcome of any pending litigation, including the Boardwalk Pipelines matter described above, will materially affect the Company’s results of operations or equity.
Commitments and Contingencies
1 unchanged sentence
CNA has provided guarantees, if the primary obligor fails to perform, to holders of structured settlement annuities issued by a previously owned subsidiary.
−Removed: As of September 30, 2020, the potential amount of future payments CNA could be required to pay under these guarantees was approximately $ 1.7 billion, which will be paid over the lifetime of the annuitants.
+Added: As of March 31, 2021, the potential amount of future payments CNA could be required to pay under these guarantees was approximately $ 1.6 billion, which will be paid over the lifetime of the annuitants.
CNA does not believe any payment is likely under these guarantees, as CNA is the beneficiary of a trust that must be maintained at a level that approximates the discounted reserves for these annuities.
−Removed: Loews Corporation has five reportable segments comprised of three individual consolidated operating subsidiaries, CNA, Boardwalk Pipelines and Loews Hotels & Co;
−Removed: the Corporate segment and Diamond Offshore.
+Added: Loews Corporation has four reportable segments comprised of three individual consolidated operating subsidiaries, CNA, Boardwalk Pipelines and Loews Hotels & Co;
+Added: and the Corporate segment.
+Added: In the first quarter of 2020 Diamond Offshore was a reportable segment.
The Corporate segment is primarily comprised of Loews Corporation excluding its subsidiaries and the operations of Altium Packaging.
Diamond Offshore was deconsolidated during the second quarter of 2020.
−Removed: See Note 2 for further information on the deconsolidation of Diamond Offshore.
Each of the operating subsidiaries and Diamond Offshore are headed by a chief executive officer who is responsible for the operation of its business and has the duties and authority commensurate with that position.
For additional disclosures regarding the composition of Loews Corporation ’s segments, see Note 20 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
−Removed: The following tables present the reportable segments and their contribution to the Consolidated Condensed Financial Statements.
+Added: The following tables present the reportable segments and their contribution to the Consolidated Condensed Statements of Operations.
Amounts presented will not necessarily be the same as those in the individual financial statements of the subsidiaries due to adjustments for purchase accounting, income taxes and noncontrolling interests.
−Removed: Total assets by segment are presented in the following tables.
−Removed: September 30, 2020
−Removed: (In millions)
−Removed: December 31, 2019
Statements of Operations by segment are presented in the following tables.
−Removed: Three Months Ended September 30, 2020
−Removed: (In millions)
−Removed: Insurance premiums
−Removed: Net investment income
−Removed: Investment gains
−Removed: Non-insurance warranty revenue
−Removed: Operating revenues and other
−Removed: Insurance claims and policyholders’ benefits
−Removed: Amortization of deferred acquisition costs
−Removed: Non-insurance warranty expense
−Removed: Operating expenses and other
−Removed: Income (loss) before income tax
−Removed: Income tax (expense) benefit
−Removed: Net income (loss)
−Removed: Amounts attributable to noncontrolling interests
−Removed: Net income (loss) attributable to Loews Corporation
−Removed: Three Months Ended September 30, 2019
+Added: Three Months Ended March 31, 2021
(In millions)
13 unchanged sentences
Net income (loss) attributable to Loews Corporation
−Removed: Nine Months Ended September 30, 2020
+Added: Three Months Ended March 31, 2020
(In millions)
13 unchanged sentences
Net income (loss) attributable to Loews Corporation
−Removed: Nine Months Ended September 30, 2019
−Removed: (In millions)
−Removed: Insurance premiums
−Removed: Net investment income
−Removed: Investment gains
−Removed: Non-insurance warranty revenue
−Removed: Operating revenues and other
−Removed: Insurance claims and policyholders’ benefits
−Removed: Amortization of deferred acquisition costs
−Removed: Non-insurance warranty expense
−Removed: Operating expenses and other
−Removed: Income (loss) before income tax
−Removed: Income tax (expense) benefit
−Removed: Net income (loss)
−Removed: Amounts attributable to noncontrolling interests
−Removed: Net income (loss) attributable to Loews Corporation
−Removed: Amounts presented for Diamond Offshore reflect the periods prior to the deconsolidation.
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.