What changed in this filing

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Item 1. Financial Statements

2021-08-02 compared with 2021-05-07 · 320 added, 143 removed, 591 unchanged (44% of the section changed)

2 unchanged sentences

CONSOLIDATED CONDENSED BALANCE SHEETS

March 31, 2021

December 31, 2020

(Dollar amounts in millions, except per share data)

8 unchanged sentences

Deferred acquisition costs of insurance subsidiaries

Assets held for sale

Liabilities and Equity:

10 unchanged sentences

Other liabilities

Liabilities held for sale

Total liabilities

15 unchanged sentences

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended March 31

Three Months Ended

Six Months Ended

(In millions, except per share data)

1 unchanged sentence

Net investment income

Investment gains (losses)

Investment gains (losses) (Note 2)

Non-insurance warranty revenue

17 unchanged sentences

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended March 31

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended

Six Months Ended

(In millions)

Net income (loss)

Other comprehensive loss, after tax

Net unrealized losses on investments with an allowance for credit losses

Net unrealized losses on other investments

Total unrealized losses on investments

Other comprehensive income (loss), after tax

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

Net unrealized gains (losses) on other investments

Total unrealized gains (losses) on investments

Unrealized gains (losses) on cash flow hedges

1 unchanged sentence

Foreign currency translation

Other comprehensive loss

Comprehensive loss

Other comprehensive income (loss)

Comprehensive income (loss)

Amounts attributable to noncontrolling interests

Total comprehensive loss attributable to Loews Corporation

Total comprehensive income (loss) attributable to Loews Corporation

See accompanying Notes to Consolidated Condensed Financial Statements.

3 unchanged sentences

Comprehensive

Noncontrolling

Income (Loss)

(In millions)

Balance, April 1, 2020

Other comprehensive income

Dividends paid ($ 0.0625 per share)

Deconsolidation of Diamond Offshore

Purchases of Loews Corporation treasury stock

Purchases of subsidiary stock from noncontrolling interests

Stock-based compensation

Balance, June 30, 2020

Balance, April 1, 2021

Other comprehensive income

Dividends paid ($ 0.0625 per share)

Purchases of Loews Corporation treasury stock

Purchases of subsidiary stock from noncontrolling interests

Stock-based compensation

Balance, June 30, 2021

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF EQUITY

Loews Corporation Shareholders

Comprehensive

Noncontrolling

Income (Loss)

(In millions)

2 unchanged sentences

Balance, January 1, 2020, as adjusted

Other comprehensive loss

Other comprehensive income

Dividends paid ($ 0.125 per share)

Deconsolidation of Diamond Offshore

Purchases of Loews Corporation treasury stock

Purchases of subsidiary stock from non- controlling interests

Purchases of subsidiary stock from noncontrolling interests

Stock-based compensation

Balance, March 31, 2020

Balance, June 30, 2020

Balance, January 1, 2021

2 unchanged sentences

Purchases of Loews Corporation treasury stock

Purchases of subsidiary stock from non-controlling interests

Purchases of subsidiary stock from noncontrolling interests

Stock-based compensation

Balance, March 31, 2021

Balance, June 30, 2021

See accompanying Notes to Consolidated Condensed Financial Statements.

1 unchanged sentence

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

Three Months Ended March 31

Six Months Ended June 30

(In millions)

1 unchanged sentence

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities, net

Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities, net

Changes in operating assets and liabilities, net:

13 unchanged sentences

Purchases of property, plant and equipment

Sale of interest in Altium Packaging

Deconsolidation of Diamond Offshore

Change in short term investments

Net cash flow provided by investing activities

Net cash flow provided (used) by investing activities

Financing Activities:

5 unchanged sentences

Issuance of debt

Net cash flow used by financing activities

Net cash flow (used) provided by financing activities

Effect of foreign exchange rate on cash

10 unchanged sentences

transportation and storage of natural gas and natural gas liquids (Boardwalk Pipeline Partners, LP (“Boardwalk Pipelines”), a wholly owned subsidiary);

the operation of a chain of hotels (Loews Hotels Holding Corporation (“Loews Hotels & Co”), a wholly owned subsidiary);

and the manufacture of rigid plastic packaging solutions (Altium Packaging LLC (“Altium Packaging”), a 99 % owned subsidiary).

and the operation of a chain of hotels (Loews Hotels Holding Corporation (“Loews Hotels & Co”), a wholly owned subsidiary).

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

On April 1, 2021, Loews Corporation sold 47 % of its interest in Altium Packaging.

On April 1, 2021, Loews Corporation sold 47 % of its interest in Altium Packaging, previously a 99 % owned subsidiary.

See Note 2 for further discussion.

As a result of the April 26, 2020 bankruptcy filing of Diamond Offshore Drilling, Inc.

(“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.

Loews Corporation’s operating results for the first quarter of 2020 include the operations of Diamond Offshore.

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.

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.

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.

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

In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of June 30, 2021 and December 31, 2020, results of operations, comprehensive income (loss) and changes in shareholders’ equity for the three and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020.

Net income (loss) for the second quarter and first half 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.

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.

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

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

8 unchanged sentences

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.

Significant Transaction

Significant Transactions

Altium Packaging

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.

On April 1, 2021, the transaction closed and Loews Corporation received approximately $ 420 million in cash consideration, subject to expenses and post-closing adjustments.

On April 1, 2021, Loews Corporation sold 47 % of its interest in Altium Packaging to GIC, Singapore’s sovereign wealth fund for $ 420 million in cash consideration.

Loews Corporation will share certain participating rights with GIC related to capital allocation and other decisions by Altium Packaging.

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.

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.

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.

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.

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.

The gain will be recorded in Investment gains (losses) on the Consolidated Condensed Statement of Operations.

Effective April 1, 2021, Loews Corporation’s investment in Altium Packaging will be accounted for under the equity method of accounting.

Therefore, in accordance with Accounting Standards Codification (“ASC”) 810, “Consolidation,” Altium Packaging was deconsolidated from Loews Corporation’s consolidated financial statements effective as of April 1, 2021.

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

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

Loews Corporation’s retained investment in Altium Packaging was recorded at an estimated fair value of $ 473 million.

The difference between the fair value of Loews Corporation’s investment in Altium Packaging and Loews Corporation’s 53 % share of the carrying value of Altium Packaging’s net assets was attributed to definite lived intangible assets and goodwill.

The amortization of the amounts attributed to definite lived intangible assets will be recognized as a component of equity income (loss) reported in Operating expenses and other on the Consolidated Condensed Statements of Operations.

The assets and liabilities deconsolidated from the Consolidated Condensed Balance Sheets were property, plant and equipment of $ 490 million, goodwill of $ 436 million, intangible assets of $ 488 million, other assets of approximately $ 370 million, long term debt of $ 1.1 billion and other liabilities of approximately $ 380 million.

Diamond Offshore

As a result of the April 26, 2020 (“the Filing Date”) bankruptcy filing of Diamond Offshore Drilling, Inc.

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.

The deconsolidation resulted in the recognition of a loss of $ 1.2 billion ($ 957 million after tax) during the three and six months ended June 30, 2020, which is reported within Investment gains (losses) on the Consolidated Condensed Statements of Operations.

Net investment income is as follows:

Three Months Ended March 31

Three Months Ended

Six Months Ended

(In millions)

7 unchanged sentences

Net investment income

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.

Net unrealized gains (losses) related to changes in fair value on securities still held were $ 28 and $ 80 for the three months ended June 30, 2021 and 2020 and $ 58 and $ 7 for the six months ended June 30, 2 021 and 2020 .

Investment gains (losses) are as follows:

Three Months Ended March 31

Three Months Ended

Six Months Ended

(In millions)

3 unchanged sentences

Short term investments and other

Sale of 47 % interest in Altium Packaging (see Note 2)

Deconsolidation of Diamond Offshore

Investment gains (losses) (a)

Gross investment gains on available-for-sale securities were $ 58 and $ 29 for the three months ended March 31, 2021 and 2020.

Gross investment losses on available-for-sale securities were $ 20 and $ 104 for the three months ended March 31, 2021 and 2020.

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 .

Gross investment gains on available-for-sale securities were $ 51 and $ 102 for the three months ended June 30, 2021 and 2020 and $ 109 and $ 131 for the six months ended June 30, 2021 and 2020 .

Gross investment losses on available-for-sale securities were $ 20 and $ 85 for the three months ended June 30, 2021 and 2020 and $ 40 and $ 189 for the six months ended June 30, 2021 and 2020.

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

During the three and six months ended June 30, 2020, $ 63 of investment gains and $ 70 of investment losses were recognized due to the change in fair value of non-redeemable preferred stock still held as of June 30, 2020 .

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

Accrued interest receivables on available-for-sale fixed maturity securities totaled $ 389 million, $ 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.

Three months ended March 31, 2021

Accrued interest receivables on available-for-sale fixed maturity securities totaled $ 374 million, $ 371 million and $ 373 million as of June 30, 2021, December 31, 2020 and June 30, 2020 and are excluded from the estimate of expected credit losses and the amortized cost basis in the tables within this Note.

Three months ended June 30, 2021

Corporate and

1 unchanged sentence

Allowance for credit losses:

Balance as of April 1, 2021

Additions to the allowance for credit losses:

Securities for which credit losses were not previously recorded

Available-for-sale securities accounted for as PCD assets

Reductions to the allowance for credit losses:

Securities sold during the period (realized)

Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period

Total allowance for credit losses

Three months ended June 30, 2020

Allowance for credit losses:

Balance as of April 1, 2020

Additions to the allowance for credit losses:

Securities for which credit losses were not previously recorded

Available-for-sale securities accounted for as PCD assets

Reductions to the allowance for credit losses:

Securities sold during the period (realized)

Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period

Total allowance for credit losses

Six months ended June 30, 2021

Corporate and

(In millions)

Allowance for credit losses:

Balance as of January 1, 2021

5 unchanged sentences

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

Additional decreases to the allowance for credit losses on securities that had an allowance recorded in a previous period

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

Three months ended March 31, 2020

Six months ended June 30, 2020

Allowance for credit losses:

7 unchanged sentences

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

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:

Three Months Ended March 31

Three Months Ended

Six Months Ended

(In millions)

1 unchanged sentence

Corporate and other bonds

Impairment losses recognized in earnings

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

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.

Impairment losses (gains) recognized in earnings

There were $ 13 million of losses on mortgage loans recognized during the six months ended June 30, 2020 due to changes in expected credit losses.

There were no losses recognized on mortgage loans during the three and six months ended June 30, 2021 or during the three months ended June 30, 2020.

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

March 31 , 2021

June 30 , 2021

(In millions)

9 unchanged sentences

Foreign government

Redeemable preferred stock

Fixed maturities available-for-sale

18 unchanged sentences

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”).

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).

As of June 30, 2021 and December 31, 2020, the net unrealized gains on investments included in AOCI were correspondingly reduced by Shadow Adjustments of $ 2.4 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:

March 31 , 2021

June 30 , 2021

(In millions)

22 unchanged sentences

Total fixed maturity securities

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.

Based on current facts and circumstances, the Company believes the unrealized losses presented in the June 30, 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.

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

accordingly, it was determined that there are no additional impairment losses to be recorded at March 31, 2021.

accordingly, it was determined that there are no additional impairment losses to be recorded at June 30, 2021.

Contractual Maturity

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

March 31, 2021

June 30, 2021

December 31, 2020

10 unchanged sentences

Mortgage Loans Amortized Cost Basis by Origination Year (a)

As of March 31 , 2021

As of June 30 , 2021

(In millions)

14 unchanged sentences

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

March 31, 2021

June 30, 2021

December 31, 2020

3 unchanged sentences

With hedge designation:

Interest rate swaps (a)

Interest rate swaps

Without hedge designation:

3 unchanged sentences

Embedded derivative on funds withheld liability

As of March 31, 2021, Interest rate swaps exclude amounts classified as held for sale.

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.

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.

As of June 30, 2021, commitments to purchase or fund were approximately $ 1.3 billion and to sell were approximately $ 95 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.

7 unchanged sentences

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.

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 that market participants presumably would use to value the assets.

Prices obtained from third-party pricing services or brokers are not adjusted.

5 unchanged sentences

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

March 31, 2021

June 30 , 2021

(In millions)

6 unchanged sentences

Equity securities

Short term and other (a)

Payable to brokers (a)

As of March 31, 2021, Short term and other and Payable to brokers exclude amounts classified as held for sale.

See Note 2 for further discussion.

Short term and other

Payable to brokers

December 31 , 2020

(In millions)

Fixed maturity securities:

7 unchanged sentences

Payable to brokers

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:

Net Realized Investment

Gains (Losses) and Net

Change in Unrealized

Investment Gains (Losses)

Recognized in

(Loss) on Level

Investment Gains

Recognized in

Comprehensive

(Losses) and Net Change

Income (Loss)

in Unrealized Investment

(Loss) on Level

Gains (Losses)

(In millions)

6 unchanged sentences

Equity securities

Net Realized Investment

Gains (Losses) and Net

Change in Unrealized

Investment Gains (Losses)

Recognized in

Investment Gains

Recognized in

Comprehensive

(Losses) and Net Change

Income (Loss)

in Unrealized Investment

(Loss) on Level

Gains (Losses)

(In millions)

Fixed maturity securities:

Corporate bonds and other

Fixed maturities available-for-sale

Fixed maturities trading

Total fixed maturities

Equity securities

Recognized in

Investment Gains

Recognized in

Comprehensive

(Losses) and Net Change

Income (Loss)

in Unrealized Investment

(Loss) on Level

Gains (Losses)

(In millions)

1 unchanged sentence

Corporate bonds and other

States, municipalities and political subdivisions

Fixed maturities available-for-sale

2 unchanged sentences

Equity securities

Recognized in

Investment Gains

Recognized in

Comprehensive

(Losses) and Net Change

Income (Loss)

in Unrealized Investment

(Loss) on Level

Gains (Losses)

(In millions)

Fixed maturity securities:

Corporate bonds and other

Fixed maturities available-for-sale

Fixed maturities trading

Total fixed maturities

Equity securities

Net investment gains and losses are reported in Net income (loss) as follows:

44 unchanged sentences

The weighted average rate is calculated based on fair value.

March 31 , 2021

June 30 , 2021

(In millions)

14 unchanged sentences

Estimated Fair Value

March 31 , 2021

June 30 , 2021

(In millions)

Other invested assets, primarily mortgage loans

Short term debt (a)

Long term debt (a)

Short term debt

Long term debt

December 31 , 2020

2 unchanged sentences

Long term debt

As of March 31, 2021, Short and Long term debt exclude amounts classified as held for sale.

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.

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.

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.

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.

The Company reported catastrophe losses, net of reinsurance, of $ 125 million and $ 75 million for the three months ended March 31, 2021 and 2020.

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

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.

The Company reported catastrophe losses, net of reinsurance, of $ 54 million and $ 301 million for the three months ended June 30, 2021 and 2020 and $ 179 million and $ 376 million for the six months ended June 30, 2021 and 2020.

Net catastrophe losses for the three and six months ended June 30, 2021 were related primarily to severe weather-related events.

Net catastrophe losses for the three months ended June 30, 2020 included $ 182 million related to the coronavirus (“COVID-19”) pandemic, $ 61 million related to civil unrest and $ 58 million related primarily to severe weather-related events.

Net catastrophe losses for the six months ended June 30, 2020 included $ 195 million related to the COVID-19 pandemic, $ 61 million related to civil unrest and $ 120 million related primarily 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, including claim and claim adjustment expense reserves of other insurance operations.

Three Months Ended March 31

Six Months Ended June 30

(In millions)

19 unchanged sentences

These changes can be favorable or unfavorable.

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:

Three Months Ended March 31

Favorable net prior year loss reserve development of $ 11 million and $ 28 million was recorded for commercial property and casualty operations (“Property & Casualty Operations”) for the three months ended June 30, 2021 and 2020 and favorable net prior year loss reserve development of $ 26 million and $ 43 million was recorded for the six months ended June 30, 2021 and 2020.

Unfavorable net prior year loss reserve development of $ 40 million and $ 50 million was recorded for CNA’s operations outside of Property & Casualty Operations (“Other Insurance Operations”) for the three and six months ended June 30, 2021 and 2020.

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

Six Months Ended

(In millions)

4 unchanged sentences

Property and other

Other insurance operations

Total pretax (favorable) unfavorable development

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

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.

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

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

Unfavorable development in other insurance operations was due to higher than expected emergence in mass tort exposures in older accident years primarily related to abuse.

Unfavorable development in commercial auto was due to unfavorable claim severity in CNA’s middle market and construction businesses in accident years 2017 through 2019.

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 primarily due to higher than expected large loss activity in CNA’s middle market, national accounts and marine business units in accident year 2019.

Unfavorable development in other insurance operations was due to higher than expected emergence in mass tort exposures in older accident years primarily related to abuse.

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

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

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

Unfavorable development in other insurance operations was primarily due to higher than expected emergence in mass tort exposures in older accident years primarily related to abuse.

Favorable development in surety was primarily due to lower than expected frequency for accident years 2017 and prior.

Favorable development in workers’ compensation was due to favorable medical trends driving lower than expected severity in accident years 2016 through 2018.

Unfavorable development in commercial auto was due to unfavorable claim severity in CNA’s middle market and construction businesses in accident years 2017 through 2019.

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

Unfavorable development in other insurance operations was due to higher than expected emergence in mass tort exposures in older accident years primarily related to abuse.

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

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”).

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 their 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.

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.

As of March 31, 2021 and December 31, 2020, the cumulative amounts ceded under the LPT were $ 3.3 billion.

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.

The impact of the LPT on the Consolidated Condensed Statements of Operations was the recognition of a retroactive reinsurance benefit of $ 12 million and $ 20 million for the three months ended June 30, 2021 and 2020 and $ 22 million and $ 34 million for the six months ended June 30, 2021 and 2020.

As of June 30, 2021 and December 31, 2020, the cumulative amounts ceded under the LPT were $ 3.3 billion.

The unrecognized deferred retroactive reinsurance benefit was $ 376 million and $ 398 million as of June 30, 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.

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.

The fair value of the collateral trust account was $ 2.9 billion as of June 30, 2021 .

In addition, Berkshire Hathaway Inc.

guaranteed the payment obligations of NICO up to the aggregate reinsurance limit as well as certain of NICO’s performance obligations under the trust agreement.

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.

NICO is responsible for claims handling and billing and collection from third-party reinsurers related to the majority of the A&EP claims.

Excess Workers’ Compensation LPT

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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.

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.

After transaction costs, a loss of approximately $ 11 million (after tax and noncontrolling interest) was recognized in Other Insurance Operations in the first quarter of 2021 related to the EWC LPT.

As of June 30, 2021, the cumulative amounts ceded under the EWC LPT were $ 690 million and the remaining amount available under the $ 1.0 billion aggregate limit was $ 310 million.

Cavello established a collateral trust account as security for its obligations, which will be maintained at 105 % of outstanding reserves.

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.

Credit Risk for Ceded Reserves

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Receivables due from reinsurers with lower financial strength ratings are primarily due from captive reinsurers and are backed by collateral arrangements.

On February 3, 2021, Altium Packaging entered into a $ 1.05 billion seven-year secured term loan.

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.

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)

The tables below present the changes in AOCI by component for the three months ended March 31, 2020 and 2021:

The tables below present the changes in AOCI by component for the three and six months ended June 30, 2020 and 2021:

Net Unrealized

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on Investments

Net Unrealized

Gains (Losses)

Allowance for

Postretirement

Comprehensive

Credit Losses

Income (Loss)

(In millions)

Balance, April 1, 2020

Other comprehensive income (loss) before reclassifications, after tax of $ 0 , $( 321 ), $ 2 , $ 0 and $ 0

Reclassification of (income) losses from accumulated other comprehensive income, after tax of $( 1 ), $ 4 , $( 1 ), $( 2 ) and $ 0

Other comprehensive income

Amounts attributable to noncontrolling interests

Balance, June 30, 2020

Balance, April 1, 2021

Other comprehensive income (loss) before reclassifications, after tax of $ 0 , $( 82 ), $( 1 ), $ 0 and $ 0

Reclassification of (income) losses from accumulated other comprehensive income, after tax of $ 0 , $ 7 , $ ( 1 ) , $ ( 3 ) and $ 0

Other comprehensive income

Amounts attributable to noncontrolling interests

Balance, June 30, 2021

Net Unrealized

Gains (Losses)

on Investments

Net Unrealized

Gains (Losses)

Allowance for

Postretirement

Comprehensive

Credit Losses

Income (Loss)

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Amounts attributable to noncontrolling interests

Balance, March 31, 2020

Balance, June 30, 2020

Balance, January 1, 2021

Other comprehensive income (loss) before reclassifications, after tax of $ 1 , $ 72 , $( 3 ), $ 0 and $ 0

Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $ ( 1 ) , $ 8 , $ ( 1 ) , $ ( 2 ) and $ 0

Reclassification of (income) losses from accumulated other comprehensive income, after tax of $( 1 ), $ 15 , $( 2 ), $( 5 ) and $ 0

Other comprehensive income (loss)

Amounts attributable to noncontrolling interests

Balance, March 31, 2021

Balance, June 30, 2021

Amounts reclassified from AOCI shown above are reported in Net income (loss) as follows:

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Treasury Stock

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 .

Loews Corporation repurchased 9.5 million and 10.7 million shares of its common stock at an aggregate cost of $ 493 million and $ 478 million during the six months ended June 30, 2021 and 2020 .

Revenue from Contracts with Customers

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:

Three Months Ended March 31

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 11:

Three Months Ended

Six Months Ended

(In millions)

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Lodging and related services – Loews Hotels & Co

Rigid plastic packaging and recycled resin – Corporate

Contract drilling – Diamond Offshore

Rigid plastic packaging and recycled resin – Corporate (a)

Contract drilling – Diamond Offshore (b)

Total revenues from contracts with customers

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Operating revenues and other

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.

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.

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.

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.

R evenues presented for Corporate reflect the periods prior to the deconsolidation of Altium Packaging in the second quarter of 2021.

See Note 2 for further discussion.

Revenues presented for Diamond Offshore reflect the periods prior to its deconsolidation.

in the second quarter of 2020.

See Note 2 for further discussion.

Receivables from contracts with customers – As of June 30, 2021 and December 31, 2020, receivables from contracts with customers were approximately $ 106 million and $ 246 million and are included within Receivables on the Consolidated Condensed Balance Sheets.

Deferred revenue – As of June 30, 2021 and December 31, 2020, deferred revenue resulting from contracts with customers was approximately $ 4.4 billion and $ 4.1 billion and is reported as Deferred non-insurance warranty revenue and within Other liabilities on the Consolidated Condensed Balance Sheets.

Approximately $ 624 million and $ 574 million of revenues recognized during the six months ended June 30, 2021 and 2020 were included in deferred revenue as of December 31, 2020 and 2019.

Performance obligations – As of June 30, 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.

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.

Approximately $ 1.2 billion will be recognized during the remaining six months of 2021, $ 2.2 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.

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

The following table presents the components of net periodic benefit for these plans:

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

Pension Benefits

Postretirement Benefits

Three Months Ended March 31

Three Months Ended

Six Months Ended

(In millions)

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Amortization of unrecognized net loss

Amortization of unrecognized prior service cost

Settlement charge

Net periodic benefit

What changed 10-Q

Item 1. Financial Statements