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Item 2. Management’s Discussion and Analysis

2021-08-02 compared with 2021-05-07 · 294 added, 176 removed, 245 unchanged (66% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with our Consolidated Condensed Financial Statements included under Item 1 of this Report, Risk Factors included under Part II, Item 1A of this Report and the Consolidated Financial Statements, Risk Factors, and MD&A included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with our Consolidated Condensed Financial Statements included under Item 1 of this Report, Risk Factors included under Part II, Item 1A of this Report, Risk Factors included in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and the Consolidated Financial Statements, Risk Factors, and MD&A included in our Annual Report on Form 10-K for the year ended December 31, 2020.

This MD&A is comprised of the following sections:

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(“Diamond Offshore”) was a reportable segment.

The Corporate segment is primarily comprised of Loews Corporation excluding its subsidiaries and the operations of Altium Packaging LLC (“Altium Packaging”).

Diamond Offshore was deconsolidated during the second quarter of 2020.

For more information see Note 2 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020.

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.

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

The Corporate segment is primarily comprised of Loews Corporation, excluding its subsidiaries, and the operations of Altium Packaging LLC (“Altium Packaging”) through March 31, 2021.

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.

As a result of the terms of this transaction, Loews Corporation will share certain participating rights with GIC related to capital allocation and other decisions and is required to deconsolidate Altium Packaging as of the date of the sale under accounting principles generally accepted in the United States of America (“GAAP”).

Subsequent to deconsolidation, Loews Corporation’s investment in Altium Packaging is accounted for under the equity method of accounting, with Equity income (loss) reported in Operating expenses and other on the Consolidated Condensed Statements of Operations in the Corporate segment.

For further information on the deconsolidations of Diamond Offshore and Altium Packaging see Note 2 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report.

Unless the context otherwise requires, the term “Company” as used herein means Loews Corporation including its consolidated subsidiaries, the terms “Parent Company,” “we,” “our,” “us” or like terms as used herein mean Loews Corporation excluding its 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.

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

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Consolidated Financial Results

The following table summarizes net income (loss) attributable to Loews Corporation by segment and net income (loss) per share attributable to Loews Corporation for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31

The following table summarizes net income (loss) attributable to Loews Corporation by segment and net income (loss) per share attributable to Loews Corporation for the three and six months ended June 30, 2021 and 2020:

Three Months Ended

Six Months Ended

(In millions, except per share data)

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Net income (loss) attributable to Loews Corporation

Basic net income (loss) per common share

Diluted net income (loss) per common share

Net income attributable to Loews Corporation for the three months ended March 31, 2021 was $261 million, or $0.97 per share, compared to net loss of $632 million, or $2.20 per share in the comparable 2020 period.

Loews Corporation’s net income for the first three months of 2021 was driven by CNA, which had improved net investment income, net investment gains, and solid non-catastrophe current accident year property and casualty underwriting results.

Boardwalk Pipelines also contributed positively to Loews Corporation’s 2021 quarterly results.

Loews Hotels & Co posted a net loss for the first three months of 2021 due to the continued negative impact on travel of the COVID-19 pandemic.

Last year’s first quarter results included a significant loss related to Diamond Offshore, which is no longer a subsidiary.

On April 1, 2021 Loews Corporation sold 47% of its interest in Altium Packaging for approximately $420 million in cash consideration, subject to expenses and post-closing adjustments.

In connection with the sale and subsequent deconsolidation, Loews Corporation expects to recognize a pretax gain of approximately $560 million in the second quarter of 2021.

Basic net income (loss) per share

Diluted net income (loss) per share

Net income attributable to Loews Corporation for the three months ended June 30, 2021 was $754 million, or $2.86 per share, compared to a net loss of $835 million, or $2.96 per share in the comparable 2020 period.

Net income attributable to Loews Corporation for the six months ended June 30, 2021 was $1.0 billion, or $3.82 per share, compared to a net loss of $1.5 billion, or $5.16 per share in the comparable 2020 period.

The three and six months ended June 30, 2021 include a gain of $438 million (after tax) related to the sale of 47% of Altium Packaging and its deconsolidation on April 1, 2021.

The three and six months ended June 30, 2020 included a loss of $957 million (after tax) related to the bankruptcy filing and deconsolidation of Diamond Offshore.

Excluding these significant transactions, net income for the second quarter of 2021 would have been $316 million compared to $122 million in the second quarter of 2020.

The increase in net income for the three months ended June 30, 2021 as compared to the comparable prior year period, excluding these significant transactions, was driven by CNA, which reported lower net catastrophe losses, improved net investment income, and higher property and casualty underwriting results before net catastrophe losses and prior year development.

Boardwalk Pipelines also contributed positively as revenues from recently completed growth projects increased from the second quarter of 2020.

Loews Hotels & Co posted improved year-over-year second quarter results due to the strong rebound in travel to resort destinations.

The Parent Company investment portfolio experienced lower net investment income in the second quarter of 2021 compared to the comparable prior year period.

The drivers of the improved net income for the six months ended June 30, 2021 as compared to the comparable 2020 period are consistent with the three-month discussion above.

In addition, during the first six months of 2020, Diamond Offshore recognized drilling rig impairment charges of $408 million (after tax and noncontrolling interests) and operating losses of $68 million (after tax and noncontrolling interests).

CNA posted net investment gains during the first six months of 2021 compared to net investment losses in the comparable prior year period, and the Parent Company investment portfolio experienced higher net investment income during the first six months of 2021 compared to the comparable prior year period.

CNA Financial

The following table summarizes the results of operations for CNA for the three months ended March 31, 2021 and 2020 as presented in Note 12 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report.

The following table summarizes the results of operations for CNA for the three and six months ended June 30, 2021 and 2020 as presented in Note 11 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report.

For further discussion of Net investment income and Investment gains (losses), see the Investments section of this MD&A.

Three Months Ended March 31

Three Months Ended

Six Months Ended

(In millions)

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Other operating expenses

Income (loss) before income tax

Income tax (expense) benefit

Net income (loss)

Income before income tax

Income tax expense

Amounts attributable to noncontrolling interests

Net income (loss) attributable to Loews Corporation

Net income attributable to Loews Corporation was $279 million for the three months ended March 31, 2021 as compared with a net loss of $55 million in the comparable 2020 period.

The improvement was due to higher net investment income, investment gains for the three months ended March 31, 2021 as compared with investment losses in the comparable 2020 period and improved non-catastrophe current accident year underwriting results.

Higher net investment income in the first three months of 2021 was driven by limited partnership and common stock returns.

Investment gains were driven by the favorable relative change in the fair value of non-redeemable preferred stock and lower impairment losses.

These results were partially offset by higher net catastrophe losses of $125 million ($88 million after tax and noncontrolling interests) for the three months ended March 31, 2021 as compared with $75 million ($53 million after tax and noncontrolling interests) in the comparable 2020 period.

Net income attributable to Loews Corporation

Three Months Ended June 30, 2021 Compared to the Comparable 2020 Period

Net income attributable to Loews Corporation was $330 million for the three months ended June 30, 2021 as compared with $135 million in the comparable 2020 period.

The increase was primarily due to lower net catastrophe losses of $54 million ($38 million after tax and noncontrolling interests) for the three months ended June 30, 2021 as compared to $301 million ($212 million after tax and noncontrolling interests) in the comparable 2020 period and improved non-catastrophe current accident year underwriting results.

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

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

Six Months Ended June 30, 2021 Compared to the Comparable 2020 Period

Net income attributable to Loews Corporation was $609 million for the six months ended June 30, 2021 as compared with $80 million in the comparable 2020 period.

The increase was primarily due to improved current accident year underwriting results, higher net investment income and higher investment gains.

Net catastrophe losses were $179 million ($126 million after tax and noncontrolling interests) for the six months ended June 30, 2021 as compared to $376 million ($265 million after tax and noncontrolling interests) in the comparable 2020 period.

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

Net catastrophe losses for the six months ended June 30, 2020 included $195 million related to COVID-19, $61 million related to civil unrest and $120 million related primarily to severe weather-related events.

Higher net investment income was driven by improved limited partnership and common stock returns and higher investment gains were driven by lower impairment losses and the favorable change in fair value of non-redeemable preferred stock for the six months ended June 30, 2021 as compared with the comparable 2020 period.

CNA’s Property & Casualty and Other Insurance Operations

CNA’s commercial property and casualty insurance operations (“ Property & Casualty Operations”) include its Specialty, Commercial and International lines of business.

CNA’s Other Insurance Operations outside of Property & Casualty Operations include its long term care business that is in run-off, certain corporate expenses, including interest on CNA’s corporate debt, certain property and casualty businesses in run-off, including CNA Re, A&EP, excess workers’ compensation and legacy mass tort.

CNA’s Other Insurance Operations outside of Property & Casualty Operations include its long term care business that is in run-off, certain corporate expenses, including interest on CNA’s corporate debt, certain property and casualty businesses in run-off, including CNA Re, Asbestos & Environmental Pollution (“A&EP”), excess workers’ compensation and legacy mass tort.

We believe the presentation of CNA as one reportable segment is appropriate in accordance with applicable accounting standards on segment reporting.

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Please see the non-GAAP reconciliation of core income (loss) to net income (loss) that follows in this MD&A.

Recent Developments

As previously disclosed, CNA sustained a sophisticated cybersecurity attack in March of 2021 involving ransomware that caused a network disruption and impacted certain of its systems.

As a result, CNA’s written premium production, most notably in Commercial, was impacted by lower levels of retention and new business during the three months ended June 30, 2021.

CNA has also incurred additional expenses within Other Insurance Operations related to the cybersecurity attack and expects these expenses may continue.

While CNA does not believe that the March 2021 cybersecurity attack will have a material impact on its business, results of operations or financial condition, no assurances can be given at this time as it continues to assess the full impact from the incident, including costs, expenses and insurance coverage.

Catastrophes and Related Reinsurance

Various events can cause catastrophe losses.

These events can be natural or man-made, including hurricanes, windstorms, earthquakes, hail, severe winter weather, fires, floods, riots, strikes, civil unrest, cyber attacks, pandemics and acts of terrorism that produce unusually large aggregate losses.

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

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

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

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

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

As a result of the coverage of in-force policies, net written premiums were reduced by $122 million during the quarter for the one-time catch-up under the treaty of unearned premium on policies previously written as of the June 1, 2021 treaty inception.

This ceded premium will earn in future quarters consistent with the underlying gross policies.

CNA also renewed its excess-of-loss property catastrophe reinsurance as described below.

Group North American Property Treaty

CNA purchased corporate catastrophe excess-of-loss treaty reinsurance covering its U.S.

states and territories and Canadian property exposures underwritten in its North American and European companies.

Exposures underwritten through Hardy are excluded.

The treaty has a term of June 1, 2021 to June 1, 2022 and provides coverage for the accumulation of covered losses from catastrophe occurrences above CNA’s per occurrence retention of $190 million up to $900 million for all losses other than earthquakes.

Earthquakes are covered up to $1.0 billion.

Losses stemming from terrorism events are covered unless they are due to a nuclear, biological or chemical attack.

All layers of the treaty provide for one full reinstatement.

See the Catastrophes and Related Reinsurance section of our MD&A included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 for further information.

Property & Casualty Operations

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

The following tables summarize the results of CNA’s Property & Casualty Operations for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31, 2021

The following tables summarize the results of CNA’s Property & Casualty Operations for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, 2021

International

1 unchanged sentence

Gross written premiums

Gross written premiums excluding third

party captives

Gross written premiums excluding third party captives

Net written premiums

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Other performance metrics:

Loss ratio excluding catastrophes

and development

Loss ratio excluding catastrophes and development

Effect of catastrophe impacts

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Combined ratio

Combined ratio excluding catastrophes

and development

Combined ratio excluding catastrophes and development

Renewal premium change

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Gross written premiums

Gross written premiums excluding third

party captives

Gross written premiums excluding third party captives

Net written premiums

1 unchanged sentence

Net investment income

Core income (loss)

Other performance metrics:

Loss ratio excluding catastrophes

and development

Loss ratio excluding catastrophes and development

Effect of catastrophe impacts

3 unchanged sentences

Combined ratio

Combined ratio excluding catastrophes

and development

Combined ratio excluding catastrophes and development

Renewal premium change

Total gross written premiums increased $167 million for the three months ended March 31, 2021 as compared with the comparable 2020 period.

Total net written premiums increased $74 million for the three months ended March 31, 2021 as compared with the comparable 2020 period.

Gross written premiums, excluding third party captives, for Specialty increased $75 million for the three months ended March 31, 2021 as compared with the comparable 2020 period driven by higher new business and strong rate.

Net written premiums for Specialty increased $48 million for the three months ended March 31, 2021 as compared with the comparable 2020 period.

The increase in net earned premiums for the three months ended March 31, 2021 was consistent with the trend in net written premiums for Specialty.

Gross written premiums for Commercial increased $51 million for the three months ended March 31, 2021 as compared with the comparable 2020 period driven by higher new business and strong rate.

Net written premiums for Commercial increased $10 million for the three months ended March 31, 2021 as compared with the comparable 2020 period.

The increase in net earned premiums for the three months ended March 31, 2021 was consistent with the trend in net written premiums in recent quarters for Commercial.

Gross written premiums for International increased $36 million for the three months ended March 31, 2021 as compared with the comparable 2020 period.

Excluding the effect of foreign currency exchange rates, gross written premiums increased $19 million driven by growth in Europe and Canada.

Net written premiums for International increased $16 million for the three months ended March 31, 2021 as compared with the comparable 2020 period.

Excluding the effect of foreign currency exchange rates, net written premiums increased $3 million for the three months ended March 31, 2021 as compared with the comparable 2020 period.

The increase in net earned premiums for the three months ended March 31, 2021 was consistent with the trend in net written premiums for International.

Total core income increased $142 million for the three months ended March 31, 2021 as compared with the comparable 2020 period primarily due to higher net investment income driven by limited partnership and common stock returns and improved non-catastrophe current accident year underwriting results, partially offset by higher net catastrophe losses.

Total net catastrophe losses were $125 million for the three months ended March 31, 2021 as compared with $75 million for the comparable 2020 period.

For the three months ended March 31, 2021 and 2020, Specialty had net catastrophe losses of $5 million and $8 million, Commercial had net catastrophe losses of $115 million and $57 million and International had net catastrophe losses of $5 million and $10 million.

Favorable net prior year loss reserve development of $15 million was recorded for the three months ended March 31, 2021 and 2020.

For the three months ended March 31, 2021 and 2020, Specialty recorded favorable net prior year loss reserve development of $15 million and $11 million.

For the three months ended March 31, 2021, Commercial recorded no net prior year loss reserve development as compared with favorable net prior year loss reserve development of $4 million in the comparable 2020 period.

There was no net prior year loss reserve development recorded for International for the three months ended March 31, 2021 and 2020.

Six Months Ended June 30, 2021

International

(In millions, except %)

Gross written premiums

Gross written premiums excluding third party captives

Net written premiums

Net earned premiums

Net investment income

Other performance metrics:

Loss ratio excluding catastrophes and development

Effect of catastrophe impacts

Effect of development-related items

Expense ratio

Dividend ratio

Combined ratio

Combined ratio excluding catastrophes and development

Renewal premium change

Six Months Ended June 30, 2020

Gross written premiums

Gross written premiums excluding third party captives

Net written premiums

Net earned premiums

Net investment income

Core income (loss)

Other performance metrics:

Loss ratio excluding catastrophes and development

Effect of catastrophe impacts

Effect of development-related items

Expense ratio

Dividend ratio

Combined ratio

Combined ratio excluding catastrophes and development

Renewal premium change

Three Months Ended June 30, 2021 Compared to the Comparable 2020 Period

Gross written premiums, excluding third party captives, for Specialty increased $86 million for the three months ended June 30, 2021 as compared with the comparable 2020 period driven by higher new business and strong rate.

Net written premiums for Specialty increased $44 million for the three months ended June 30, 2021 as compared with the comparable 2020 period.

The increase in net earned premiums for the three months ended June 30, 2021 was consistent with the trend in net written premiums for Specialty.

Gross written premiums for Commercial increased $35 million for the three months ended June 30, 2021 as compared with the comparable 2020 period driven by new business and rate.

Net written premiums for Commercial decreased $118 million for the three months ended June 30, 2021 as compared with the comparable 2020 period driven by the impact of the June 1, 2021 written premium catch-up resulting from the addition of the quota share treaty to the property reinsurance program.

For further discussion of the reinsurance programs, see the Catastrophes and Related Reinsurance section of this MD&A.

Excluding the impact of the June 1, 2021 written premium catch-up, net written premiums decreased $6 million for the three months ended June 30, 2021 as compared with the comparable 2020 period.

Written premiums were also impacted by lower levels of retention and new business during the period related to the network disruption and impact to certain of CNA’s systems from the March 2021 cybersecurity attack.

Net earned premiums for Commercial increased $86 million for the three months ended June 30, 2021 as compared with the comparable 2020 period.

The increase in net earned premiums for the three months ended June 30, 2021 was partially impacted by a reduction in estimated audit premiums related to COVID-19 in the second quarter of 2020 for Commercial.

Gross written premiums for International increased $62 million for the three months ended June 30, 2021 as compared with the comparable 2020 period.

Excluding the effect of foreign currency exchange rates, gross written premiums increased $37 million driven by higher new business and rate.

Net written premiums for International increased $53 million for the three months ended June 30, 2021 as compared with the comparable 2020 period.

Excluding the effect of foreign currency exchange rates, net written premiums increased $31 million for the three months ended June 30, 2021 as compared with the comparable 2020 period.

The increase in net earned premiums for the three months ended June 30, 2021 was consistent with the trend in net written premiums for International.

Total core income increased $226 million for the three months ended June 30, 2021 as compared with the comparable 2020 period primarily due to lower net catastrophe losses and improved non-catastrophe current accident year underwriting results.

Total net catastrophe losses were $54 million for the three months ended June 30, 2021 as compared with $301 million in the comparable 2020 period.

For the three months ended June 30, 2021 and 2020, Specialty had net catastrophe losses of $1 million and $105 million, Commercial had net catastrophe losses of $51 million and $151 million and International had net catastrophe losses of $2 million and $45 million.

Favorable net prior year loss reserve development of $11 million and $28 million was recorded for the three months ended June 30, 2021 and 2020.

For the three months ended June 30, 2021 and 2020, Specialty recorded favorable net prior year loss reserve development of $10 million and $20 million, Commercial recorded no net prior year loss reserve development and favorable net prior year loss reserve development of $5 million and International recorded favorable net prior year loss reserve development of $1 million and $3 million.

Further information on net prior year loss reserve development is included in Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Specialty’s combined ratio improved 2.5 points for the three months ended March 31, 2021 as compared with the comparable 2020 period due to a 1.4 point improvement in the expense ratio and a 1.1 point improvement in the loss ratio.

The improvement in the loss ratio was primarily due to higher favorable net prior year loss reserve development and lower net catastrophe losses.

The improvement in the expense ratio was driven by higher net earned premiums.

Commercial’s combined ratio increased 5.1 points for the three months ended March 31, 2021 as compared with the comparable 2020 period due to a 6.9 point increase in the loss ratio, partially offset by a 1.8 point improvement in the expense ratio.

The increase in the loss ratio was primarily due to higher net catastrophe losses, which were 13.4 points of the loss ratio for the three months ended March 31, 2021 as compared with 7.0 points of the loss ratio in the comparable 2020 period.

The improvement in the expense ratio was driven by favorable acquisition expenses and higher net earned premiums.

International’s combined ratio improved 4.0 points for the three months ended March 31, 2021 as compared with the comparable 2020 period due to a 3.0 point improvement in the loss ratio and a 1.0 point improvement in the expense ratio.

The improvement in the loss ratio was driven by improved current accident year underwriting results.

The improvement in the expense ratio was driven by favorable commission rates and higher net earned premiums.

Specialty’s combined ratio improved 16.3 points for the three months ended June 30, 2021 as compared with the comparable 2020 period due to a 14.3 point improvement in the loss ratio and a 2.0 point improvement in the expense ratio.

The improvement in the loss ratio was driven by lower net catastrophe losses, which had a minimal impact on the loss ratio for the three months ended June 30, 2021 as compared with being 15.0 points of the loss ratio for the comparable 2020 period, and improved non-catastrophe current accident year underwriting results.

The improvement in the expense ratio was driven by a favorable acquisition ratio and higher net earned premiums.

Commercial’s combined ratio improved 12.3 points for the three months ended June 30, 2021 as compared with the comparable 2020 period.

The loss ratio improved 10.7 points driven by lower net catastrophe losses, which were 5.8 points of the loss ratio for the three months ended June 30, 2021 as compared with 19.0 points of the loss ratio in the comparable 2020 period.

The combined ratio excluding catastrophes and development improved 0.2 points for the three months ended June 30, 2021 as compared with the comparable 2020 period, reflecting a 1.6 point improvement in the expense ratio largely offset by a 1.4 point increase in the loss ratio excluding catastrophes and development.

The improvement in the expense ratio was primarily due to higher net earned premiums.

The increase in the loss ratio excluding catastrophes and development was driven by lower loss frequency as a result of shelter in place restrictions in the second quarter of 2020.

International’s combined ratio improved 22.3 points for the three months ended June 30, 2021 as compared with the comparable 2020 period due to a 19.1 point improvement in the loss ratio and a 3.2 point improvement in the expense ratio.

The improvement in the loss ratio was driven by lower net catastrophe losses, which were 0.8 points of the loss ratio for the three months ended June 30, 2021 as compared with 19.9 points of the loss ratio in the comparable 2020 period, and improved non-catastrophe current accident year underwriting results.

The improvement in the expense ratio was driven by higher net earned premiums and lower acquisition costs.

Six Months Ended June 30, 2021 Compared to the Comparable 2020 Period

Gross written premiums, excluding third party captives, for Specialty increased $161 million for the six months ended June 30, 2021 as compared with the comparable 2020 period driven by higher new business and strong rate.

Net written premiums for Specialty increased $92 million for the six months ended June 30, 2021 as compared with the comparable 2020 period.

The increase in net earned premiums for the six months ended June 30, 2021 was consistent with the trend in net written premiums for Specialty.

Gross written premiums for Commercial increased $86 million for the six months ended June 30, 2021 as compared with the comparable 2020 period driven by higher new business and rate.

Net written premiums for Commercial decreased $108 million for the six months ended June 30, 2021 as compared with the comparable 2020 period driven by the impact of the June 1, 2021 written premium catch-up resulting from the addition of the quota share treaty to the property reinsurance program.

Excluding the impact of the June 1, 2021 written premium catch-up, net written premiums increased $4 million for the six months ended June 30, 2021 as compared with the comparable 2020 period.

Net earned premiums for Commercial increased $123 million for the six months ended June 30, 2021 as compared with the comparable 2020 period.

The increase in net earned premiums for the six months ended June 30, 2021 was partially impacted by a reduction in estimated audit premiums related to COVID-19 in the second quarter of 2020 for Commercial.

Gross written premiums for International increased $98 million for the six months ended June 30, 2021 as compared with the comparable 2020 period.

Excluding the effect of foreign currency exchange rates, gross written premiums increased $57 million driven by higher new business and rate.

Net written premiums for International increased $69 million for the six months ended June 30, 2021 as compared with the comparable 2020 period.

Excluding the effects of foreign currency exchange rates, net written premiums increased $34 million for the six months ended June 30, 2021 as compared with the comparable 2020 period.

The increase in net earned premiums for the six months ended June 30, 2021 was consistent with the trend in net written premiums for International.

Total core income increased $368 million for the six months ended June 30, 2021 as compared with the comparable 2020 period primarily due to improved current accident year underwriting results and higher net investment income driven by limited partnership and common stock returns.

Total net catastrophe losses were $179 million for the six months ended June 30, 2021 as compared with $376 million in the comparable 2020 period.

For the six months ended June 30, 2021 and 2020, Specialty had net catastrophe losses of $6 million and $113 million, Commercial had net catastrophe losses of $166 million and $208 million and International had net catastrophe losses of $7 million and $55 million.

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.

For the six months ended June 30, 2021 and 2020, Specialty recorded favorable net prior year loss reserve development of $25 million and $31 million, Commercial recorded no net prior year loss reserve development and favorable net prior loss reserve development of $9 million and International recorded favorable net prior year loss reserve development of $1 million and $3 million.

Further information on net prior year loss reserve development is included in Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Specialty’s combined ratio improved 9.6 points for the six months ended June 30, 2021 as compared with the comparable 2020 period due to a 7.7 point improvement in the loss ratio and a 1.9 point improvement in the expense ratio.

The improvement in the loss ratio was primarily due to lower net catastrophe losses, which were 0.3 points of the loss ratio for the six months ended June 30, 2021 as compared with 8.2 points of the loss ratio in the comparable 2020 period, and improved non-catastrophe current accident year underwriting results.

The improvement in the expense ratio was driven by higher net earned premiums and a favorable acquisition ratio.

Commercial’s combined ratio improved 3.5 points for the six months ended June 30, 2021 as compared to the comparable 2020 period due to a 1.8 point improvement in the expense ratio and a 1.7 point improvement in the loss ratio.

The improvement in the expense ratio was primarily due to higher net earned premiums and a favorable acquisition ratio.

The improvement in the loss ratio was driven by lower net catastrophe losses, which were 9.6 points of the loss ratio for the six months ended June 30, 2021 as compared with 12.8 points of the loss ratio in the comparable 2020 period.

International’s combined ratio improved 13.0 points for the six months ended June 30, 2021 as compared with the comparable 2020 period due to a 10.8 point improvement in the loss ratio and a 2.2 point improvement in the expense ratio.

The improvement in the loss ratio was driven by lower net catastrophe losses, which were 1.4 points of the loss ratio for the six months ended June 30, 2021 as compared with 11.9 points of the loss ratio in the comparable 2020 period, and improved non-catastrophe current accident year underwriting results.

The improvement in the expense ratio was driven by lower acquisition costs and higher net earned premiums.

Other Insurance Operations

The following table summarizes the results of CNA’s Other Insurance Operations for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31

The following table summarizes the results of CNA’s Other Insurance Operations for the three and six months ended June 30, 2021 and 2020:

Three Months Ended

Six Months Ended

(In millions)

1 unchanged sentence

Net investment income

Core income (loss)

Core results improved $13 million for the three months ended March 31, 2021 as compared with the comparable 2020 period driven by better than expected morbidity in the long term care business and higher net investment income, driven by returns in the limited partnership portfolio.

Further, during the first three months of 2021, relative to expectations, CNA experienced lower new claim frequency, higher claim terminations and more favorable claim severity in the long term care business amid the effects of the coronavirus disease (“COVID-19”).

Given the uncertainty of these trends, CNA increased its incurred but not reported (“IBNR”) reserves in anticipation of increased claim activity as the COVID-19 pandemic abates.

Results for the three months ended March 31, 2021 also reflect the recognition of a $12 million loss resulting from the legacy excess workers’ compensation loss portfolio transfer (“EWC LPT”).

For further information on the EWC LPT see Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Non-GAAP Reconciliation of Core Income (Loss) to Net Income (Loss)

The following table reconciles core income (loss) to net income (loss) attributable to Loews Corporation for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31

Three Months Ended June 30, 2021 Compared to the Comparable 2020 Period

Core results improved $16 million for the three months ended June 30, 2021 as compared with the comparable 2020 period due to higher net investment income, driven by returns in the limited partnership portfolio, and better than expected morbidity in the long term care business, partially offset by unfavorable persistency in the long term care business.

Core results for the three months ended June 30, 2021 also include unfavorable net prior year loss reserve development related to legacy mass tort exposures of $40 million compared with $50 million in the comparable 2020 period.

Net prior year loss reserve development is further discussed in Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Core results for the three months ended June 30, 2021 also include additional expenses related to the March 2021 cybersecurity attack.

Six Months Ended June 30, 2021 Compared to the Comparable 2020 Period

Core results improved $29 million for the six months ended June 30, 2021 as compared with the comparable 2020 period, due to higher net investment income, driven by returns in the limited partnership portfolio, better than expected morbidity in the long term care business and lower unfavorable net prior year loss reserve development on legacy mass tort exposures.

These improvements were partially offset by unfavorable persistency in the long term care business, lower amortization of the deferred gain related to the A&EP Loss Portfolio Transfer (“LPT”) and the recognition of a $12 million loss resulting from legacy excess workers’ compensation loss portfolio transfer (“EWC LPT”) in the 2021 period.

For further information on the A&EP LPT, EWC LPT and net prior year loss reserve development see Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Core results for the six months ended June 30, 2021 also include additional expenses related to the March 2021 cybersecurity attack.

Non-GAAP Reconciliation of Core Income (Loss) to Net Income

The following table reconciles core income (loss) to net income attributable to Loews Corporation for the three and six months ended June 30, 2021 and 2020:

Three Months Ended

Six Months Ended

(In millions)

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Consolidating adjustments including noncontrolling interests

Net income (loss) attributable to Loews Corporation

Net income attributable to Loews Corporation

Boardwalk Pipelines

Results of Operations

A significant portion of Boardwalk Pipelines’ revenues are fee-based, being derived from capacity reservation charges under firm agreements with customers, which do not vary significantly period to period, but are impacted by longer term trends in its business such as lower pricing on contract renewals and other factors.

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For further information on Boardwalk Pipelines’ revenue recognition policies see Note 1 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020.

The following table summarizes the results of operations for Boardwalk Pipelines for the three months ended March 31, 2021 and 2020 as presented in Note 12 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:

Three Months Ended March 31

The following table summarizes the results of operations for Boardwalk Pipelines for the three and six months ended June 30, 2021 and 2020 as presented in Note 11 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:

Three Months Ended

Six Months Ended

(In millions)

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Net income attributable to Loews Corporation

Total revenues increased $31 million for the three months ended March 31, 2021 as compared with the comparable 2020 period.

Including the effect of fuel and transportation expense, operating revenues increased $28 million driven primarily by recently completed growth projects and higher system utilization from colder winter weather experienced during the first three months of 2021, partially offset by higher fuel and transportation expense.

Operating expenses increased $6 million for the three months ended March 31, 2021 as compared with the comparable 2020 period.

Excluding items offset with operating revenues, operating costs increased $3 million, primarily due to an increased asset base and the colder winter weather experienced during the first three months of 2021.

Three Months Ended June 30, 2021 Compared to the Comparable 2020 Period

Total revenues increased $16 million for the three months ended June 30, 2021 as compared with the comparable 2020 period primarily driven by revenues from recently completed growth projects.

Operating and interest expenses were essentially flat for the three months ended June 30, 2021 as compared with the comparable 2020 period.

Six Months Ended June 30, 2021 Compared to the Comparable 2020 Period

Total revenues increased $47 million for the six months ended June 30, 2021 as compared with the comparable 2020 period.

Including fuel and transportation expense, net operating revenues increased $44 million primarily driven by recently completed growth projects and higher system utilization from colder winter weather experienced during the first quarter of 2021, partially offset by higher fuel and transportation expense.

Operating expenses increased $5 million for the six months ended June 30, 2021 as compared with the comparable 2020 period.

Excluding fuel and transportation expense which was offset with operating revenues, operating expenses increased $2 million, primarily due to an increased asset base from recently completed growth projects.

Interest expense decreased $2 million for the six months ended June 30, 2021 as compared with the comparable 2020 period primarily due to lower average interest rates and lower average outstanding long term debt balances.

Loews Hotels & Co

The following table summarizes the results of operations for Loews Hotels & Co for the three months ended March 31, 2021 and 2020 as presented in Note 12 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:

Three Months Ended March 31

The following table summarizes the results of operations for Loews Hotels & Co for the three and six months ended June 30, 2021 and 2020 as presented in Note 11 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:

Three Months Ended

Six Months Ended

(In millions)

Operating revenue

Gain on sale of hotel

Revenues related to reimbursable expenses

Operating and other:

Asset impairments

Reimbursable expenses

Equity loss from joint ventures

Equity (income) loss from joint ventures

Loss before income tax

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Net loss attributable to Loews Corporation

Loews Hotels & Co’s results declined mainly due to the continuing adverse impact of the COVID-19 pandemic on its operations.

Beginning in mid-March 2020, occupancy rates declined significantly, and most hotel properties owned and/or operated by Loews Hotels & Co temporarily suspended operations by the end of March or early April 2020.

While almost all of these hotel properties resumed operations during 2020, occupancy rates in the first three months of 2021 were considerably lower than the prior year period before mid-March 2020.

Occupancy rates have been gradually improving since June of 2020 with hotel properties located in resort destinations experiencing improvement at a faster pace than hotel properties located in urban centers.

Although Loews Hotels & Co has enacted significant measures to adjust the operating cost structure of each hotel during the COVID-19 pandemic, deferred a significant amount of capital expenditures and reduced the operating costs of its management company, it has not been able to fully offset the lost revenues resulting from lower occupancies.

This has resulted in the decrease in operating revenues of $70 million, the decrease in operating expenses of $58 million, and the increase in equity loss from joint ventures of $8 million for the three months ended March 31, 2021 as compared with the comparable 2020 period.

Pre-opening costs included in equity loss from joint ventures decreased $5 million for the three months ended March 31, 2021 as compared with the comparable 2020 period.

Corporate operations consist primarily of investment income at the Parent Company, operating results of Altium Packaging, Parent Company interest expense and other Parent Company administrative costs.

Loews Hotels & Co’s results have been significantly impacted by the COVID-19 pandemic.

By April 2020, most hotel properties owned and/or operated by Loews Hotels & Co had temporarily suspended operations.

These hotel properties gradually resumed operations at various times and all hotels have resumed operations by June 30, 2021.

During 2021, occupancy restrictions due to social distancing have lessened and occupancy rates have gradually improved since the second quarter of 2020, with hotel properties located in resort destinations improving faster than hotel properties located in urban centers.

However total occupancy levels for Loews Hotels & Co’s hotel properties have not yet reached pre-pandemic levels.

The resumption of operations and associated occupancy improvement have resulted in the increase in operating revenues of $67 million and the increase in operating expenses of $30 million for the three months ended June 30, 2021 as compared with the comparable 2020 period, when operations were significantly impacted by the pandemic.

Pre-pandemic operating results prior to mid-March 2020 and the impact of measures to adjust the operating cost structure of each hotel during the COVID-19 pandemic while hotel operations were suspended drove the decrease in operating revenues of $3 million and the decrease in operating expenses of $28 million for the six months ended June 30, 2021 as compared with the comparable 2020 period.

Equity (income) loss from joint ventures improved $28 million and $20 million for the three and six months ended June 30, 2021 as compared with the comparable 2020 periods driven by the resumption of operations and associated occupancy improvement at all joint venture hotels.

All eight Universal Orlando hotel properties were open and operational for the first time by June 30, 2021.

In addition, pre-opening costs included in equity (income) loss from joint ventures decreased $2 million and $7 million for the three and six months ended June 30, 2021 as compared with the comparable 2020 periods.

Loews Hotels & Co considers events or changes in circumstances that indicate the carrying amount of its assets may not be recoverable.

During the second quarter of 2020, Loews Hotels & Co recorded impairment charges of $20 million to reduce the carrying value of certain assets to their estimated fair value.

Loews Hotels & Co recorded a gain of $13 million on the sale of an owned hotel in the second quarter of 2020.

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

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

The following table summarizes the results of operations for Corporate for the three months ended March 31, 2021 and 2020 as presented in Note 12 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:

Three Months Ended March 31

Corporate also includes the operating results of Altium Packaging through March 31, 2021 and the equity loss related to the Parent Company’s equity method investment in Altium Packaging beginning on April 1, 2021, as a result of the sale of 47% of the Parent Company’s interest in Altium Packaging and the resulting deconsolidation.

See Note 2 for more information.

The following table summarizes the results of operations for Corporate for the three and six months ended June 30, 2021 and 2020 as presented in Note 11 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:

Three Months Ended

Six Months Ended

(In millions)

Net investment income (loss)

Investment gains (losses)

Operating revenues and other

Operating and other

Loss before income tax

Income (loss) before income tax

Income tax (expense) benefit

Net loss attributable to Loews Corporation

Net investment income for the Parent Company for the three months ended March 31, 2021 was $46 million as compared with a loss of $166 million for the comparable 2020 period, primarily due to improved results from equity based investments in the Parent Company trading portfolio.

Operating revenues and other include Altium Packaging revenues of $280 million and $256 million for the three months ended March 31, 2021 and 2020.

The increase of $24 million for the three months ended March 31, 2021 as compared with the comparable 2020 period reflects higher year-over-year resin prices and an increase of $7 million related to an acquisition in 2020, partially offset by lower volumes, primarily due to the impact of the winter storms in 2021.

Altium Packaging’s contracts with its customers provide for price adjustments for changes in resin prices on a prospective basis.

Due to fluctuations in resin prices, over time resin raw material costs are generally offset by the change in revenues, so that Altium Packaging’s gross margins return to the same level as prior to the change in prices.

Operating and other expenses include Altium Packaging operating expenses of $279 million and $246 million for the three months ended March 31, 2021 and 2020.

The increase in operating expenses of $33 million for the three months ended March 31, 2021 as compared with the comparable 2020 period is primarily due to the increase in resin prices, an increase of $4 million related to an acquisition in 2020 and increased labor costs.

Corporate Operating and other expenses were $29 million and $22 million for the three months ended March 31, 2021 and 2020.

The increase of $7 million for the three months ended March 31, 2021 as compared with the comparable 2020 period is primarily due to legal and other corporate overhead expenses.

Interest expenses increased $17 million for the three months ended March 31, 2021 as compared with the comparable 2020 period due to the May of 2020 issuance of the Parent Company’s $500 million aggregate principal amount of 3.2% senior notes due May 15, 2030 and a charge of approximately $14 million to write off debt issuance costs for the early retirement of debt at Altium Packaging in the current year period.

Income tax expense was $31 million for the three months ended March 31, 2021 as compared with an income tax benefit of $43 million for the comparable 2020 period.

The income tax expense for the three months ended March 31, 2021 is primarily due to the recognition of a $35 million deferred tax liability resulting from the asset held for sale designation of Altium Packaging related to the sale of 47% of the Company’s interest in Altium Packaging.

For more information on the sale see Note 2 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Net income (loss) attributable to Loews Corporation

Net investment income for the Parent Company decreased $86 million for the three months ended June 30, 2021 as compared with the comparable 2020 period, primarily due to lower results from equity based investments in the Parent Company trading portfolio.

Net investment income for the Parent Company for the six months ended June 30, 2021 was $70 million as compared with a loss of $56 million for the comparable 2020 period, primarily due to improved results from equity based investments in the Parent Company trading portfolio.

Investment gains of $540 million for the three and six months ended June 30, 2021 were primarily due to a gain of $555 million ($438 million after tax) on the sale of 47% of Altium Packaging.

Investment loss of $1.2 billion ($957 million after tax) for the three and six months ended June 30, 2020 was due to the loss recognized upon deconsolidation of Diamond Offshore as a result of its Chapter 11 Filing.

Operating revenues and other include Altium Packaging revenues of $280 million for 2021, prior to its deconsolidation on April 1, 2021, and $244 million and $500 million for the three and six months ended June 30, 2020.

Operating and other expenses decreased by $230 million and $190 million for the three and six months ended June 30, 2021 as compared with the comparable 2020 periods primarily due to the deconsolidation of Altium Packaging as the three and six months ended June 30, 2020 included $236 million and $482 million of Operating and other expenses for Altium Packaging.

Operating and other expenses also include legal and administrative costs at the Parent Company.

In addition, pursuant to the deconsolidation of Altium Packaging, the related equity loss for the three months ended June 30, 2021 related to the Parent Company’s investment in Altium Packaging is included in Operating and other expenses.

Interest expenses decreased $10 million for the three months ended June 30, 2021 as compared with the comparable 2020 period primarily due to the deconsolidation of Altium Packaging as the three months ended June 30, 2020 included $11 million of interest expense for Altium packaging.

Interest expenses increased $7 million for the six months ended June 30, 2021 as compared with the comparable 2020 period primarily due to the May of 2020 issuance of the Parent Company’s $500 million 3.2% senior notes and a charge of approximately $14 million to write off debt issuance costs for the early retirement of debt at Altium Packaging in the first quarter of 2021, partially offset by the deconsolidation of Altium Packaging as of April 1, 2021.

Income tax expense was $114 million and $145 million for the three and six months ended June 30, 2021 as compared with an income tax benefit of $241 million and $284 million for the comparable 2020 periods.

The income tax expense for the three and six months ended June 30, 2021 is primarily due to the recognition of $117 million of taxes on the investment gain related to the sale of 47% of Altium Packaging.

The income tax expense for the six months ended June 30, 2021 also includes the recognition of a $40 million deferred tax liability resulting from the asset held for sale designation of Altium Packaging in the first quarter of 2021.

The income tax benefit for the three and six months ended June 30, 2020 is primarily due to the recognition of taxes on the investment loss related to the deconsolidation of Diamond Offshore.

Diamond Offshore

Amounts presented for Diamond Offshore for the three months ended March 31, 2020 reflect the period prior to its deconsolidation in the second quarter of 2020.

Contract drilling revenues were $218 million and Contract drilling expenses were $185 million for the three months ended March 31, 2020.

Operating and other expenses include an aggregate asset impairment charge of $774 million ($408 million after tax and noncontrolling interests) recognized in the first quarter of 2020.

For more information on the deconsolidation of Diamond Offshore see Note 2 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020.

Amounts presented for Diamond Offshore for the three and six months ended June 30, 2020 reflect the periods prior to its deconsolidation in the second quarter of 2020.

Contract drilling revenues were $69 million and $287 million for the three and six months ended June 30, 2020 and Contract drilling expenses were $69 million and $254 million for the three and six months ended June 30, 2020.

Operating and other expenses for the six months ended June 30, 2020 included an aggregate asset impairment charge of $774 million ($408 million after tax and noncontrolling interests) recognized in the first quarter of 2020.

For more information on the deconsolidation of Diamond Offshore see Note 2 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

LIQUIDITY AND CAPITAL RESOURCES

Parent Company

Parent Company cash and investments, net of receivables and payables, totaled $3.6 billion at March 31, 2021 as compared to $3.5 billion at December 31, 2020.

During the three months ended March 31, 2021, we received $275 million in dividends from CNA, including a special dividend of $182 million.

Parent Company cash and investments, net of receivables and payables, totaled $3.9 billion at June 30, 2021 as compared to $3.5 billion at December 31, 2020.

During the six months ended June 30, 2021, we received $367 million in dividends from CNA, including a special dividend of $182 million.

We also received a $199 million dividend from Altium Packaging in February of 2021.

Cash outflows during the three months ended March 31, 2021 included the payment of $280 million to fund treasury stock purchases, $17 million of cash dividends to our shareholders and $32 million of cash contributions to Loews Hotels & Co.

On April 1, 2021, Loews Corporation sold its 47% interest in Altium Packaging to GIC and received approximately $420 million in cash consideration, subject to expenses and post-closing adjustments.

Cash outflows during the six months ended June 30, 2021 included the payment of $484 million to fund treasury stock purchases, $33 million of cash dividends to our shareholders and $32 million of cash contributions to Loews Hotels & Co.

On April 1, 2021, Loews Corporation sold its 47% interest in Altium Packaging to GIC and received $420 million in cash consideration.

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

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

During the three months ended March 31, 2021, we purchased 5.6 million shares of Loews Corporation common stock.

As of April 30, 2021, we had purchased an additional 0.6 million shares of Loews Corporation common stock in 2021 at an aggregate cost of $32 million.

As of April 30, 2021, there were 263,175,591 shares of Loews Corporation common stock outstanding.

During the six months ended June 30, 2021, we purchased 9.5 million shares of Loews Corporation common stock.

As of July 30, 2021, we had purchased an additional 2.6 million shares of Loews Corporation common stock in 2021 at an aggregate cost of $140 million.

As of July 30, 2021, there were 257,273,034 shares of Loews Corporation common stock outstanding.

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

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

CNA’s cash provided by operating activities was $82 million for the three months ended March 31, 2021 and $212 million for the comparable 2020 period.

The decrease in cash provided by operating activities was driven by the payment of the EWC LPT premium, partially offset by lower net claim payments and an increase in premiums collected.

CNA’s cash provided by operating activities was $685 million for the six months ended June 30, 2021 and $650 million for the comparable 2020 period.

The increase in cash provided by operating activities was driven by lower net claim payments and an increase in premiums collected, largely offset by the payment of the EWC LPT premium.

For further information on the EWC LPT see Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

CNA paid a quarterly cash dividend of $0.38 per share on its common stock and a special cash dividend of $0.75 per share on its common stock in the first quarter of 2021.

On April 30, 2021, CNA’s Board of Directors declared a quarterly cash dividend of $0.38 per share, payable June 3, 2021 to shareholders of record on May 17, 2021.

CNA paid cash dividends of $1.51 per share on its common stock, including a special cash dividend of $0.75 per share, during the six months ended June 30, 2021.

On July 30, 2021, CNA’s Board of Directors declared a quarterly cash dividend of $0.38 per share, payable September 2, 2021 to shareholders of record on August 16, 2021.

CNA’s declaration and payment of future dividends is at the discretion of its Board of Directors and will depend on many factors, including CNA’s earnings, financial condition, business needs and regulatory constraints.

Dividends from Continental Casualty Company (“CCC”), a subsidiary of CNA, are subject to the insurance holding company laws of the State of Illinois, the domiciliary state of CCC.

Under these laws, ordinary dividends, or dividends that do not require prior approval by the Illinois Department of Insurance (the “Department”), are determined based on the greater of the prior year’s statutory net income or 10% of statutory surplus as of the end of the prior year, as

well as the timing and amount of dividends paid in the preceding 12 months.

Additionally, ordinary dividends may only be paid from earned surplus, which is calculated by removing unrealized gains from unassigned surplus.

As of March 31, 2021, CCC was in a positive earned surplus position.

CCC paid dividends of $330 million and $670 million during the three months ended March 31, 2021 and 2020.

As of June 30, 2021, CCC was in a positive earned surplus position.

CCC paid dividends of $480 million and $815 million during the six months ended June 30, 2021 and 2020.

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

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

Boardwalk Pipelines’ cash provided by operating activities increased $40 million for the three months ended March 31, 2021 compared to the comparable 2020 period, primarily due to the change in net income.

For the three months ended March 31, 2021 and 2020, Boardwalk Pipelines’ capital expenditures were $53 million and $101 million, consisting primarily of a combination of growth and maintenance capital.

As of March 31, 2021, Boardwalk Pipelines had $10 million of outstanding borrowings under its credit facility.

As of April 30, 2021, Boardwalk Pipelines had no outstanding borrowings and approximately $1.5 billion of available borrowing under its credit facility.

Boardwalk Pipelines anticipates that its existing capital resources, including its credit facility and cash flows from operating activities, will be adequate to fund its operations and capital expenditures for 2021.

Boardwalk Pipelines’ cash provided by operating activities increased $26 million for the six months ended June 30, 2021 as compared to the comparable 2020 period, primarily due to the change in net income.

For the six months ended June 30, 2021 and 2020, Boardwalk Pipelines’ capital expenditures were $138 million and $246 million, consisting primarily of a combination of growth and maintenance capital.

In May of 2021, Boardwalk Pipelines entered into an amended revolving credit agreement to decrease the borrowing capacity from $1.5 billion to $1.0 billion and extend the maturity date to May 27, 2026, although the maturity date may be further extended for two one-year extensions at Boardwalk Pipelines’ election.

As of June 30, 2021, Boardwalk Pipelines had no outstanding borrowings under its revolving credit facility.

Boardwalk Pipelines anticipates that its existing capital resources, including its revolving credit facility and cash flows from operating activities, will be adequate to fund its operations and capital expenditures for 2021.

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

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(2) temporarily allow funds previously restricted directly or indirectly under the hotel’s underlying loan agreement for the renewal, replacement and addition of building improvements, furniture and fixtures to be used instead for hotel operations and maintenance;

and/or (3) defer certain interest and/or principal payments while the hotels operations are temporarily suspended or significantly impacted by a decline in occupancy.

and/or (3) defer certain interest and/or principal payments while the hotels operations were temporarily suspended or significantly impacted by a decline in occupancy.

Loews Hotels & Co also continues to work with lenders on loans that are being reviewed for extension.

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Through the date of this Report, Loews Hotels & Co is not in default on any of its loans.

Additionally, due to temporary suspension of operations and lost revenues in certain joint venture entities, Loews Hotels & Co has received capital call notices in accordance with the underlying joint venture agreements to support the properties’ operations.

Through April 30, 2021, Loews Hotels & Co funded approximately $13 million to these joint ventures in 2021.

Additional capital calls are anticipated from certain joint ventures during 2021 and will depend on future occupancy levels and cash needs.

Through April 30, 2021, Loews Hotels & Co received capital contributions of $32 million from Loews Corporation.

Additional funding from Loews Corporation during the remainder of 2021 will be needed and will depend on numerous factors, including how quickly properties are able to return to sustainable operating levels as well as any strategically aligned development opportunities.

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.

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

Loews Hotels & Co received capital contributions of $32 million from Loews Corporation during the six months ended June 30, 2021.

Additional funding from Loews Corporation during the remainder of 2021 may be needed and will depend on numerous factors, including how quickly properties are able to return to sustainable operating levels as well as any strategically aligned development opportunities.

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

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

These types of investments generally present greater volatility, less liquidity and greater risk than fixed income investments and are included within Results of Operations – Corporate.

We enter into short sales and invest in certain derivative instruments that are used for asset and liability management activities, income enhancements to the portfolio management strategy and to benefit from anticipated future movements in the underlying markets.

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

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

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

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Credit exposure associated with non-performance by counterparties to derivative instruments is generally limited to the uncollateralized change in fair value of the derivative instruments recognized in the Consolidated Condensed Balance Sheets.

We mitigate the risk of non-performance by monitoring the creditworthiness of counterparties and diversifying derivatives by using multiple counterparties.

We occasionally require collateral from derivative investment counterparties depending on the amount of the exposure and the credit rating of the counterparty.

The risk of non-performance is mitigated by monitoring the creditworthiness of counterparties and diversifying derivatives by using multiple counterparties.

Collateral is occasionally required from derivative investment counterparties depending on the amount of the exposure and the credit rating of the counterparty.

CNA maintains a large portfolio of fixed maturity and equity securities, including large amounts of corporate and government issued debt securities, residential and commercial mortgage-backed securities, other asset-backed securities and investments in limited partnerships which pursue a variety of long and short investment strategies across a broad array of asset classes.

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Fixed income securities, as presented, include both fixed maturity securities and non-redeemable preferred stock.

Three Months Ended March 31

Three Months Ended

Six Months Ended

(In millions)

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Total fixed income securities

Limited partnership investments

Limited partnership and common stock investments

Other, net of investment expense

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Limited partnership and common stock return

CNA’s net investment income for the three months ended March 31, 2021 increased $175 million as compared with the comparable 2020 period, driven by increased limited partnership and common stock returns.

CNA’s net investment income for the three and six months ended June 30, 2021 increased $57 million and $232 million as compared with the comparable 2020 periods, driven by limited partnership and common stock returns.

Investment Gains (Losses)

The components of CNA’s investment gains (losses) are presented in the following table:

Three Months Ended March 31

Three Months Ended

Six Months Ended

(In millions)

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Amounts attributable to noncontrolling interests

Net investment gains (losses) attributable to Loews Corporation

CNA’s investment gains (losses) increased $273 million for the three months ended March 31, 2021 as compared with the comparable 2020 period driven by the favorable relative change in fair value of non-redeemable preferred stock and lower impairment losses.

Investment gains (losses) attributable to Loews Corporation

CNA’s investment gains (losses) decreased $31 million for the three months ended June 30, 2021 as compared with the comparable 2020 period driven by the less favorable change in fair value of non-redeemable preferred stock partially offset by lower impairment losses.

CNA’s investment gains (losses) increased $242 million for the six months ended June 30, 2021 as compared with the comparable 2020 period driven by lower impairment losses and the favorable change in fair value of non-redeemable preferred stock.

Further information on CNA’s investment gains and losses is set forth in Note 3 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

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The following table presents the estimated fair value and net unrealized gains (losses) of CNA’s fixed maturity securities by rating distribution:

March 31, 2021

June 30, 2021

December 31, 2020

(In millions)

Government, Government agencies and

Government-sponsored enterprises

Government, Government agencies and Government-sponsored enterprises

Non-investment grade

As of March 31, 2021 and December 31, 2020, 1% of CNA’s fixed maturity portfolio was rated internally.

AAA rated securities included $1.9 billion and $1.8 billion of pre-refunded municipal bonds as of March 31, 2021 and December 31, 2020.

As of June 30, 2021 and December 31, 2020, 2% and 1% of CNA’s fixed maturity portfolio was rated internally.

AAA rated securities included $1.9 billion and $1.8 billion of pre-refunded municipal bonds as of June 30, 2021 and December 31, 2020.

The following table presents CNA’s available-for-sale fixed maturity securities in a gross unrealized loss position by ratings distribution:

March 31, 2021

June 30, 2021

(In millions)

Government, Government agencies and

Government-sponsored enterprises

Government, Government agencies and Government-sponsored enterprises

Non-investment grade

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Securities not due to mature on a single date are allocated based on weighted average life:

March 31, 2021

June 30, 2021

(In millions)

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Amounts presented are net of payable and receivable amounts for securities purchased and sold, but not yet settled.

March 31, 2021

June 30, 2021

December 31, 2020

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FORWARD-LOOKING STATEMENTS

Investors are cautioned that certain statements contained in this Report as well as in other SEC filings and periodic press releases and certain oral statements made by us and our subsidiaries and our and their officials during presentations may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”).

Investors are cautioned that certain statements contained in this Report as well as in other of our and our subsidiaries SEC filings and periodic press releases and certain oral statements made by us and our subsidiaries and our and their officials during presentations may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”).

Forward-looking statements include, without limitation, any statement that does not directly relate to any historical or current fact and may project, indicate or imply future results, events, performance or achievements.

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Forward-looking statements are based on current expectations and projections about future events and are inherently subject to a variety of risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from those anticipated or projected.

Developments in any of the risks or uncertainties facing us or our subsidiaries, including those described under Part II, Item 1A, Risk Factors in this Report and Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020 and in our other filings with the SEC, could cause our results to differ materially from results that have been or may be anticipated or projected.

Developments in any of the risks or uncertainties facing us or our subsidiaries, including those described under Part II, Item 1A, Risk Factors in this Report, Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020, Part II, Item 1A, Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and in our other filings with the SEC, could cause our results to differ materially from results that have been or may be anticipated or projected.

Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis