UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 20212022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From ____________ to _____________

Commission File Number 1-65411-06541

LOEWS CORPORATION
(Exact name of registrant as specified in its charter)

Delaware13-2646102
Delaware
13-2646102
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

667 Madison Avenue, New York, NY 10065-8087
(Address of principal executive offices) (Zip Code)

(212) 521-2000
(Registrant’s telephone number, including area code)

NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareLNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d)15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes☒No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes☒No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐

Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes☐No ☒

As of October 29, 2021,28, 2022, there were 253,684,412237,427,052 shares of the registrant’s common stock outstanding.

INDEX

Page
No.1
Table of contents
INDEX

Page
No.
Item 1. Financial Statements (unaudited)
Consolidated Condensed Balance Sheets
3
September 30, 20212022 and December 31, 2020
2021

Consolidated Condensed Statements of Operations
4
Three and nine months ended September 30, 20212022 and 2020
2021

Consolidated Condensed Statements of Comprehensive Income (Loss)
(Loss)
5
Three and nine months ended September 30, 20212022 and 2020
2021

Consolidated Condensed StatementsStatements of Equity
6
Three and nine months ended September 30, 20212022 and 2020
2021

Consolidated Condensed Statements of Cash Flows
8
Nine months ended September 30, 20212022 and 2020
2021

Notes to Consolidated Condensed Financial Statements
9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
37
39
Item 3. Quantitative and Qualitative Disclosures about Market Risk
57
61
Item 4. Controls and Procedures
57
61
58
62
Item 1. Legal Proceedings
58
62
Item 1A. Risk Factors
58
62
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
61
62
Item 6. Exhibits
62
63

2
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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)

 September 30,  December 31, 
  2021  2020 
(Dollar amounts in millions, except per share data)      
       
Assets:      
       
Investments:      
Fixed maturities, amortized cost of $40,342 and $38,963, less allowance for credit loss of $31 and $40
 $45,069  $44,646 
Equity securities, cost of $1,552 and $1,456
  1,660   1,561 
Limited partnership investments  1,996   1,798 
Other invested assets, primarily mortgage loans, less allowance for credit loss of $26 and $26
  1,140   1,165 
Short term investments  4,178   4,674 
Total investments  54,043   53,844 
Cash  811   478 
Receivables  9,187   7,833 
Property, plant and equipment  9,878   10,451 
Goodwill  349   785 
Deferred non-insurance warranty acquisition expenses  3,418   3,068 
Deferred acquisition costs of insurance subsidiaries  721   708 
Other assets  3,319   3,069 
Total assets $81,726  $80,236 
         
Liabilities and Equity:        
         
Insurance reserves:        
Claim and claim adjustment expense $23,832  $22,706 
Future policy benefits  13,198   13,318 
Unearned premiums  5,577   5,119 
Total insurance reserves  42,607   41,143 
Payable to brokers  665   92 
Short term debt  187   37 
Long term debt  8,925   10,072 
Deferred income taxes  1,089   1,065 
Deferred non-insurance warranty revenue  4,443   4,023 
Other liabilities  4,680   4,623 
Total liabilities  62,596   61,055 
         
Commitments and contingent liabilities  0   0
 
         
Preferred stock, $0.10 par value:
        
Authorized – 100,000,000 shares
  0   0
 
Common stock, $0.01 par value:
        
Authorized – 1,800,000,000 shares
        
Issued – 269,574,153 and 269,360,973 shares
  3   3 
Additional paid-in capital  3,120   3,133 
Retained earnings  15,336   14,150 
Accumulated other comprehensive income  191   581 
   18,650   17,867 
Less treasury stock, at cost (15,807,106 and 150,000 shares)
  (833)  (7)
Total shareholders’ equity  17,817   17,860 
Noncontrolling interests  1,313   1,321 
Total equity  19,130   19,181 
Total liabilities and equity $81,726  $80,236 

September 30,December 31,
 20222021
(Dollar amounts in millions, except per share data)
Assets:
Investments:
Fixed maturities, amortized cost of $41,588 and $39,952, less allowance for credit loss of $3 and $18$37,504 $44,380 
Equity securities, cost of $1,581 and $1,5461,340 1,674 
Limited partnership investments1,975 1,933 
Other invested assets, primarily mortgage loans, less allowance for credit loss of $24 and $161,053 1,091 
Short term investments4,125 4,860 
Total investments45,997 53,938 
Cash886 621 
Receivables9,458 9,273 
Property, plant and equipment9,949 9,888 
Goodwill344 349 
Deferred non-insurance warranty acquisition expenses3,653 3,476 
Deferred acquisition costs of insurance subsidiaries787 737 
Other assets4,037 3,344 
Total assets$75,111 $81,626 
 
Liabilities and Equity:
 
Insurance reserves:
Claim and claim adjustment expense$24,700 $24,174 
Future policy benefits10,454 13,236 
Unearned premiums6,195 5,761 
Total insurance reserves41,349 43,171 
Payable to brokers359 90 
Short term debt814 93 
Long term debt8,475 8,986 
Deferred income taxes245 1,079 
Deferred non-insurance warranty revenue4,706 4,503 
Other liabilities4,510 4,529 
Total liabilities60,458 62,451 
 
Commitments and contingent liabilities
 
Preferred stock, $0.10 par value:
Authorized – 100,000,000 shares
Common stock, $0.01 par value:
Authorized – 1,800,000,000 shares
Issued – 248,665,240 and 248,467,051 shares2 2 
Additional paid-in capital2,886 2,885 
Retained earnings15,377 14,776 
Accumulated other comprehensive income (loss)(3,803)186 
 14,462 17,849 
Less treasury stock, at cost (10,515,975 and 50,000 shares)(616)(3)
Total shareholders’ equity13,846 17,846 
Noncontrolling interests807 1,329 
Total equity14,653 19,175 
Total liabilities and equity$75,111 $81,626 
See accompanying Notes to Consolidated Condensed Financial Statements.







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Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

 Three Months Ended  Nine Months Ended Three Months EndedNine Months Ended
 September 30,  September 30, September 30,
 2021  2020  2021  2020 2022202120222021
(In millions, except per share data)            (In millions, except per share data)  
               
Revenues:            Revenues:  
Insurance premiums $2,059  $1,953  $6,056  $5,672 Insurance premiums$2,221 $2,059 $6,435 $6,056 
Net investment income  483   540   1,649   1,347 Net investment income404 483 1,202 1,649 
Investment gains (losses) (Note 2)  22   46   657   (1,312)
Investment gains (losses)Investment gains (losses)(96)22 (166)657 
Non-insurance warranty revenue  357   317   1,054   926 Non-insurance warranty revenue399 357 1,173 1,054 
Operating revenues and other  450   609   1,580   2,241 Operating revenues and other533 450 1,607 1,580 
Total  3,371   3,465   10,996   8,874 Total3,461 3,371 10,251 10,996 
                
Expenses:                Expenses:
Insurance claims and policyholders’ benefits  1,632   1,616   4,684   4,683 Insurance claims and policyholders’ benefits1,665 1,632 4,703 4,684 
Amortization of deferred acquisition costs  368   360   1,084   1,046 Amortization of deferred acquisition costs383 368 1,101 1,084 
Non-insurance warranty expense  330   293   973   859 Non-insurance warranty expense371 330 1,092 973 
Operating expenses and other  638   876   2,208   3,894 Operating expenses and other760 638 2,166 2,208 
Interest  99   137   324   404 Interest92 99 284 324 
Total  3,067   3,282   9,273   10,886 Total3,271 3,067 9,346 9,273 
Income (loss) before income tax  304   183   1,723   (2,012)
Income tax (expense) benefit  (58)  (21)  (391)  284 
Net income (loss)  246   162   1,332   (1,728)
Income before income taxIncome before income tax190 304 905 1,723 
Income tax expenseIncome tax expense(47)(58)(190)(391)
Net incomeNet income143 246 715 1,332 
Amounts attributable to noncontrolling interests  (26)  (23)  (97)  400 Amounts attributable to noncontrolling interests(13)(26)(67)(97)
Net income (loss) attributable to Loews Corporation $220  $139  $1,235  $(1,328)
Net income attributable to Loews CorporationNet income attributable to Loews Corporation$130 $220 $648 $1,235 
                
Basic net income (loss) per share $0.86  $0.50  $4.71  $(4.70)
                
Diluted net income (loss) per share $0.85  $0.50  $4.70  $(4.70)
Basic net income per shareBasic net income per share$0.54 $0.86 $2.65 $4.71 
Diluted net income per shareDiluted net income per share$0.54 $0.85 $2.64 $4.70 
                
Weighted average shares outstanding:                Weighted average shares outstanding:
Shares of common stock  256.76   279.40   262.27   282.63 Shares of common stock240.37256.76244.57262.27
Dilutive potential shares of common stock  0.54   0.09   0.50     Dilutive potential shares of common stock0.390.540.460.50
Total weighted average shares outstanding assuming dilution  257.30   279.49   262.77   282.63 Total weighted average shares outstanding assuming dilution240.76257.30245.03262.77

See accompanying Notes to Consolidated Condensed Financial Statements.

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Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)

 Three Months Ended  Nine Months Ended Three Months EndedNine Months Ended
 September 30,  September 30, September 30,
 2021  2020  2021  2020 2022202120222021
(In millions)            (In millions)  
               
Net income (loss) $246  $162  $1,332  $(1,728)
Net incomeNet income$143 $246 $715 $1,332 
                
Other comprehensive income (loss), after tax                Other comprehensive income (loss), after tax
Changes in:                Changes in:
Net unrealized gains (losses) on investments with an allowance for credit losses      6       (3)
Net unrealized gains (losses) on other investments  (138)  207   (465)  354 
Total unrealized gains (losses) on investments  (138)  213   (465)  351 
Unrealized gains (losses) on cash flow hedges  2   1   14   (18)
Net unrealized losses on investments with an allowance for credit lossesNet unrealized losses on investments with an allowance for credit losses(2)(8)
Net unrealized losses on other investmentsNet unrealized losses on other investments(1,327)(138)(4,284)(465)
Total unrealized losses on investmentsTotal unrealized losses on investments(1,329)(138)(4,292)(465)
Unrealized gains on cash flow hedgesUnrealized gains on cash flow hedges4 2 28 14 
Pension and postretirement benefits  16   7   32   27 Pension and postretirement benefits6 16 18 32 
Foreign currency translation  (33)  38   (19)  (17)Foreign currency translation(106)(33)(189)(19)
                
Other comprehensive income (loss)  (153)  259   (438)  343 
Other comprehensive lossOther comprehensive loss(1,425)(153)(4,435)(438)
                
Comprehensive income (loss)  93   421   894   (1,385)Comprehensive income (loss)(1,282)93 (3,720)894 
                
Amounts attributable to noncontrolling interests  (9)  (49)  (49)  363 Amounts attributable to noncontrolling interests119 (9)379 (49)
                
Total comprehensive income (loss) attributable to Loews Corporation $84  $372  $845  $(1,022)Total comprehensive income (loss) attributable to Loews Corporation$(1,163)$84 $(3,341)$845 

See accompanying Notes to Consolidated Condensed Financial Statements.

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Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY
(Unaudited)

    Loews Corporation Shareholders    
              Accumulated  Common    
        Additional     Other  Stock    
     Common  Paid-in  Retained  Comprehensive  Held in  Noncontrolling 
  Total  Stock  Capital  Earnings  Income (Loss)  Treasury  Interests 
(In millions)                     
                      
Balance, July 1, 2020 $18,413  $3  $3,371  $14,316  $5  $(491) $1,209 
Net income
  162           139           23 
Other comprehensive income  259               233       26 
Dividends paid ($0.0625 per share)
  (27)          (17)          (10)
Purchases of Loews Corporation treasury stock  (195)                  (195)    
Stock-based compensation  8       8                 
Other  0           (1)      1     
Balance, September 30, 2020
 $18,620  $3  $3,379  $14,437  $238  $(685) $1,248 
                             
Balance, July 1, 2021 $19,398  $3  $3,121  $15,132  $327  $(500) $1,315 
Net income  246           220           26 
Other comprehensive loss
  (153)              (136)      (17)
Dividends paid ($0.0625 per share)
  (27)          (16)          (11)
Purchases of Loews Corporation treasury stock  (333)                  (333)    
Stock-based compensation  (2)      (2)                
Other  1       1                 
Balance, September 30, 2021
 $19,130  $3  $3,120  $15,336  $191  $(833) $1,313 

See accompanying Notes to Consolidated Condensed Financial Statements.

6
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Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY
(Unaudited)

    Loews Corporation Shareholders    
              Accumulated  Common    
        Additional     Other  Stock    
     Common  Paid-in  Retained  Comprehensive  Held in  Noncontrolling 
  Total  Stock  Capital  Earnings  Income (Loss)  Treasury  Interests 
(In millions)                     
                      
Balance, January 1, 2020, as reported $21,930  $3  $3,374  $15,823  $(68) $(13) $2,811 
Cumulative effect adjustment from change in accounting standards  (5)          (5)            
Balance, January 1, 2020, as adjusted  21,925   3   3,374   15,818   (68)  (13)  2,811 
Net loss  (1,728)          (1,328)          (400)
Other comprehensive income  343               306       37 
Dividends paid ($0.1875 per share)
  (141)          (53)          (88)
Deconsolidation of Diamond Offshore  (1,087)                      (1,087)
Purchases of Loews Corporation treasury stock  (673)                  (673)    
Purchases of subsidiary stock from noncontrolling interests  (37)      5               (42)
Stock-based compensation  17       (1)              18 
Other  1       1           1   (1)
Balance, September 30, 2020
 $18,620  $3  $3,379  $14,437  $238  $(685) $1,248 
                             
Balance,  January 1, 2021 $19,181  $3  $3,133  $14,150  $581  $(7) $1,321 
Net income  1,332           1,235           97 
Other comprehensive loss  (438)              (390)      (48)
Dividends paid ($0.1875 per share)
  (103)          (49)          (54)
Purchases of Loews Corporation treasury stock  (826)                  (826)    
Purchases of subsidiary stock from noncontrolling interests  (18)                      (18)
Stock-based compensation  5       (11)              16 
Other  (3)      (2)              (1)
Balance, September 30, 2021
 $19,130  $3  $3,120  $15,336  $191  $(833) $1,313 
 Loews Corporation Shareholders 
 TotalCommon StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Common Stock
Held in Treasury		Noncontrolling Interests
(In millions)       
        
Balance, July 1, 2021$19,398 $3 $3,121 $15,132 $327 $(500)$1,315 
Net income246 220 26 
Other comprehensive loss(153)(136)(17)
Dividends paid ($0.0625 per share)(27)(16)(11)
Purchases of Loews Corporation treasury stock(333)(333)
Stock-based compensation(2)(2)
Other1 1 
Balance, September 30, 2021$19,130 $3 $3,120 $15,336 $191 $(833)$1,313 
Balance, July 1, 2022$16,221 $2 $2,869 $15,261 $(2,510)$(386)$985 
Net income143 130 13 
Other comprehensive loss(1,425)(1,293)(132)
Dividends paid ($0.0625 per share)(23)(15)(8)
Purchase of subsidiary stock from noncontrolling interests(45)5 (50)
Purchases of Loews Corporation treasury stock(230)(230)
Stock-based compensation9 8 1 
Other3 4 1 (2)
Balance, September 30, 2022$14,653 $2 $2,886 $15,377 $(3,803)$(616)$807 

See accompanying Notes to Consolidated Condensed Financial Statements.

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Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWSEQUITY
(Unaudited)

Nine Months Ended September 30 2021  2020 
(In millions)      
       
Operating Activities:      
       
Net income (loss) $1,332  $(1,728)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities, net  (85)  2,503 
Changes in operating assets and liabilities, net:        
Receivables  (1,115)  (273)
Deferred acquisition costs  (15)  (36)
Insurance reserves  1,891   1,479 
Other assets  (853)  (411)
Other liabilities  701   238 
Trading securities  (180)  (481)
Net cash flow provided by operating activities  1,676   1,291 
         
Investing Activities:        
         
Purchases of fixed maturities  (7,127)  (8,466)
Proceeds from sales of fixed maturities  2,510   5,023 
Proceeds from maturities of fixed maturities  3,360   2,706 
Purchases of equity securities  (242)  (373)
Proceeds from sales of equity securities  237   275 
Purchases of limited partnership investments  (281)  (144)
Proceeds from sales of limited partnership investments  239   305 
Purchases of property, plant and equipment  (327)  (584)
Dispositions  52   47 
Sale of interest in Altium Packaging  417     
Deconsolidation of Diamond Offshore      (483)
Change in short term investments  725   706 
Other, net  13   (120)
Net cash flow used by investing activities  (424)  (1,108)
         
Financing Activities:        
         
Dividends paid  (49)  (53)
Dividends paid to noncontrolling interests  (54)  (88)
Purchases of Loews Corporation treasury stock  (825)  (678)
Purchases of subsidiary stock from noncontrolling interests  (18)  (37)
Principal payments on debt  (1,154)  (1,157)
Issuance of debt  1,199   2,393 
Other, net  (12)  (13)
Net cash flow (used) provided by financing activities  (913)  367 
         
Effect of foreign exchange rate on cash  (6)    
         
Net change in cash  333   550 
Cash, beginning of period  478   336 
Cash, end of period $811  $886 
 Loews Corporation Shareholders 
 TotalCommon StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Common Stock
Held in Treasury		Noncontrolling Interests
(In millions)       
        
Balance, January 1, 2021$19,181 $3 $3,133 $14,150 $581 $(7)$1,321 
Net income1,332 1,235 97 
Other comprehensive loss(438)(390)(48)
Dividends paid ($0.1875 per share)(103)(49)(54)
Purchase of subsidiary stock from noncontrolling interests(18)(18)
Purchases of Loews Corporation treasury stock(826)(826)
Stock-based compensation5 (11)16 
Other(3)(2)(1)
Balance, September 30, 2021$19,130 $3 $3,120 $15,336 $191 $(833)$1,313 
Balance, January 1, 2022$19,175 $2 $2,885 $14,776 $186 $(3)$1,329 
Net income715 648 67 
Other comprehensive loss(4,435)(3,989)(446)
Dividends paid ($0.1875 per share)(133)(46)(87)
Purchase of subsidiary stock from noncontrolling interests(66)4 (70)
Purchases of Loews Corporation treasury stock(614)(614)
Stock-based compensation11 (6)17 
Other— 3 (1)1 (3)
Balance, September 30, 2022$14,653 $2 $2,886 $15,377 $(3,803)$(616)$807 

See accompanying Notes to Consolidated Condensed Financial Statements.

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Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

Nine Months Ended September 3020222021
(In millions)
Operating Activities:
Net income$715 $1,332 
Adjustments to reconcile net income to net cash provided by operating activities, net779 (85)
Changes in operating assets and liabilities, net:
Receivables(447)(1,115)
Deferred acquisition costs(66)(15)
Insurance reserves1,743 1,891 
Other assets(486)(853)
Other liabilities161 701 
Trading securities293 (180)
Net cash flow provided by operating activities2,692 1,676 
 
Investing Activities:
 
Purchases of fixed maturities(8,768)(7,127)
Proceeds from sales of fixed maturities4,885 2,510 
Proceeds from maturities of fixed maturities2,095 3,360 
Purchases of equity securities(245)(242)
Proceeds from sales of equity securities230 237 
Purchases of limited partnership investments(265)(281)
Proceeds from sales of limited partnership investments156 239 
Purchases of property, plant and equipment(437)(327)
Dispositions16 52 
(Investment in) sale of interest in Altium Packaging(79)417 
Change in short term investments568 725 
Other, net65 13 
Net cash flow used by investing activities(1,779)(424)
 
Financing Activities:
 
Dividends paid(46)(49)
Dividends paid to noncontrolling interests(87)(54)
Purchases of Loews Corporation treasury stock(611)(825)
Purchases of subsidiary stock from noncontrolling interests(66)(18)
Principal payments on debt(327)(1,154)
Issuance of debt532 1,199 
Other, net(16)(12)
Net cash flow used by financing activities(621)(913)
 
Effect of foreign exchange rate on cash(27)(6)
 
Net change in cash265 333 
Cash, beginning of period621 478 
Cash, end of period$886 $811 

See accompanying Notes to Consolidated Condensed Financial Statements.
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Loews Corporation and Subsidiaries
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation


Loews Corporation is a holding company. Its consolidated operating subsidiaries are engaged in the following lines of business: commercial property and casualty insurance (CNA Financial Corporation (“CNA”), an 89.6%a 90% owned subsidiary); transportation and storage of natural gas and natural gas liquids (Boardwalk Pipeline Partners, LP (“Boardwalk Pipelines”), a wholly owned subsidiary); and the operation of a chain of hotels (Loews Hotels Holding Corporation (“Loews Hotels & Co”), a wholly owned subsidiary). Unless the context otherwise requires, the term “Company” as used herein means Loews Corporation including its consolidated subsidiaries, the term “Parent Company” means Loews Corporation excluding its subsidiaries, the term “Net income (loss) attributable to Loews Corporation” 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 LLC (“Altium Packaging”), previously a 99% owned subsidiary. Seesubsidiary, for $420 million in cash consideration, and following the transaction Loews Corporation deconsolidated Altium Packaging. 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 nine months ended September 30, 2021, which was recorded in Investment gains (losses) on the Consolidated Condensed Statement of Operations. For additional information regarding the deconsolidation of Altium Packaging, see Note 2 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for further discussion.the year ended December 31, 2021.


In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of September 30, 20212022 and December 31, 2020,2021 and results of operations, comprehensive income (loss) and changes in shareholders’ equity for the three and nine months ended September 30, 20212022 and 20202021 and cash flows for the nine months ended September 30, 2022 and 2021, and 2020.in each case in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Net income (loss) for the third quarter and first nine months of each of the years is not necessarily indicative of net income (loss) for that entire year. 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, 2020.2021.


The Company presents basic and diluted net income (loss) per share on the Consolidated Condensed Statements of Operations. Basic net income (loss) per share excludes dilution and is computed by dividing net income (loss) attributable to common stock by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the three and nine months ended September 30, 2022 and 2021 there were 0no 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 ASUsAccounting Standards Updates (“ASUs”) – In August of 2018,, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)ASU 2018-12,, “Financial Services – Insurance (Topic 944)944): Targeted Improvements to the Accounting for Long-Duration Contracts.” The updated accounting guidance requires changes to the measurement and disclosure of long-duration contracts. The guidance requires entitiesFor the Company, this includes CNA’s long term care and fully-ceded single premium immediate annuity business. Entities will be required to review, and update annuallyif there is a change, cash flow assumptions including(including morbidity and persistency,persistency) at least annually and to update quarterly discount rate assumptions using an upper-medium grade fixed-income instrument yield. The effect of changes in cash flow assumptions will be recorded in Net income and the effect of changes in discount rate assumptions will be recorded in Other comprehensive income (“OCI”). ThisThe guidance is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. The guidancepermitted, and may be applied using either a modified retrospective transition method or a full retrospective transition method. The guidance requires restatement ofFinancial statements for prior periods presented. presented will be adjusted to reflect the effects of applying the new accounting guidance.

The Company plans towill adopt on the new guidance effective date,January 1, 2023, using the modified retrospective method applied as of the transition methoddate of January 1, 2021. A published spot rate curve constructed from A+, A and is currently evaluatingA- rated U.S. dollar denominated corporate bonds matched to the duration of the corresponding insurance liabilities will be used to calculate discount rates. Long-duration contracts will be grouped into calendar year cohorts based on the contract issue date and
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product line. Long term care contracts will be grouped separately from the fully-ceded single premium immediate annuity contracts.

The most significant impact at the transition date will be the effect of updating the updated guidancediscount rate assumption to reflect an upper-medium grade fixed-income instrument yield, which will have on its consolidated financial statements, includingbe partially offset by the increased disclosure requirements.de-recognition of Shadow Adjustments associated with long-duration contracts. The annual updatingCompany expects the net impact of these changes will be a decrease of approximately $2.1 billion (after tax and noncontrolling interests) in Accumulated other comprehensive income (“AOCI”) as of the transition date of January 1, 2021. There is a minimal transition impact expected to retained earnings.

The requirement to review, and update if there is a change, cash flow assumptions at least annually is expected to increase income statement volatility.change the pattern of earnings being recognized. Adoption will also significantly expand the Company’s disclosures, and will impact systems, processes and controls. While the requirements of the new guidance represent a material change from existing accounting guidance, the new guidance will not impact capital and surplus under statutory accounting practices, cash flows, or the underlying economics of the business and related cash flows will be unchanged.

2.  Significant Transactions

Altium Packaging


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 shares 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 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.

business.
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The transaction resultedCompany continues to make progress in a gainconnection with these matters and is in the process of $555 million ($438 million after tax) for the nine months ended September 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 Packagingrefining key accounting policy decisions, technology solutions and Loews Corporation’s 53% shareupdates to internal controls associated with adoption of the carrying valuenew guidance. These in-progress activities include modifications of Altium Packaging’s net assets was attributed to definite lived intangible assetsactuarial valuation systems, data sourcing, analytical procedures 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.reporting processes.

Diamond Offshore


As a result of the April 26, 2020 (“the Filing Date”) 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. 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 nine months ended September 30, 2020, which is reported within Investment gains (losses) on the Consolidated Condensed Statements of Operations. During the nine months ended September 30, 2020, Diamond Offshore also 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.

3.2. Investments


Net investment income is as follows:

Three Months Ended Nine Months Ended Three Months EndedNine Months Ended
September 30, 
September 30,
 September 30,
2021 2020 2021 2020 2022202120222021
(In millions)        (In millions)  
           
Fixed maturity securities $425  $432  $1,278  $1,300 Fixed maturity securities$454 $425 $1,324 $1,278 
Limited partnership investments  89   71   285   26 Limited partnership investments(32)89 (5)285 
Short term investments  1   2   1   11 
Equity securities  4   18   53   24 
Equity securities (a)Equity securities (a)2 4 (7)53 
Income (loss) from trading portfolio (a)  (30)  22   46     Income (loss) from trading portfolio (a)(18)(30)(95)46 
Other  12   14   42   44 Other19 13 47 43 
Total investment income  501   559   1,705   1,405 Total investment income425 501 1,264 1,705 
Investment expenses  (18)  (19)  (56)  (58)Investment expenses(21)(18)(62)(56)
Net investment income $483  $540  $1,649  $1,347 Net investment income$404 $483 $1,202 $1,649 
(a) Net investment income (loss) recognized due to the change in fair value of equity and trading portfolio securities held as of September 30, 2022 and 2021(a) Net investment income (loss) recognized due to the change in fair value of equity and trading portfolio securities held as of September 30, 2022 and 2021$(68)$(55)$(179)$(9)


(a)
Net investment income recognized due to the change in fair value on securities still held as of September 30, 2021 and 2020 was $(55) and $11 for the three months ended September 30, 2021 and 2020 and $(9) and $13 for the nine months ended September 30, 2021 and 2020.
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Investment gains (losses) are as follows:

  Three Months Ended  Nine Months Ended 
 September 30,  
September 30,
 
  2021  2020  2021  2020 
(In millions)            
             
Fixed maturity securities:          
 
Gross gains $50  $44  $159  $175 
Gross losses  (28)  (18)  (68)  (207)
Investment gains (losses) on fixed maturity securities  22   26   91   (32)
Equity securities  (2)  25   17   (45)
Derivative instruments  2   (2)  7   (7)
Short term investments and other      (3)  2   (17)
Altium Packaging (see Note 2)          555     
Diamond Offshore (see Note 2)          (15)  (1,211)
Investment gains (losses) (a) $22  $46  $657  $(1,312)

(a)
During the three and nine months ended September 30, 2021, $2 of investment losses and $15 of investment gains were recognized due to the change in fair value of non-redeemable preferred stock still held as of September 30, 2021. During the three and nine months ended September 30, 2020, $25 of investment gains and $44 of investment losses were recognized due to the change in fair value of non-redeemable preferred stock still held as of September 30, 2020.


Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
(In millions)  
   
Fixed maturity securities:
Gross gains$23 $50 $94 $159 
Gross losses(134)(28)(222)(68)
Investment gains (losses) on fixed maturity securities(111)22 (128)91 
Equity securities (a)(2)(2)(111)17 
Derivative instruments24 2 79 7 
Short term investments and other(7)(6)(13)
Altium Packaging (see Note 1)555 
Investment gains (losses)$(96)$22 $(166)$657 
(a) Investment gains (losses) recognized due to the change in fair value of non-redeemable preferred stock included within equity securities held as of September 30, 2022 and 2021$(2)$(2)$(109)$15 
The following tables present
Investment gains (losses) for the activitythree months ended September 30, 2022 in the table above include a $35 million net loss related to the allowanceexpected novation of a coinsurance agreement on available-for-sale securities with credit impairmentsCNA’s legacy annuity business, which was transacted on a funds withheld basis and purchased credit-deteriorated (“PCD”) assets. Accrued interest receivablesgave rise to an embedded derivative. The net loss of $35 million is comprised of a $59 million loss on available-for-salethe fixed maturity securities totaled $387supporting the funds withheld liability to recognize unrealized losses which had been included in AOCI since the inception of the coinsurance agreement, partially offset by a $24 million $371 million and $390 million asgain on the associated embedded derivative. Taken together, this net loss is the final recognition of September 30, 2021, December 31, 2020 and September 30, 2020 and are excluded from the estimate of expected credit losses and the amortized cost basischanges in the tables within this Note.

  Corporate and  Asset-    
Three months ended September 30, 2021 Other Bonds  backed  Total 
(In millions)         
          
Allowance for credit losses:         
Balance as of July 1, 2021
 $24  $21  $45 
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  2   
   2 
             
Reductions to the allowance for credit losses:            
Securities sold during the period (realized)            
Write-offs charged against the allowance
  16       16 
             
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 $10  $21  $31 

Three months ended September 30, 2020         
          
Allowance for credit losses:         
Balance as of July 1, 2020
 $39  $12  $51 
Additions to the allowance for credit losses:            
Securities for which credit losses were not previously recorded  4   
   4 
Available-for-sale securities accounted for as PCD assets  1       1 
             
Reductions to the allowance for credit losses:            
Securities sold during the period (realized)  9       9 
Write-offs charged against the allowance
            
             
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period  (1)  1   
Total allowance for credit losses $34  $13  $47 

valuation of the funds held assets and offsets previously recognized investment gains on the associated embedded derivative.
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  Corporate and
  Asset-
    
Nine months ended September 30, 2021 Other Bonds  backed  Total 
(In millions)         
          
Allowance for credit losses:         
Balance as of January 1, 2021
 $23  $17  $40 
Additions to the allowance for credit losses:            
Securities for which credit losses were not previously recorded  14       14 
Available-for-sale securities accounted for as PCD assets  4   4   8 
             
Reductions to the allowance for credit losses:            
Securities sold during the period (realized)  6       6 
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis            
Write-offs charged against the allowance
  16       16 
             
Additional increases or (decrease) to the allowance for credit losses on securities that had an allowance recorded in a previous period  (9)      (9)
Total allowance for credit losses $10  $21  $31 

Nine months ended September 30, 2020         
          
Allowance for credit losses:         
Balance as of January 1, 2020 $0  $0  $0 
Additions to the allowance for credit losses:            
Impact of adopting ASC 326  6       6 
Securities for which credit losses were not previously recorded  62   12   74 
Available-for-sale securities accounted for as PCD assets  3       3 
             
Reductions to the allowance for credit losses:            
Securities sold during the period (realized)  15       15 
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis  1       1 
Write-offs charged against the allowance
            
             
Additional increases or (decrease) to the allowance for credit losses on securities that had an allowance recorded in a previous period  (21)  1   (20)
Total allowance for credit losses $34  $13  $47 


The components of available-for-sale impairment losses (gains) recognized in earnings by asset type are presented in the following table. The table includes losses (gains) on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date:

  Three Months Ended  Nine Months Ended 
 September 30,  September 30, 
  2021  2020  2021  2020 
(In millions)            
             
Fixed maturity securities available-for-sale:            
Corporate and other bonds 

 $4 $5  $94 
Asset-backed $11   1   11   14 
Impairment losses recognized in earnings $11 $5  $16  $108 


Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
(In millions)  
   
Fixed maturity securities available-for-sale:  
Corporate and other bonds$24 $53 $5 
Asset-backed1 $11 2 11 
Impairment losses (gains) recognized in earnings$25 $11 $55 $16 

There were $3 million and $16$8 million of losses on mortgage loans recognized during the three and nine months ended September 30, 20202022 primarily due to changes in expected credit losses. ThereThere were 0no losses recognized on mortgage loans during the three and nine months ended September 30, 2021.


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The amortized cost and fair valuesfollowing tables present a summary of fixed maturity securities are as follows:securities:

  Cost or


Gross


Gross


Allowance



 
   Amortized   Unrealized   Unrealized   for Credit
   Estimated 
September 30, 2021
 Cost  Gains  Losses  Losses  Fair Value 
(In millions)               
                
Fixed maturity securities:               
Corporate and other bonds $21,608  $2,967  $42  $10  $24,523 
States, municipalities and political subdivisions  10,384   1,610   15       11,979 
Asset-backed:                    
Residential mortgage-backed  3,176   89   6       3,259 
Commercial mortgage-backed  2,064   85   16   17   2,116 
Other asset-backed  2,429   76   4   4   2,497 
Total asset-backed  7,669   250   26   21   7,872 
U.S. Treasury and obligations of government-sponsored enterprises  139   1   4       136 
Foreign government  521   19   2       538 
Redeemable preferred stock
  12               12 
Fixed maturities available-for-sale  40,333   4,847   89   31   45,060 
Fixed maturities trading  9               9 
Total fixed maturity securities $40,342  $4,847  $89  $31  $45,069 

December 31, 2020
               
                
Fixed maturity securities:               
Corporate and other bonds $20,792  $3,578  $22  $23  $24,325 
States, municipalities and political subdivisions  9,729   1,863           11,592 
Asset-backed:                    
Residential mortgage-backed  3,442   146   1       3,587 
Commercial mortgage-backed  1,933   93   42   17   1,967 
Other asset-backed  2,179   81   9       2,251 
Total asset-backed  7,554   320   52   17   7,805 
U.S. Treasury and obligations of government-sponsored enterprises  339   2   3       338 
Foreign government  512   32           544 
Fixed maturities available-for-sale  38,926   5,795   77   40   44,604 
Fixed maturities trading  37   5           42 
Total fixed maturity securities $38,963  $5,800  $77  $40  $44,646 

September 30, 2022Cost or Amortized CostGross Unrealized
Gains		Gross Unrealized
Losses		Allowance
for Credit Losses		Estimated
Fair Value
(In millions)     
      
Fixed maturity securities:     
Corporate and other bonds$23,082 $231 $2,398 $20,915 
States, municipalities and political
 subdivisions		9,244 259 1,080 8,423 
Asset-backed:
Residential mortgage-backed3,153 6 470 2,689 
Commercial mortgage-backed1,921 4 237 1,688 
Other asset-backed3,264 2 349 $3 2,914 
Total asset-backed8,338 12 1,056 3 7,291 
U.S. Treasury and obligations of
 government sponsored enterprises		107 3 1 109 
Foreign government544 2 48 498 
Redeemable preferred stock3 3 
Fixed maturities available-for-sale41,318 507 4,583 3 37,239 
Fixed maturities trading270 5 265 
Total fixed maturity securities$41,588 $507 $4,588 $3 $37,504 

December 31, 2021Cost or Amortized CostGross Unrealized
Gains		Gross Unrealized
Losses		Allowance
for Credit Losses		Estimated
Fair Value
(In millions)    
Fixed maturity securities:    
Corporate and other bonds$21,444 $2,755 $56 $11 $24,132 
States, municipalities and political
 subdivisions		10,358 1,599 14 11,943 
Asset-backed:
Residential mortgage-backed2,893 71 8 2,956 
Commercial mortgage-backed1,987 63 19 2,031 
Other asset-backed2,561 54 10 7 2,598 
Total asset-backed7,441 188 37 7 7,585 
U.S. Treasury and obligations of
 government sponsored enterprises		132 1 3 130 
Foreign government570 15 2 583 
Fixed maturities available-for-sale39,945 4,558 112 18 44,373 
Fixed maturities trading7 7 
Total fixed maturity securities$39,952 $4,558 $112 $18 $44,380 

The net unrealized gains and losses on available-for-sale investments included in the tables above are recorded as a component of Accumulated other comprehensive income (loss) (“AOCI”).AOCI. When presented in AOCI, these amounts are net of tax and noncontrolling interests and any required Shadow Adjustments. To the extent thatthere are unrealized gains on fixed income securities supporting long term carethe reserves of certain products and structured settlements not funded by annuitieswithin the Life & Group business that would result in a premium deficiency, or would impact the reserve balance 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 (losses), net of tax and noncontrolling interests, through Other comprehensive income (loss) (“Shadow Adjustments”). As of September 30, 2021 2022
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and December 31, 2020,2021, the net unrealized gains and losses on investments included in AOCI were correspondingly reduced by Shadow Adjustments of $2.2 billion$41 million and $2.5$2.2 billion (after tax and noncontrolling interests).

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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:

   Less than
   12 Months
    
 12 Months  or Longer  Total 
      Gross     Gross
     Gross
 
   Estimated   Unrealized  Estimated
   Unrealized  Estimated
   Unrealized 
September 30, 2021
 Fair Value  Losses  Fair Value  Losses  Fair Value  Losses 
(In millions)                  
                   
Fixed maturity securities:                  
Corporate and other bonds $1,853  $37  $88  $5  $1,941  $42 
States, municipalities and political subdivisions  885   15           885   15 
Asset-backed:                        
Residential mortgage-backed  1,295   6   
       1,295   6 
Commercial mortgage-backed  317   4   194   12   511   16 
Other asset-backed  439   3   58   1   497   4 
Total asset-backed  2,051   13   252   13   2,303   26 
U.S. Treasury and obligations of government-sponsored enterprises  65   4   1       66   4 
Foreign government  73   2           73   2 
Total fixed maturity securities $4,927  $71  $341  $18  $5,268  $89 
                         
December 31, 2020
                        
                         
Fixed maturity securities:                        
Corporate and other bonds $609  $21  $12  $1  $621  $22 
States, municipalities and political subdivisions  33               33     
Asset-backed:                        
Residential mortgage-backed  71   1   11       82   1 
Commercial mortgage-backed  533   40   28   2   561   42 
Other asset-backed  344   9   13       357   9 
Total asset-backed  948   50   52   2   1,000   52 
U.S. Treasury and obligations of government-sponsored enterprises  63   3           63   3 
Foreign government  13               13     
Total fixed maturity securities $1,666  $74  $64  $3  $1,730  $77 

 Less than 12 Months12 Months or LongerTotal
September 30, 2022Estimated Fair ValueGross Unrealized LossesEstimated Fair ValueGross Unrealized LossesEstimated Fair ValueGross Unrealized Losses
(In millions)
 
Fixed maturity securities:
Corporate and other bonds$16,707 $2,117 $914 $281 $17,621 $2,398 
States, municipalities and political
 subdivisions		4,793 1,029 128 51 4,921 1,080 
Asset-backed:
Residential mortgage-backed2,582 462 17 8 2,599 470 
Commercial mortgage-backed1,372 194 233 43 1,605 237 
Other asset-backed2,433 307 233 42 2,666 349 
Total asset-backed6,387 963 483 93 6,870 1,056 
U.S. Treasury and obligations of
 government-sponsored enterprises		61 1 61 1 
Foreign government446 42 25 6 471 48 
Total fixed maturity securities$28,394 $4,152 $1,550 $431 $29,944 $4,583 
December 31, 2021
Fixed maturity securities:
Corporate and other bonds$2,389 $48 $136 $8 $2,525 $56 
States, municipalities and political
 subdivisions		730 14 730 14 
Asset-backed:
Residential mortgage-backed1,043 8 1,043 8 
Commercial mortgage-backed527 7 167 12 694 19 
Other asset-backed840 10 62 902 10 
Total asset-backed2,410 25 229 12 2,639 37 
U.S. Treasury and obligations of
 government-sponsored enterprises		69 3 5 74 3 
Foreign government97 2 97 2 
Total fixed maturity securities$5,695 $92 $370 $20 $6,065 $112 

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

September 30, 2022December 31, 2021
Estimated Fair ValueGross Unrealized LossesEstimated Fair ValueGross Unrealized Losses
(In millions)
U.S. Government, Government agencies and Government-sponsored enterprises$2,360 $360 $898 $8 
AAA1,566 318 368 6 
AA4,430 917 875 17 
A6,548 838 1,516 23 
BBB13,394 1,902 1,812 42 
Non-investment grade1,646 248 596 16 
Total$29,944 $4,583 $6,065 $112 

Based on current facts and circumstances, the Company believes the unrealized losses presented in the September 30, 20212022 securities in athe gross unrealized loss position table above are not believed to be indicative of the ultimate collectabilitycollectibility of the current amortized cost of the securities, but rather are primarily attributable to changes in risk-free interest rates and a general market widening of credit spreads. In reaching this determination, the recent volatility in risk-free rates and credit spreads, and other factors. Thereas well as the fact that the unrealized losses are concentrated in investment grade issuers, were considered. Additionally, there is no current intent to sell securities with unrealized losses, nor is it more likely than not that sale will be required prior to recovery of amortized cost; accordingly, it was determined that there are0 no additional impairment losses to be recorded at September 30, 2021.2022.

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 $401 million, $369 million and $387 million as of September 30, 2022, December 31, 2021 and September 30, 2021 and are excluded from the estimate of expected credit losses and the amortized cost basis in the tables within this Note.

Three months ended September 30, 2022
Corporate and Other Bonds
Asset-backed
Total
(In millions)   
Allowance for credit losses:   
Balance as of July 1, 2022$— $5 $5 
Additions to the allowance for credit losses:
Available-for-sale securities accounted for as PCD assets— 
 
Reductions to the allowance for credit losses:
Write-offs charged against the allowance— 
Additional decreases to the allowance for credit losses
on securities that had an allowance recorded in a previous period
(2)(2)
Total allowance for credit losses$— $3 $3 

14
Table of contents
Three months ended September 30, 2021Corporate and Other BondsAsset-backedTotal
(In millions)   
Allowance for credit losses:   
Balance as of July 1, 2021$24 $21 $45 
Additions to the allowance for credit losses:
Available-for-sale securities accounted for as PCD assets2 2 
 
Reductions to the allowance for credit losses:
Write-offs charged against the allowance16 16 
Total allowance for credit losses$10 $21 $31 

Nine months ended September 30, 2022
    
Allowance for credit losses:   
Balance as of January 1, 2022$11 $7 $18 
Additions to the allowance for credit losses:
Available-for-sale securities accounted for as PCD assets3 3 
Reductions to the allowance for credit losses:
Write-offs charged against the allowance12 12 
Additional increases or (decreases) to the allowance for credit
losses on securities that had an allowance recorded in a previous period
1 (7)(6)
Total allowance for credit losses$— $3 $3 

Nine months ended September 30, 2021
    
Allowance for credit losses:   
Balance as of January 1, 2021$23 $17 $40 
Additions to the allowance for credit losses:
Securities for which credit losses were not previously recorded14 14 
Available-for-sale securities accounted for as PCD assets4 4 8 
 
Reductions to the allowance for credit losses:
Securities sold during the period (realized)6 6 
Write-offs charged against the allowance16 16 
Additional decreases to the allowance for credit losses
on securities that had an allowance recorded in a previous period
(9)(9)
Total allowance for credit losses$10 $21 $31 

15
Table of contents
Contractual Maturity


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

 September 30, 2021  December 31, 2020 
  Cost or


Estimated


Cost or


Estimated
 
  Amortized


Fair


Amortized


Fair
 
  Cost  Value  Cost  Value 
(In millions)            
             
Due in one year or less $1,648  $1,656  $1,456  $1,458 
Due after one year through five years  10,776   11,517   12,304   13,098 
Due after five years through ten years  13,628   14,794   12,319   13,878 
Due after ten years  14,281   17,093   12,847   16,170 
Total $40,333  $45,060  $38,926  $44,604 

September 30, 2022December 31, 2021
Cost or Amortized CostEstimated Fair
Value		Cost or Amortized CostEstimated
Fair
Value
(In millions)
Due in one year or less$952 $948 $1,603 $1,624 
Due after one year through five years9,487 9,000 10,637 11,229 
Due after five years through ten years14,323 12,765 13,294 14,338 
Due after ten years16,556 14,526 14,411 17,182 
Total$41,318 $37,239 $39,945 $44,373 

Actual maturities may differ from contractual maturities because certain securities may be called or prepaid. Securities not due at a single date are allocated based on weighted average life.

14
Index
Mortgage Loans


The following table presents the amortized cost basis of mortgage loans for each credit quality indicator by year of origination. The primary credit quality indicators utilized are debt service coverage ratios (“DSCR”) and loan-to-value (“LTV”) ratios.

 Mortgage Loans Amortized Cost Basis by Origination Year (a) 
As of September 30, 2021
 2021  2020  2019  2018  2017  Prior  Total 
Mortgage Loans Amortized Cost Basis by Origination Year (a)
As of September 30, 2022As of September 30, 202220222021202020192018PriorTotal
(In millions)                     (In millions)       
                             
DSCR ≥1.6x                     DSCR ≥1.6x       
LTV less than 55% $
 8  $
75  $
16  $
37  $
116  $
203  $
455 LTV less than 55%$9 $13 $112 $29 $54 $275 $492 
LTV 55% to 65%    38   15   18   
   1   72 LTV 55% to 65%— 
LTV greater than 65% 
17       14   7       23   61 LTV greater than 65%18 11 29 
DSCR 1.2x - 1.6x                            DSCR 1.2x - 1.6x
LTV less than 55%  13   15   95       5   58   186 LTV less than 55%5 49 18 56 10 42 180 
LTV 55% to 65%  25   
   
   24   10   4   63 LTV 55% to 65%87 20 8 115 
LTV greater than 65%      24   9       8   
   41 LTV greater than 65%— 
DSCR ≤1.2x                            DSCR ≤1.2x
LTV less than 55%          35       30   
   65 LTV less than 55%57 57 
LTV 55% to 65%          42               42 LTV 55% to 65%21 44 65 
LTV greater than 65%      9   56           7   72 LTV greater than 65%10 22 7 39 
Total $63  $161  $282  $86  $169  $296  $1,057 Total$129 $94 $150 $208 $64 $332 $977 

(a)
(a)The values in the table above reflect DSCR on a standardized amortization period and LTV ratios based on the most recent appraised values trended forward using changes in a commercial real estate price index.

Derivative Financial Instruments


A summary of the aggregate contractual or notional amounts and gross estimated fair values related to derivative financial instruments follows. The contractual or notional amounts for derivatives are used to calculate the exchange of contractual payments under related agreements and may not be representative of the potential for gain or loss on these instruments. Gross estimated fair values of derivative positions are currently presented in Equity securities, Receivables and Payable to brokers on the Consolidated Condensed Balance Sheets.

 September 30, 2021  December 31, 2020 
  Contractual/        Contractual/       
  Notional  Estimated Fair Value  Notional  Estimated Fair Value 
  Amount  Asset  (Liability)  Amount  Asset  (Liability) 
(In millions)                  
                   
With hedge designation:                  
Interest rate swaps 

  

  

  $
675  

  $(26)
                         
Without hedge designation:                        
Equity markets:                        
Options – purchased $1           135  $3     
Interest rate swaps  100      $(1)  100       (3)
Embedded derivative on funds withheld liability  272       (11)  190       (19)

Investment Commitments


As part of the overall investment strategy, investments are made in various assets which require future purchase, sale or funding commitments. These investments are recorded once funded, and the related commitments may include future capital calls from various third-party limited partnerships, signed and accepted mortgage loan applications and obligations related to private placement securities. As of September 30, 2021, commitments to purchase or fund were approximately $1.3 billion and to sell were approximately $55 million under the terms of these investments.

15
Index
4. Fair Value


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. The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable:

●Level 1 – Quoted prices for identical instruments in active markets.

●Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

●Level 3 – Valuations derived from valuation techniques in which one or more significant inputs are not observable.


Prices may fall within Level 1, 2 or 3 depending upon the methodology and inputs used to estimate fair value for each specific security. 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 that market participants presumably would use to value the assets. Prices obtained from third-party pricing services or brokers are not adjusted.


Control procedures are performed over information obtained from pricing services and brokers to ensure prices received represent a reasonable estimate of fair value and to confirm representations regarding whether inputs are observable or unobservable. Procedures may include:  (i) the review of pricing service methodologies or broker pricing qualifications, (ii) back-testing, where past fair value estimates are compared to actual transactions executed in the market on similar dates, (iii) exception reporting, where period-over-period changes in price are reviewed and challenged with the pricing service or broker based on exception criteria and (iv) detailed analysis, where an independent analysis of the inputs and assumptions used to price individual securities is performed.


Assets and liabilities measured at fair value on a recurring basis are summarized in the following tables. Corporate bonds and other includes obligations of the U.S. Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.

September 30, 2021
 Level 1  Level 2  Level 3  Total 
(In millions)            
             
Fixed maturity securities:            
Corporate bonds and other $146  $24,186  $877  $25,209 
States, municipalities and political subdivisions      11,922   57   11,979 
Asset-backed      7,394   478   7,872 
Fixed maturities available-for-sale  146   43,502   1,412   45,060 
Fixed maturities trading      9       9 
Total fixed maturities $146  $43,511  $1,412  $45,069 
                 
Equity securities $890  $745  $25  $1,660 
Short term and other  4,063           4,063 
Payable to brokers  (118)  (1)      (119)

December 31, 2020
            
             
Fixed maturity securities:            
Corporate bonds and other $355  $24,082  $770  $25,207 
States, municipalities and political subdivisions      11,546   46   11,592 
Asset-backed      7,497   308   7,805 
Fixed maturities available-for-sale  355   43,125   1,124   44,604 
Fixed maturities trading      34   8   42 
Total fixed maturities $355  $43,159  $1,132  $44,646 
                 
Equity securities $796  $722  $43  $1,561 
Short term and other  4,538   39       4,577 
Payable to brokers  (14)  (29)      (43)
16
Index


The following tables present reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2021 and 2020:

                             Unrealized 
                             Gains 
                          Unrealized  (Losses) 
                          Gains  Recognized in 
     Net Realized                    (Losses)  Other 
     Investment Gains                    Recognized in  Comprehensive 
     (Losses) and Net Change                    Net Income  Income (Loss) 
     in Unrealized Investment                    (Loss) on Level  on Level 3 
     Gains (Losses)                    3 Assets and  Assets and 
     Included in              Transfers  Transfers     Liabilities  Liabilities 
  Balance,  Net Income  Included in           into  out of  Balance,  Held at  Held at 
2021 July 1  (Loss)  OCI  Purchases  Sales  Settlements  Level 3  Level 3  September 30  September 30  September 30 
(In millions)                                 
                                  
Fixed maturity securities:                                 
Corporate bonds and other $883  $1  $1  $55  
   $(11)    $
(52) $877     $2 
States, municipalities and political subdivisions  57                              57        
Asset-backed  410   1   1   83  $
(9)  (11) $41  
(38)  478        
Fixed maturities available-for-sale  1,350   2   2   138   (9)  (22)  41   (90)  1,412  $0   2 
Fixed maturities trading  0                               0         
Total fixed maturities $1,350  $2  $2  $138  $(9) $(22) $41  $(90) $1,412  $0  $2 
                                             
Equity securities $36  $(2)     $1  $(11)     $
11  $
(10) $25  $
(3)    

17
Index

    
























Unrealized 
    
























Gains 
    





















Unrealized

(Losses) 
    





















Gains

Recognized in 
    
Net Realized



















(Losses)

Other 
    
Investment Gains



















Recognized in

Comprehensive 
    
(Losses) and Net Change



















Net Income

Income (Loss) 
    
in Unrealized Investment



















(Loss) on Level

on Level 3 
    
Gains (Losses)



















3 Assets and

Assets and 
     Included in              Transfers  Transfers     Liabilities  Liabilities 
  Balance,  Net Income  Included in           into  out of  Balance,  Held at  Held at 
2020 July 1  (Loss)  OCI  Purchases  Sales  Settlements  Level 3  Level 3  September 30  September 30  September 30 
(In millions)                                 
                                  
Fixed maturity securities:                                 
Corporate bonds and other $555      $5  $129     $(3)
$
8
      $694      $5 
States, municipalities and political subdivisions  0           45                  45         
Asset-backed  222       9   20  

  (14)     $(2)  235       8 
Fixed maturities available-for-sale  777  $0   14   194  $
0  (17) 
8   (2)  974  $0   13 
Fixed maturities  trading  4   4                           8   4     
Total fixed maturities $781  $4  $14  $194  $
0 $(17) $8  $(2) $982  $4  $13 
                                             
Equity securities $27  

  
   $12          

      $39  

    

18
Index
                             Unrealized 
                             Gains 
                          Unrealized  (Losses) 
                          Gains  Recognized in 
     Net Realized  
              
  (Losses)  Other 
     Investment Gains  
              
  Recognized in  Comprehensive 
     (Losses) and Net Change  
              
  Net Income  Income (Loss) 
     in Unrealized Investment  
              
  (Loss) on Level  on Level 3 
     Gains (Losses)  
              
  3 Assets and  Assets and 
     Included in              Transfers  Transfers     Liabilities  Liabilities 
  Balance,  Net Income  Included in           into  out of  Balance,  Held at  Held at 
2021 January 1  (Loss)  OCI  Purchases  Sales  Settlements  Level 3  Level 3  September 30  September 30  September 30 
(In millions)                                 
                                  
Fixed maturity securities:                                 
Corporate bonds and other $770  $(9) $(23) $219  $(3) $(35) $10  $(52) $877     $(22)
States, municipalities and political subdivisions  46           12       (1)          57        
Asset-backed  308   4   (4)  197   (9)  (38)  71   (51)  478      (5)
Fixed maturities available-for-sale  1,124   (5)  (27)  428   (12)  (74)  81   (103)  1,412  $0   (27)
Fixed maturities trading  8   (6)              (2)          0         
Total fixed maturities $1,132  $(11) $(27) $428  $(12) $(76) $81  $
(103) $1,412  $0  $(27)
                                             
Equity securities $43  $(15)     $11  $(15)     $11  $(10) $25  $(1)    

19
Index

                              Unrealized 
                              Gains 
                           Unrealized   (Losses) 
                           Gains  Recognized in
 
      Net Realized                     (Losses)   Other 
      Investment Gains                    Recognized in
  Comprehensive
 
      (Losses) and Net Change                     Net Income  Income (Loss)
 
      in Unrealized Investment                     (Loss) on Level   on Level 3 
      Gains (Losses)                     3 Assets and  Assets and
 
     Included in              Transfers  Transfers     Liabilities  Liabilities 
  Balance,  Net Income  Included in           into  out of  Balance,  Held at  Held at 
2020 January 1  (Loss)  OCI  Purchases  Sales  Settlements  Level 3  Level 3  
September 30
  
September 30
  
September 30
 
(In millions)                                 
                                  
Fixed maturity securities:                                 
Corporate bonds and other $468      $27  $200     $(9) $
8
      $694      $29 
States, municipalities and political subdivisions  
0
           45                  45         
Asset-backed  165       18   100  $(9)  (22)     $(17)  235       19 
Fixed maturities available-for-sale  633  $0   45   345   (9)  (31) 
8   (17)  974  $0   48 
Fixed maturities  trading  4   4                           8   4     
Total fixed maturities $637  $4  $45  $345  $(9) $(31) $8  $(17) $982  $4  $48 
                                             
Equity securities $19  $(7)      $12          $15      $39  $(7)    


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

Major Category of Assets and LiabilitiesConsolidated Condensed Statements of Operations Line Items
Fixed maturity securities available-for-saleInvestment gains (losses)
Fixed maturity securities tradingNet investment income
Equity securitiesInvestment gains (losses) and Net investment income
Other invested assetsInvestment gains (losses) and Net investment income
Derivative financial instruments held in a trading portfolioNet investment income
Derivative financial instruments, otherInvestment gains (losses) and Operating revenues and other

20
Index

Securities may be transferred in or out of levels within the fair value hierarchy based on the availability of observable market information and quoted prices used to determine the fair value of the security. The availability of observable market information and quoted prices varies based on market conditions and trading volume.

Valuation Methodologies and Inputs


The following section describes the valuation methodologies and relevant inputs used to measure different financial instruments at fair value, including an indication of the level in the fair value hierarchy in which the instruments are generally classified.

Fixed Maturity Securities


Level 1 securities include highly liquid government securities and exchange traded bonds valued using quoted market prices. Level 2 securities include most other fixed maturity securities as the significant inputs are observable in the marketplace. All classes of Level 2 fixed maturity securities are valued using a methodology based on information generated by market transactions involving identical or comparable assets, a discounted cash flow methodology or a combination of both when necessary. Common inputs for all classes of fixed maturity securities include prices from recently executed transactions of similar securities, marketplace quotes, benchmark yields, spreads off benchmark yields, interest rates and U.S. Treasury or swap curves. Specifically for asset-backed securities, key inputs include prepayment and default projections based on past performance of the underlying collateral and current market data. Fixed maturity securities are primarily assigned to Level 3 in cases where broker/dealer quotes are significant inputs to the valuation, and there is a lack of transparency as to whether these quotes are based on information that is observable in the marketplace. Level 3 securities also include private placement debt securities whose fair value is determined using internal models with some inputs that are not market observable.

Equity Securities


Level 1 securities include publicly traded securities valued using quoted market prices. Level 2 securities are primarily valued using pricing for similar securities, recently executed transactions and other pricing models utilizing market observable inputs. Level 3 securities are primarily priced using broker/dealer quotes and internal models with some inputs that are not market observable.

Derivative Financial Instruments


Equity options are valued using quoted market prices and are classified within Level 1A summary of the aggregate contractual or notional amounts and gross estimated fair value hierarchy. Over-the-countervalues related to derivative financial instruments follows. The contractual or notional amounts for derivatives principally interest rate swaps, currency forwards, total return swaps, commodity swaps, equity warrantsare used to calculate the exchange of contractual payments under related agreements and options, are valued using inputs including broker/dealer quotes and are classified within Level 2 or Level 3may not be representative of the valuation hierarchy, dependingpotential for gain or loss on the amountthese
16
Table of transparency as to whether these quotescontents
instruments. Gross estimated fair values of derivative positions are based on information that is observable in the marketplace.

Short Term and Other Invested Assets


Securities that are actively traded or have quoted prices are classified as Level 1. These securities include money market funds, treasury bills and exchange traded open-end funds valued using quoted market prices. Level 2 primarily includes commercial paper, for which all inputs are market observable. Fixed maturity securities purchased within one year of maturity are classified consistent with fixed maturity securities discussed above. Short term investments ascurrently presented in the tables above differ from the amounts presented inEquity securities, Receivables and Payable to brokers on the Consolidated Condensed Balance Sheets because certain short termSheets.

September 30, 2022December 31, 2021
Contractual/Notional AmountEstimated Fair ValueContractual/Notional AmountEstimated Fair Value
Asset
(Liability)
Asset(Liability)
(In millions)
Without hedge designation:
Interest rate swaps$240 $19 $100 
Embedded derivative on funds withheld liability220 1 270 $(12)
Other127 7 

Investment Commitments

As part of the overall investment strategy, investments such as time deposits, are notmade in various assets which require future purchase, sale or funding commitments. These investments are recorded once funded, and the related commitments may include future capital calls from various third-party limited partnerships, signed and accepted mortgage loan applications and obligations related to private placement securities. As of September 30, 2022, commitments to purchase or fund were approximately $1.6 billion and to sell were approximately $100 million under the terms of these investments.

3. Fair Value

Assets and liabilities measured at fair value.value on a recurring basis are summarized in the following tables. Corporate bonds and other includes obligations of the U.S. Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.

September 30, 2022
Level 1
Level 2
Level 3
Total
(In millions)    
     
Fixed maturity securities:    
Corporate bonds and other$118 $20,605 $802 $21,525 
States, municipalities and political subdivisions8,381 42 8,423 
Asset-backed6,575 716 7,291 
Fixed maturities available-for-sale118 35,561 1,560 37,239 
Fixed maturities trading183 82 265 
Total fixed maturities$301 $35,643 $1,560 $37,504 
 
Equity securities$685 $625 $30 $1,340 
Short term and other3,847 163 4,010 
Receivables19 19 
Payable to brokers(90)(90)
17
Table of contents
December 31, 2021Level 1Level 2Level 3Total
(In millions)
Fixed maturity securities:
Corporate bonds and other$140 $23,768 $937 $24,845 
States, municipalities and political subdivisions11,887 56 11,943 
Asset-backed7,029 556 7,585 
Fixed maturities available-for-sale140 42,684 1,549 44,373 
Fixed maturities trading7 7 
Total fixed maturities$140 $42,691 $1,549 $44,380 
Equity securities$924 $721 $29 $1,674 
Short term and other4,696 74 4,770 
Payable to brokers(70)(70)

21
18
IndexTable of contents
The following tables present reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2022 and 2021:

Net Realized Investment Gains (Losses) and Net Change in Unrealized Investment Gains (Losses)Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and Liabilities Held at September 30Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and Liabilities Held at September 30
2022Balance, July 1
Included in Net Income
Included in OCIPurchases
Sales
Settlements
Transfers into
Level 3
Transfers out of Level 3
Balance, September 30
(In millions)           
            
Fixed maturity securities:           
Corporate bonds and other$846 $1 $(50)$9 $(4)$802 $(51)
States, municipalities and political
 subdivisions46 (4)42 (4)
Asset-backed641 7 (38)116 (14)$47 $(43)716 (38)
Fixed maturities available-for-sale1,533 8 (92)125 $— (18)47 (43)1,560 $— (93)
Fixed maturities trading— — 
Total fixed maturities$1,533 $8 $(92)$125 $— $(18)$47 $(43)$1,560 $— $(93)
 
Equity securities$47 $(7)$(10)$30 $(7)

19
Table of contents

Net Realized Investment Gains (Losses) and Net Change in Unrealized Investment Gains (Losses)Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and Liabilities Held at September 30Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and Liabilities Held at September 30
2021Balance, July 1Included in Net IncomeIncluded in OCIPurchasesSalesSettlementsTransfers into
Level 3		Transfers out of Level 3Balance, September 30
(In millions)           
            
Fixed maturity securities:
Corporate bonds and other$883 $1 $1 $55 $(11)$(52)$877 $2 
States, municipalities and political
 subdivisions57 57 
Asset-backed410 1 1 83 $(9)(11)$41 (38)478 
Fixed maturities available-for-sale1,350 2 2 138 (9)(22)41 (90)1,412 $— 2 
Fixed maturities trading— — 
Total fixed maturities$1,350 $2 $2 $138 $(9)$(22)$41 $(90)$1,412 $— $2 
 
Equity securities$36 $(2)$1 $(11)$11 $(10)$25 $(3)

20
Table of contents
Net Realized Investment Gains (Losses) and Net Change in Unrealized Investment Gains (Losses)Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and Liabilities Held at September 30Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and Liabilities Held at September 30
2022Balance, January 1
Included in Net Income
Included in OCIPurchases
Sales
Settlements
Transfers into
Level 3
Transfers out of Level 3
Balance, September 30
(In millions)           
            
Fixed maturity securities:           
Corporate bonds and other$937 $(1)$(203)$127 $(5)$(63)$10 $802 $(203)
States, municipalities and political
 subdivisions56 (14)42 (14)
Asset-backed556 18 (122)348 (2)(54)66 $(94)716 (121)
Fixed maturities available-for-sale1,549 17 (339)475 (7)(117)76 $(94)1,560 $— (338)
Fixed maturities trading— — 
Total fixed maturities$1,549 $17 $(339)$475 $(7)$(117)$76 $(94)$1,560 $— $(338)
 
Equity securities$29 $(7)$12 $(3)$9 $(10)$30 $(8)
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Net Realized Investment Gains (Losses) and Net Change in Unrealized Investment Gains (Losses)Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and Liabilities Held at September 30Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and Liabilities Held at September 30
2021Balance, January 1Included in Net IncomeIncluded in OCIPurchasesSalesSettlementsTransfers into
 Level 3		Transfers out of Level 3Balance, September 30
(In millions)          
          
Fixed maturity securities:          
Corporate bonds and other$770 $(9)$(23)$219 $(3)$(35)$10 $(52)$877 $(22)
States, municipalities and political
subdivisions46 12 (1)57 
Asset-backed308 4 (4)197 (9)(38)71 (51)478 (5)
Fixed maturities available-for-sale1,124 (5)(27)428 (12)(74)81 (103)1,412 $— (27)
Fixed maturities trading8 (6)(2)— 
Total fixed maturities$1,132 $(11)$(27)$428 $(12)$(76)$81 $(103)$1,412 $— $(27)
 
Equity securities$43 $(15)$11 $(15)$11 $(10)$25 $(1)

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

Major Category of Assets and LiabilitiesConsolidated Condensed Statements of Operations Line Items
Fixed maturity securities available-for-saleInvestment gains (losses)
Fixed maturity securities tradingNet investment income
Equity securitiesInvestment gains (losses) and Net investment income
Other invested assetsInvestment gains (losses) and Net investment income
Derivative financial instruments held in a trading portfolioNet investment income
Derivative financial instruments, otherInvestment gains (losses) and Operating revenues and other

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Significant Unobservable Inputs


The following tables present quantitative information about the significant unobservable inputs utilized in the fair value measurement of Level 3 assets. Valuations for assets and liabilities not presented in the tables below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of unobservable inputs from these broker quotes is neither provided nor reasonably available. The weighted average rate is calculated based on fair value.

 





Range
 Estimated

Valuation

Unobservable

(Weighted
September 30, 2021
Fair Value Techniques Inputs Average)
 (In millions)      
         
Fixed maturity securities$1,154 Discounted cash flow Credit spread 1% – 7% (2%)
         
December 31, 2020
        
         
Fixed maturity securities$966 Discounted cash flow Credit spread 1% – 8% (3%)

September 30, 2022Estimated
Fair Value		Valuation TechniquesUnobservable InputsRange (Weighted Average)
 (In millions)  
    
Fixed maturity securities$1,111 Discounted cash flowCredit spread1%—11%(3%)
   
December 31, 2021  
   
Fixed maturity securities$1,225 Discounted cash flowCredit spread1%—7%(2%)

For fixed maturity securities, an increase to the credit spread assumptions would result in a lower fair value measurement.

Financial Assets and Liabilities Not Measured at Fair Value


The carrying amount, estimated fair value and the level of the fair value hierarchy of the financial assets and liabilities which are not measured at fair value on the Consolidated Condensed Balance Sheets are presented in the following tables. The carrying amounts and estimated fair values of short term debt and long term debt exclude finance lease obligations. The carrying amounts reported on the Consolidated Condensed Balance Sheets for cash and short term investments not carried at fair value and certain other assets and liabilities approximate fair value due to the short term nature of these items.

 Carrying  Estimated Fair Value 
September 30, 2021
 Amount  Level 1  Level 2  Level 3  Total 
Carrying AmountEstimated Fair Value
September 30, 2022September 30, 2022Level 1Level 2Level 3Total
(In millions)               (In millions)     
                     
Assets:               Assets:     
Other invested assets, primarily mortgage loans $1,031  
   
   $1,106  $1,106 Other invested assets, primarily mortgage loans$953 $880 $880 
                    
Liabilities:                    Liabilities:
Short term debt  186           190   190 Short term debt813 $794 14 808 
Long term debt  8,919      $9,319   554   9,873 Long term debt8,470 7,135 666 7,801 
                    
December 31, 2020
                    
December 31, 2021December 31, 2021
                    
Assets:                    Assets:
Other invested assets, primarily mortgage loans $1,068          $1,151  $1,151 Other invested assets, primarily mortgage loans$973 $1,018 $1,018 
                    
Liabilities:                    Liabilities:
Short term debt  35      $19   17   36 Short term debt93 93 93 
Long term debt  10,042       10,482   765   11,247 Long term debt8,981 $9,170 611 9,781 

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5.4. Claim and Claim Adjustment Expense Reserves and Future Policy Benefit Reserves



Property and casualty insurance claim and claim adjustment expense reserves represent the estimated amounts necessary to resolve all outstanding claims, including incurred but not reported (“IBNR”) claims as of the reporting date. 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. All of these factors can affect the estimation of claim and claim adjustment expense reserves.


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Establishing claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves for catastrophic events that have occurred, is an estimation process. Many factors can ultimately affect the final settlement of a claim and, therefore, the necessary reserve. Changes in the law, results of litigation, medical costs, the cost of repair materials and labor rates can affect ultimate claim costs. In addition, time can be a critical part of reserving determinations since the longer the span between the incidence of a loss and the payment or settlement of the claim, the more variable the ultimate settlement amount can be. Accordingly, short-tail claims, such as property damage claims, tend to be more reasonably estimable than long-tail claims, such as workers’ compensation, general liability and professional liability claims. Adjustments to prior year reserve estimates, if necessary, are reflected in the results of operations in the period that the need for such adjustments is determined. There can be no assurance that the ultimate cost for insurance losses will not exceed current estimates.



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 catastropheCatastrophe losses, net of reinsurance, of $114 million and $178 million and $160 millionwere recorded for the three months ended September 30, 2022 and 2021 and 2020$171 million and $357 million and $536 millionwere recorded for the nine months ended September 30, 20212022 and 2020. Net catastrophe2021. Catastrophe losses for the three and nine months ended September 30, 2022 were driven primarily by severe weather related events, including $87 million for Hurricane Ian. Catastrophe losses for the three months ended September 30, 2021 included $114 million for Hurricane Ida. Net catastropheCatastrophe losses for the nine months ended September 30, 2021 were driven by severe weather-relatedweather related events, primarily Hurricane Ida and Winter Storms Uri and Viola. Net catastrophe losses for the three months ended September 30, 2020 were driven by severe weather-related events, primarily Hurricanes Laura, Isaias and Sally and the Midwest derecho. Net catastrophe losses for the nine months ended September 30, 2020 included $273 million primarily related to severe weather-related events, $195 million related to the COVID-19 pandemic and $68 million related to civil unrest.


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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.the Life & Group business.


Nine Months Ended September 3020222021
(In millions)  
   
Reserves, beginning of year:  
Gross$24,174 $22,706 
Ceded4,969 4,005 
Net reserves, beginning of year19,205 18,701 
 
Reduction of net reserves due to the excess workers’ compensation loss portfolio transfer(632)
Net incurred claim and claim adjustment expenses:
Provision for insured events of current year4,638 4,474 
Decrease in provision for insured events of prior years(144)(130)
Amortization of discount131 137 
Total net incurred (a)
4,625 4,481 
 
Net payments attributable to:
Current year events(523)(629)
Prior year events(3,371)(2,874)
Total net payments(3,894)(3,503)
 
Foreign currency translation adjustment and other(383)(51)
 
Net reserves, end of period19,553 18,996 
Ceded reserves, end of period5,147 4,836 
Gross reserves, end of period$24,700 $23,832 
Nine Months Ended September 30
 2021  2020 
(In millions)      
       
Reserves, beginning of year:      
Gross $22,706  
$
21,720
 
Ceded  4,005   
3,835
 
Net reserves, beginning of year  18,701   
17,885
 
         
Reduction of net reserves due to the excess workers’ compensation loss portfolio transfer  (632)    
         
Net incurred claim and claim adjustment expenses:        
Provision for insured events of current year  4,474   
4,425
 
Increase (decrease) in provision for insured events of prior years  (130)  
(68
)
Amortization of discount  137   
143
 
Total net incurred (a)  4,481   
4,500
 
         
Net payments attributable to:        
Current year events  (629)  
(556
)
Prior year events  (2,874)  
(3,285
)
Total net payments  (3,503)  
(3,841
)
         
Foreign currency translation adjustment and other  (51)  
39
 
         
Net reserves, end of period  18,996   
18,583
 
Ceded reserves, end of period  4,836   
3,951
 
Gross reserves, end of period $23,832  
$
22,534
 


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


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Net Prior Year Development


Changes in estimates of claim and claim adjustment expense reserves, net of reinsurance, for prior years are defined as net prior year loss reserve development. These changes can be favorable or unfavorable.


Favorable net prior year loss reserve development of $10 million and $15 million was recorded forFor commercial property and casualty operations (“Property & Casualty Operations”) favorable net prior year development of $17 million and $10 million was recorded for the three months ended September 30, 20212022 and 20202021 and favorable net prior year loss reserve development of $36$66 million and $58$36 million was recorded for the nine months ended September 30, 20212022 and 2020.2021. Unfavorable net prior year loss reserve development of $40$64 million and $50$40 million was recorded infor CNA’s operations outside of Property & Casualty Operations (“Other Insurance Operations”) for the nine months ended September 30, 20212022 and 2020. 2021.


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


Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
(In millions)  
   
Medical professional liability$8 $8 $17 $16 
Other professional liability and management liability9 22 10 
Surety(20)(15)(48)(53)
Commercial auto21 30 
General liability41 
Workers’ compensation(2)2 (86)(40)
Property and other(12)(5)(33)1 
Other insurance operations64 40 
Total pretax (favorable) unfavorable development$(17)$(10)$(2)$4 
  Three Months Ended  Nine Months Ended 
  September 30,
  September 30, 
  2021  2020  2021  2020 
(In millions)            
             
Medical professional liability $8  $25  $16  
$
35
 
Other professional liability and management liability          10   (6)
Surety  (15)  (40)  (53)  (70)
Commercial auto      
9
   30   
33
 
General liability      15       15 
Workers’ compensation  2   
(23
)  (40)  (97)
Property and other  (5)  
(1
)  1   
32
 
Other insurance operations          40   
50
 
Total pretax (favorable) unfavorable development $(10) 
$
(15
) $4  
$
(8
)

Three Months


2022
2021


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


2021

2020

Unfavorable development in medical professional liability was primarily due to higher than expected frequency of large losses in recent accident years and unfavorable development on a latent claim for an older accident year.



Favorable development in surety was primarily due to lower than expected frequency and lack of systemic activity forin recent accident years 2019 and prior.years.



Unfavorable development in general liability was primarily due to increased bodily injury severities in accident years 2012 through 2016 and higher than expected frequency and severity in CNA’s umbrella business in accident years 2015 through 2019.


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

Nine Months


2022

2021


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


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


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


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

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

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

Favorable development in property and other was mainly due to lower than expected loss emergence in a recent accident year for warranty.

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

2021

Unfavorable development in medical professional liability was due to higher than expected frequency of large losses in recent accident years.

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

Unfavorable development in commercial auto was due to higher than expected claim severity in CNA’s construction 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 property and other was due to higher than expected claim severity in CNA’s medical treatment business mostly offset by favorable development due to lower than expected loss emergence across multiple accident years in property, energy and marine.commercial.


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

2020


Unfavorable development in medical professional liability was primarily due to higher than expected frequency of large losses in recent accident years, unfavorable development on a latent claim for an older accident year and unfavorable outcomes on specific claims in accident years 2015 and 2016 in CNA’s aging services business.


Favorable development in surety was due to lower than expected frequency and lack of systemic activity for accident years 2019 and prior.


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.


Unfavorable development in general liability was driven by increased bodily injury severities in accident years 2012 through 2016 and higher than expected frequency and severity in CNA’s umbrella business in accident years 2015 through 2019.


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.

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 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. The $1.6 billion of claim and allocated claim adjustment expense reserves ceded to NICO was net of $1.2 billion of ceded claim and allocated claim adjustment expense reserves under existing third party reinsurance contracts. The NICO LPT aggregate reinsurance limit also covers credit risk on the existing third party reinsurance related to these liabilities. NICO was paid a reinsurance premium of $2.0 billion and billed third party reinsurance receivables related to A&EP claims with a net book value of $215 million were transferred to NICO, resulting in total consideration of $2.2 billion.


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Index

In years subsequent to the effective date of the LPT, adverse prior year development on A&EP reserves was recognized resulting in additional amounts ceded under the LPT. As a result, the cumulative amounts ceded under the LPT have exceeded the $2.2 billion consideration paid, resulting in the NICO LPT moving into a gain position, requiring retroactive reinsurance accounting. Under retroactive reinsurance accounting, this gain is deferred and only recognized in earnings in proportion to actual paid recoveries under the LPT. Over the life of the contract, there is no economic impact as long as any additional losses incurred are within the limit of the LPT. In a period in which a change in the estimate of A&EP reserves is recognized that increases or decreases the amounts ceded under the LPT, the proportion of actual paid recoveries to total ceded losses is affected and the change in the deferred gain is recognized in earnings as if the revised estimate of ceded losses was available at the effective date of the LPT. The effect of the deferred retroactive reinsurance benefit is recorded in Insurance claims and policyholders’ benefits on the Consolidated Condensed Statements of Operations.



The impact of the LPT on the Consolidated Condensed Statements of Operations was the recognition of a retroactive reinsurance benefit of $8$17 million and $9$8 million for the three months ended September 30, 2022 and 2021 and 2020$40 million and $30 million and $43 million for the nine months ended September 30, 20212022 and 2020.2021. As of September 30, 20212022 and December 31, 2020,2021, the cumulative amounts ceded under the LPT were $3.3$3.4 billion. The unrecognized deferred retroactive reinsurance benefit was $368$389 million and $398$429 million as of September 30, 20212022 and December 31, 20202021 and is included within Other liabilities on the Consolidated Condensed Balance Sheets.



NICO established a collateral trust account as security for its obligations under the LPT. The fair value of the collateral trust account was $2.9$2.3 billion as of September 30, 2021.2022. 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 A&EP claims.


Excess Workers’ Compensation LPT

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On February 5, 2021, CNA completed a transaction with Cavello Bay Reinsurance Limited (“Cavello”), a subsidiary of Enstar Group Limited, under which certain legacy excess workers’ compensation (“EWC”) liabilities were ceded to Cavello. Under the terms of the transaction, based on reserves in place as of January 1, 2020, approximately $690 million of net EWC claim and allocated claim adjustment expense reserves were ceded to Cavello under a loss portfolio transfer (“EWC LPT”) with an aggregate limit of $1.0 billion. 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 Other Insurance Operations in the first quarter of 2021 related to the EWC LPT.

As of September 30, 2021, the cumulative amount ceded under the EWC LPT was $690 million.

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


The majority of CNA’s outstanding voluntary reinsurance receivables are due from reinsurers with financial strength ratings of A- or higher. Receivables due from reinsurers with lower financial strength ratings are primarily due from captive reinsurers and are backed by collateral arrangements.


Life & Group Policyholder Reserves


CNA’s Life & Group business includes its run-off long term care business as well as structured settlement obligations not funded by annuities related to certain property and casualty claimants. Long term care policies provide benefits for nursing homes, assisted living facilities and home health care subject to various daily and lifetime caps. Generally, policyholders must continue to make periodic premium payments to keep the policy in force and CNA has the ability to increase policy premiums, subject to state regulatory approval.


CNA maintains both claim and claim adjustment expense reserves as well as future policy benefit reserves for policyholder benefits for its Life & Group business. Claim and claim adjustment expense reserves consist of estimated reserves for long term care policyholders that are currently receiving benefits, including claims that have been incurred but are not yet reported. In developing the claim and claim adjustment expense reserve estimates for long term care policies, CNA’s actuaries perform a detailed claim reserve review on an annual basis. The review analyzes the sufficiency of existing reserves for policyholders currently on claim and includes an evaluation of expected benefit utilization and claim duration. In addition, claim and claim adjustment expense reserves are also maintained for the
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Index
structured settlement obligations. In developing the claim and claim adjustment expense reserve estimates for structured settlement obligations, CNA’s actuaries review mortality experience on an annual basis. CNA’s recorded claim and claim adjustment expense reserves reflect management’s best estimate after incorporating the results of the most recent reviews.



CNA completed itsCNA’s most recent annual claim reserve reviews were completed in the third quartersquarter of 2022. The long term care claim reserve review resulted in a $25 million pretax reduction in reserves driven by a $107 million favorable impact from the release of all remaining IBNR reserves established during 2020 and 2021 in response to the COVID-19 pandemic partially offset by an $82 million unfavorable impact from higher claim severity, including utilization and cost of care inflation, than anticipated in the reserve estimates. The structured settlement claim reserve review resulted in a $5 million pretax reduction in reserves due to discount rate assumption changes. CNA’s 2021 annual claim reserve reviews were completed in the third quarter of 2021 and 2020 resulting in a $40 million and $37 million pretax reductionsreduction in long term care reserves primarily due to lower claim severity than anticipated in the reserve estimates and a $2 million and $46 million pretax increasesincrease in the structured settlement claim reserves primarily due to lower discount rate assumptions and mortality assumption changes.


Future policy benefit reserves consist of active life reserves related to CNA’s long term care policies for policyholders that are not currently receiving benefits and represent the present value of expected future benefit payments and expenses less expected future premium. The determination of these reserves requires management to make estimates and assumptions about expected investment and policyholder experience over the life of the contract. Since many of these contracts may be in force for several decades, these assumptions are subject to significant estimation risk.



The actuarial assumptions that CNA believes are subject to the most variability are morbidity, persistency, discount rates and anticipated future premium rate increases. Morbidity is the frequency and severity of injury, illness, sickness and diseases contracted. Persistency is the percentage of policies remaining in force and can be affected by policy lapses, benefit reductions and death. Discount rates are influenced by the investment yield on assets supporting long term care reserves which is subject to interest rate and market volatility and may also be affected by changes to the Internal Revenue Code. Future premium rate increases are generally subject to regulatory approval, and therefore the exact timing and size of the approved rate increases are unknown. As a result of this variability, CNA’s long term care reserves may be subject to material increases if actual experience develops adversely to CNA’s expectations.


Annually, in the third quarter, CNA assesses the adequacy of its long term care future policy benefit reserves by performing a gross premium valuation (“GPV”) to determine if there is a premium deficiency. Under the GPV, management estimates required reserves using best estimate assumptions as of the date of the assessment without provisions for adverse deviation. The GPV required reserves are then compared to the existing recorded reserves. If the GPV required reserves are greater than the existing recorded reserves, the existing assumptions are unlocked and future policy benefit reserves are increased to the greater amount. Any such increase is reflected in the Company’s results of operations in the period in which the need for such adjustment is determined. If the GPV required reserves are less than the existing recorded reserves, assumptions remain locked in and no adjustment is required.made.


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The GPV for the long term care future policy benefit reserves, performed in the third quarterquarters of 2022 and 2021, indicated the recorded reserves included a pretax margin of approximately $125 million and $72 million as of September 30, 2021.


The GPV for the long term care future policy benefit reserves performed in the third quarter of 2020 indicated a premium deficiency primarily driven by lower discount rate assumptions. Recognition of the premium deficiency resulted in a $74 million pretax increase in policyholders’ benefits reflected in the Company’s results of operations for the three2022 and nine months ended September 30, 2020.
2021.

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6.5. Shareholders’ Equity

Accumulated other comprehensive income (loss)


The tables below present the changes in AOCI by component for the three and nine months ended September 30, 20202021 and 2021:2022:

 Net Unrealized                
  Gains (Losses)              Total 
  on Investments  Net Unrealized  Unrealized        Accumulated 
  with an  Gains (Losses)  Gains (Losses)  Pension and  Foreign  Other 
  Allowance for  on Other  on Cash Flow  Postretirement  Currency  Comprehensive 
  Credit Losses  Investments  Hedges  Benefits  Translation  Income (Loss) 
(In millions)                  
                   
Balance, July 1, 2020 $(8) $1,050  $(25) $(837) $(175) $5 
Other comprehensive income (loss) before reclassifications, after tax of $0, $(63), $0, $0 and $0
  2   231   (2)  (2)  38   267 
Reclassification of (income) losses from accumulated other comprehensive income, after tax of $(1), $7, $0, $(3) and $0
  4   (24)  3   9       (8)
Other comprehensive income  6   207   1   7   38   259 
Amounts attributable to noncontrolling interests  (1)  (22)      
   (3)  (26)
Balance, September 30, 2020
 $(3) $1,235  $(24) $(830) $(140) $238 
 Net Unrealized Gains (Losses) on Investments with an Allowance for Credit LossesNet Unrealized Gains (Losses) on Other InvestmentsUnrealized Gains (Losses) on Cash Flow HedgesPension and Postretirement BenefitsForeign Currency TranslationTotal Accumulated Other Comprehensive Income (Loss)
(In millions)      
       
Balance, July 1, 2021$— $1,271 $(11)$(863)$(70)$327 
Other comprehensive income (loss) before reclassifications, after tax of $0, $32, $0, $0 and $0(121)1 3 (33)(150)
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $0, $5, $0, $(2) and $0(17)1 13 (3)
Other comprehensive income (loss)— (138)2 16 (33)(153)
Amounts attributable to noncontrolling interests14 (1)4 17 
Balance, September 30, 2021$— $1,147 $(9)$(848)$(99)$191 
Balance, July 1, 2022$(7)$(1,721)$18 $(625)$(175)$(2,510)
Other comprehensive income (loss) before reclassifications, after tax of $1, $381, $0, $0 and $0(1,429)6 (106)(1,529)
Reclassification of (gains) losses from accumulated other comprehensive loss, after tax of $0, $(11), $(1), $(2) and $0(2)102 (2)6 104 
Other comprehensive income (loss)(2)(1,327)4 6 (106)(1,425)
Amounts attributable to noncontrolling interests(1)124 (1)10 132 
Balance, September 30, 2022$(10)$(2,924)$22 $(620)$(271)$(3,803)

Balance, July 1, 2021 $0  $1,271  $(11) $(863) $(70) $327 
Other comprehensive income (loss) before reclassifications, after tax of $0, $32, $0, $0 and $0
      (121)  1   3   (33)  (150)
Reclassification of (income) losses from accumulated other comprehensive income, after tax of $0, $5, $0, $(2) and $0
      (17)  1   13       (3)
Other comprehensive income (loss)
      (138)  2
   16   (33)  (153)
Amounts attributable to noncontrolling interests      14       (1)  4   17 
Balance, September 30, 2021
 $0  $1,147  $(9) $(848) $(99) $191 

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 Net Unrealized                
  Gains (Losses)              Total 
  on Investments  Net Unrealized  Unrealized        Accumulated 
  with an  Gains (Losses)  Gains (Losses)  Pension and  Foreign  Other 
  Allowance for  on Other  on Cash Flow  Postretirement  Currency  Comprehensive 
  Credit Losses  Investments  Hedges  Benefits  Translation  Income (Loss) 
(In millions)                  
                   
Balance, January 1, 2020 $0  $918  $(6) $(855) $(125) $(68)
Other comprehensive income (loss) before reclassifications, after tax of $13, $(97), $8, $0 and $0
  (48)  374   (22)  (3)  (17)  284 
Reclassification of losses from accumulated other comprehensive income, after tax of $(12), $5, $(1), $(8) and $0
  45   (20)  4   30       59 
Other comprehensive income (loss)  (3)  354   (18)  27   (17)  343 
Amounts attributable to noncontrolling interests      (37)      (2)  2   (37)
Balance, September 30, 2020
 $(3) $1,235  $(24) $(830) $(140) $238 

Balance, January 1, 2021 $0  $1,563  $(23) $(877) $(82) $581 
Other comprehensive income (loss) before reclassifications, after tax of $1, $104, $(3), $0 and $0
  (2)  (391)  12   1   (19)  (399)
Reclassification of (income) losses from accumulated other comprehensive income, after tax of $(1), $20, $(2), $(7) and $0
  2   (74)  2   31       (39)
Other comprehensive income (loss)  0   (465)  14   32   (19)  (438)
Amounts attributable to noncontrolling interests      49       (3)  2   48 
Balance, September 30, 2021
 $0  $1,147  $(9) $(848) $(99) $191 

 Net Unrealized Gains (Losses) on Investments with an Allowance for Credit LossesNet Unrealized Gains (Losses) on Other InvestmentsUnrealized Gains (Losses) on Cash Flow HedgesPension and Postretirement BenefitsForeign Currency TranslationTotal Accumulated Other Comprehensive Income (Loss)
(In millions)      
       
Balance, January 1, 2021$— $1,563 $(23)$(877)$(82)$581 
Other comprehensive income (loss) before reclassifications, after tax of $1, $104, $(3), $0 and $0(2)(391)12 1 (19)(399)
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $(1), $20, $(2), $(7) and $02 (74)2 31 (39)
Other comprehensive income (loss)— (465)14 32 (19)(438)
Amounts attributable to noncontrolling interests49 (3)2 48 
Balance, September 30, 2021$— $1,147 $(9)$(848)$(99)$191 
Balance, January 1, 2022$(2)$930 $(6)$(636)$(100)$186 
Other comprehensive income (loss) before reclassifications, after tax of $1, $1,165, $3, $0 and $0(5)(4,401)27 (189)(4,568)
Reclassification of (gains) losses from accumulated other comprehensive loss, after tax of $1, $(15), $0, $(5) and $0(3)117 1 18 133 
Other comprehensive income (loss)(8)(4,284)28 18 (189)(4,435)
Amounts attributable to noncontrolling interests430 (2)18 446 
Balance, September 30, 2022$(10)$(2,924)$22 $(620)$(271)$(3,803)

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

Major Category of AOCIAffected Line Item
Net unrealized gains (losses) on investments with an allowance for credit losses and Net
unrealized gains (losses) on investments with OTTI losses and Net unrealized gains
(losses) on other investmentsInvestment gains (losses)
Unrealized gains (losses) on cash flow hedgesOperating revenues and other, Interest expense and Operating expenses and other
Pension and postretirement benefitsOperating expenses and other

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Treasury Stock


Loews Corporation repurchased15.7 10.5 million and 16.115.7 million shares of its common stock at an aggregate costcosts of $826$614 million and $673$826 million during the nine months ended September 30, 20212022 and 20202021. Loews Corporation purchased 0.7 million shares of CNA’s common stock at an aggregate cost of $26 million during the nine months ended September 30, 2022.
.
6. Debt

In February of 2022, Boardwalk Pipelines completed a public offering of $500 million aggregate principal amount of its 3.6% senior notes due September 1, 2032. Boardwalk Pipelines used the proceeds to retire the outstanding $300 million aggregate principal amount of its 4.0% senior notes due June 2022 in March of 2022, to fund growth capital expenditures and for general corporate purposes.

7. 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 11:

  Three Months Ended

Nine Months Ended 
  September 30,
  September 30, 
  2021  2020  2021  2020 
(In millions)            
             
Non-insurance warranty – CNA Financial $357  $317  $1,054  $926 
                 
Transportation and storage of natural gas and NGLs and other services – Boardwalk Pipelines  296   280   959   898 
Lodging and related services – Loews Hotels & Co  129   36   279   194 
Rigid plastic packaging and recycled resin – Corporate (a)      253   280   753 
Contract drilling – Diamond Offshore (b)
      
       300 
Total revenues from contracts with customers  425   569   1,518   2,145 
Other revenues  25   40   62   96 
Operating revenues and other $450  $609  $1,580  $2,241 

(a)
Revenues 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.
(b)Revenues presented for Diamond Offshore reflect the period prior to its deconsolidation in the second quarter of 2020. See Note 2 for further discussion.

Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
(In millions)  
   
Non-insurance warranty – CNA Financial$399 $357 $1,173 $1,054 
 
Transportation and storage of natural gas and NGLs and other services – Boardwalk Pipelines$329 $296 $1,013 $959 
Lodging and related services – Loews Hotels & Co171 129 507 279 
Rigid plastic packaging and recycled resin – Corporate (a)280 
Total revenues from contracts with customers500 425 1,520 1,518 
Other revenues33 25 87 62 
Operating revenues and other$533 $450 $1,607 $1,580 

(a)Revenues presented reflect the consolidated results of Altium Packaging through March 31, 2021.

Receivables from contracts with customers – As of September 30, 20212022 and December 31, 2020,2021, receivables from contracts with customers were approximately $118$144 million and $246$145 million and are included within Receivables on the Consolidated Condensed Balance Sheets.


Deferred revenue – As of September 30, 20212022 and December 31, 2020,2021, deferred revenue resulting from contracts with customers was approximately $4.5$4.8 billion and $4.1$4.6 billion and is reported as Deferred non-insurance warranty revenue and within Other liabilities on the Consolidated Condensed Balance Sheets. Approximately $916 million$1.0 billion and $839$916 million of revenues recognized during the nine months ended September 30, 20212022 and 20202021 were included in deferred revenue as of December 31, 20202021 and 2019.2020.


Performance obligations– As of September 30, 2021,2022, approximately $13.3$13.4 billion of estimated operating revenues is expected to be recognized in the future related to outstanding performance obligations. The balance relates primarily to revenues for transportation and storage ofservices for natural gas and natural gas liquids and hydrocarbons (“NGLs”) servicesat Boardwalk Pipelines and non-insurance warranty revenue. revenue at CNA. Approximately $0.7$0.8 billion will be recognized during the remaining three months of 2021, $2.32022, $2.7 billion in 20222023 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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8. Benefit Plans


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


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

 Pension Benefits 
  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2021  2020  2021  2020 
(In millions)            
             
Service cost $1  
   $2  $2 
Interest cost  17  $24   53   70 
Expected return on plan assets  (41)  (43)  (127)  (130)
Amortization of unrecognized net loss  12   12   37   35 
Amortization of unrecognized prior service cost              1 
Settlement charge      1   2   8 
Regulatory asset decrease
  1       1     
Net periodic benefit $(10) $(6) $(32) $(14)


Pension Benefits
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
(In millions)    
     
Service cost$1 $1 $2 $2 
Interest cost20 17 57 53 
Expected return on plan assets(41)(41)(124)(127)
Amortization of unrecognized net loss8 12 24 37 
Settlements2 2 
Regulatory asset (increase) decrease(1)1 1 1 
Net periodic benefit$(13)$(10)$(38)$(32)
The net periodic benefit for other postretirement benefits was $1 million for the three months ended September 30, 2021 and the nine months ended September 30, 2021 and 2020. There was 0 net periodic benefit for the three months ended September 30, 2020.
Other Postretirement Benefits
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
(In millions)    
     
Interest cost$1 $1 
Expected return on plan assets$(1)(1)(2)
Net periodic benefit$— $(1)$— $(1)

9. Legal Proceedings

Boardwalk Pipelines Litigation

On May 25, 2018, plaintiffs Tsemach Mishal and Paul Berger (on behalf of themselves and the purported class, “Plaintiffs”) initiated a purported class action in the Court of Chancery of the State of Delaware (the “Court”“Trial Court”) against the following defendants: Boardwalk Pipelines, Boardwalk GP, LP (“General Partner”), Boardwalk GP, LLC and Boardwalk Pipelines Holding Corp. (“BPHC”) (together, “Defendants”), regarding the potential exercise by the General Partner of its right to purchase all of the issued and outstanding common units representing limited partnership interests in Boardwalk Pipelines not already owned by the General Partner or its affiliates.


On June 25, 2018, Plaintiffs and Defendants entered into a Stipulation and Agreement of Compromise and Settlement, subject to the approval of the Trial Court (the “Proposed Settlement”). Under the terms of the Proposed Settlement, the lawsuit would be dismissed, and related claims against the Defendants would be released by the Plaintiffs, if BPHC, the sole member of the General Partner, elected to cause the General Partner to exercise its right to purchase the issued and outstanding common units of Boardwalk Pipelines pursuant to Boardwalk Pipelines’ Third Amended and Restated Agreement of Limited Partnership, as amended (“Limited Partnership Agreement”), within a period specified by the Proposed Settlement. On June 29, 2018, the General Partner elected to exercise its right to purchase all of the issued and outstanding common units representing limited partnership interests in Boardwalk Pipelines not already owned by the General Partner or its affiliates pursuant to the Limited Partnership Agreement within the period specified by the Proposed Settlement. The transaction was completed on July 18, 2018.


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On September 28, 2018, the Trial Court denied approval of the Proposed Settlement. On February 11, 2019, a substitute verified class action complaint was filed in this proceeding.proceeding, which among other things, added the Parent Company as a Defendant. The Defendants filed a motion to dismiss, which was heard by the Trial Court in July of 2019. In October of 2019, the Trial Court ruled on the motion and granted a partial dismissal, with certain aspects of the case proceeding to trial. A trial was held the week of February 22, 2021 and post-trial oral arguments were held on July 14, 2021.2021.

On November 12, 2021, the Trial Court issued a ruling in the case. The Trial Court held that the General Partner breached the Limited Partnership Agreement and awarded Plaintiffs approximately $690 million, plus pre-judgment interest (approximately $166 million), post-judgment interest and attorneys’ fees.

The Company believes that the Trial Court ruling includes factual and legal errors. Therefore on January 3, 2022, the Defendants appealed the Trial Court’s ruling to the Supreme Court of the State of Delaware (the “Supreme Court”). On January 17, 2022, the Plaintiffs filed a cross-appeal to the Supreme Court contesting the calculation of damages by the Trial Court. Oral arguments were held for this case on September 14, 2022.

At this time, given the Trial Court’s ruling and the pending appeals, the Company believes that it is reasonably possible that a loss has occurred, although the Company is unable to estimate any potential loss as it may range from zero up to the full amount of the Trial Court’s award of $690 million, plus pre- and post-judgment interest and attorneys’ fees, or more, depending on the extent of the Defendants’ and Plaintiffs’ success on appeal. The Company has not recorded a liability related to this matter.

As litigation is inherently unpredictable, if an unfavorable final outcome occurs, there is a possibility of a material adverse impact to the Company’s consolidated financial statements in the period in which the effects become known.

Other Litigation

The Company is from time to time party to other litigation arising in the ordinary course of business. While it is difficult to predict the outcome or effect of any litigation, management does not believe that the outcome of any such pending litigation including the Boardwalk Pipelines matter described above, will materially affect the Company’s results of operations or equity.

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10. Commitments and Contingencies

CNA Data Breach-related Contingency


As previously disclosed, CNA sustained a sophisticated cybersecurity attack in March of 2021 involving ransomware. CNA’s investigation revealed that an unauthorized third party copied some personal information relating to certain current and former employees, contractor workers and their dependents and certain other persons, including some policyholders. In July of 2021, CNA provided notifications to the impacted individuals and to regulators, in accordance with applicable law. CNA may be subject to subsequent investigations, fines or penalties, as well as other legal claims and actions, related to the foregoing. The likelihood is reasonably possible, but the amount of such fines, penalties or costs, if any, cannot be estimated at this time.


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

Guarantees
CNA
Guarantees


CNA has provided guarantees, if the primary obligor fails to perform, to holders of structured settlement annuities issued by a previously owned subsidiary. As of September 30, 2021,2022, the potential amount of future payments CNA could be required to pay under these guarantees was approximately $1.6 billion, which will be paid over the lifetime of the annuitants. CNA does not believe any payment is likely under these guarantees, as CNA is the beneficiary of a trust that must be maintained at a level that approximates the discounted reserves for these annuities.

Loews Hotels & Co

In October of 2022, Loews Hotels & Co contributed $34 million as an initial investment in two joint venture development projects expected to open in 2025. These projects are currently estimated to require an aggregate investment of approximately $200 million in capital contributions from Loews Hotels & Co.


11. Segments


Loews Corporation has 4four reportable segments comprised of 3three individual consolidated operating subsidiaries, CNA, Boardwalk Pipelines and Loews Hotels & Co; and the Corporate segment. In the first quarter of 2020, Diamond Offshore was a reportable segment; it was deconsolidated during the second quarter of 2020. The Corporate segment is primarily comprised of Loews Corporation, excluding its subsidiaries, and the consolidated operations of Altium Packaging through March 31, 2021. On April 1, 2021 Loews Corporation sold 47% of its interest in Altium Packaging and as a result, Altium Packaging was deconsolidated from Loews Corporation’s consolidated financial results. 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 discussion on the deconsolidations of Diamond Offshore andfor Altium Packaging see Note 2.


subsequent to its deconsolidation on April 1, 2021. Each of the operating subsidiaries is headed by a chief executive officer who is responsible for the operation of its business and has the duties and authority commensurate with that position. For additional disclosures regarding the composition of Loews Corporation’s segments, see Note 2019 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.2021.


The following tables present the reportable segments and their contribution to the Consolidated Condensed Statements of Operations. Amounts presented will not necessarily be the same as those in the individual financial statements of the subsidiaries due to adjustments for purchase accounting, income taxes and noncontrolling interests.

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Statements of Operations by segment are presented in the following tables.

 CNA
  Boardwalk
  Loews
  
  
 
Three Months Ended September 30, 2021
 Financial  Pipelines  Hotels & Co  Corporate  Total 
Three Months Ended September 30, 2022Three Months Ended September 30, 2022
CNA Financial
Boardwalk Pipelines
Loews
Hotels & Co
Corporate
Total
(In millions)               (In millions)     
                     
Revenues:               Revenues:     
                     
Insurance premiums $2,059           $2,059 Insurance premiums$2,221 $2,221 
Net investment income (loss)
  513     
   $(30)  483 Net investment income (loss)422 $1 $(19)404 
Investment gains  22              22 
Investment lossesInvestment losses(96)(96)
Non-insurance warranty revenue  357              357 Non-insurance warranty revenue399 399 
Operating revenues and other  8  $307  $
134   1   450 Operating revenues and other11 338 $180 4 533 
Total  2,959   307   134   (29)  3,371 Total2,957 339 180 (15)3,461 
                    
Expenses:                    Expenses:
                    
Insurance claims and policyholders’ benefits  1,632               1,632 Insurance claims and policyholders’ benefits1,665 1,665 
Amortization of deferred acquisition costs  368               368 Amortization of deferred acquisition costs383 383 
Non-insurance warranty expense  330               330 Non-insurance warranty expense371 371 
Operating expenses and other  287   215   109   27   638 Operating expenses and other346 250 147 17 760 
Interest  28   40   8   23   99 Interest28 42 (1)23 92 
Total  2,645   255   117   50   3,067 Total2,793 292 146 40 3,271 
Income (loss) before income tax  314   52   17   (79)  304 Income (loss) before income tax164 47 34 (55)190 
Income tax (expense) benefit  (59)  (14)  (4)  19   (58)Income tax (expense) benefit(36)(13)(9)11 (47)
Net income (loss)  255   38   13   (60)  246 Net income (loss)128 34 25 (44)143 
Amounts attributable to noncontrolling interests  (26)              (26)Amounts attributable to noncontrolling interests(13)(13)
Net income (loss) attributable to Loews Corporation $229  $38  $13  $(60) $220 Net income (loss) attributable to Loews Corporation$115 $34 $25 $(44)$130 

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Three Months Ended September 30, 2021CNA FinancialBoardwalk PipelinesLoews
Hotels & Co		CorporateTotal
(In millions)     
      
Revenues:     
      
Insurance premiums$2,059 $2,059 
Net investment income (loss)513 $(30)483 
Investment gains22 22 
Non-insurance warranty revenue357 357 
Operating revenues and other8 $307 $134 1 450 
Total2,959 307 134 (29)3,371 
 
Expenses:
 
Insurance claims and policyholders’ benefits1,632 1,632 
Amortization of deferred acquisition costs368 368 
Non-insurance warranty expense330 330 
Operating expenses and other287 215 109 27 638 
Interest28 40 8 23 99 
Total2,645 255 117 50 3,067 
Income (loss) before income tax314 52 17 (79)304 
Income tax (expense) benefit(59)(14)(4)19 (58)
Net income (loss)255 38 13 (60)246 
Amounts attributable to noncontrolling interests(26)(26)
Net income (loss) attributable to Loews Corporation$229 $38 $13 $(60)$220 


  CNA
  Boardwalk
  Loews
  
  
 
Three Months Ended September 30, 2020
 Financial  Pipelines  Hotels & Co  Corporate (a)  Total 
(In millions)               
                
Revenues:               
                
Insurance premiums $1,953           $1,953 
Net investment income  517        $23   540 
Investment gains
  46             46 
Non-insurance warranty revenue  317             317 
Operating revenues and other  7  $289  $60   253   609 
Total  2,840   289   60   276   3,465 
                     
Expenses:                    
                     
Insurance claims and policyholders’ benefits  1,616               1,616 
Amortization of deferred acquisition costs  360               360 
Non-insurance warranty expense  293               293 
Operating expenses and other  268   219   114   275   876 
Interest  52   44   8   33   137 
Total  2,589   263   122   308   3,282 
Income (loss) before income tax  251   26   (62)  (32)  183 
Income tax (expense) benefit  (36)  (6)  15   6   (21)
Net income (loss)  215   20   (47)  (26)  162 
Amounts attributable to noncontrolling interests  (23)              (23)
Net income (loss) attributable to Loews Corporation $192  $20  $(47) $(26) $139 

(a)
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Nine Months Ended September 30, 2022CNA FinancialBoardwalk PipelinesLoews Hotels & CoCorporateTotal
(In millions)     
      
Revenues:     
      
Insurance premiums$6,435 $6,435 
Net investment income (loss)1,302 $1 $(1)$(100)1,202 
Investment losses(166)(166)
Non-insurance warranty revenue1,173 1,173 
Operating revenues and other24 1,044 533 6 1,607 
Total8,768 1,045 532 (94)10,251 
 
Expenses:
 
Insurance claims and policyholders’ benefits4,703 4,703 
Amortization of deferred acquisition costs1,101 1,101 
Non-insurance warranty expense1,092 1,092 
Operating expenses and other1,001 698 405 62 2,166 
Interest84 126 7 67 284 
Total7,981 824 412 129 9,346 
Income (loss) before income tax787 221 120 (223)905 
Income tax (expense) benefit(141)(57)(36)44 (190)
Net income (loss)646 164 84 (179)715 
Amounts attributable to noncontrolling interests(67)(67)
Net income (loss) attributable to Loews Corporation$579 $164 $84 $(179)$648 

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Nine Months Ended September 30, 2021CNA FinancialBoardwalk PipelinesLoews Hotels & CoCorporate (a)Total
(In millions)
Revenues:
Insurance premiums$6,056 $6,056 
Net investment income1,608 $1 $40 1,649 
Investment gains117 540 657 
Non-insurance warranty revenue1,054 1,054 
Operating revenues and other19 $991 288 282 1,580 
Total8,854 991 289 862 10,996 
Expenses:
Insurance claims and policyholders’ benefits4,684 4,684 
Amortization of deferred acquisition costs1,084 1,084 
Non-insurance warranty expense973 973 
Operating expenses and other874 641 328 365 2,208 
Interest85 121 25 93 324 
Total7,700 762 353 458 9,273 
Income (loss) before income tax1,154 229 (64)404 1,723 
Income tax (expense) benefit(219)(59)13 (126)(391)
Net income (loss)935 170 (51)278 1,332 
Amounts attributable to noncontrolling interests(97)(97)
Net income (loss) attributable to Loews Corporation$838 $170 $(51)$278 $1,235 

(a)Amounts presented for Corporate include the operating results of Altium Packaging prior to the deconsolidation.

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  CNA


Boardwalk


Loews






 
Nine Months Ended September 30, 2021 Financial  Pipelines  Hotels & Co  Corporate (b)  Total 
(In millions)               
                
Revenues:               
                
Insurance premiums $6,056              $6,056 
Net investment income  1,608      $1  $40   1,649 
Investment gains  117           540   657 
Non-insurance warranty revenue  1,054               1,054 
Operating revenues and other  19  $991   288   282   1,580 
Total  8,854   991   289   862   10,996 
                     
Expenses:                    
                     
Insurance claims and policyholders’ benefits  4,684               4,684 
Amortization of deferred acquisition costs  1,084               1,084 
Non-insurance warranty expense  973               973 
Operating expenses and other  874   641   328   365   2,208 
Interest  85   121   25   93   324 
Total  7,700   762   353   458   9,273 
Income (loss) before income tax  1,154   229   (64)  404   1,723 
Income tax (expense) benefit  (219)  (59)  13   (126)  (391)
Net income (loss)  935   170   (51)  278   1,332 
Amounts attributable to noncontrolling interests  (97)              (97)
Net income (loss) attributable to Loews Corporation $838  $170  $(51) $278  $1,235 

(b)Amounts presented for Corporate include the operatingconsolidated results of Altium Packaging through March 31, 2021. Beginning April 1, 2021, Altium Packaging is recorded as an equity method investment.

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  CNA
  Boardwalk
  Loews
  
  Diamond
  
 
Nine Months Ended September 30, 2020
 Financial  Pipelines  Hotels & Co  Corporate (a)  Offshore (c)  Total 
(In millions)                  
                   
Revenues:                  
                   
Insurance premiums $5,672              $5,672 
Net investment income (loss)  1,380        $(33)     1,347 
Investment losses  (101)        (1,211)     (1,312)
Non-insurance warranty revenue  926                926 
Operating revenues and other  20  $926  $236   754  $305   2,241 
Total  7,897   926   236   (490)  305   8,874 
                         
Expenses:                        
                         
Insurance claims and policyholders’ benefits  4,683                   4,683 
Amortization of deferred acquisition costs  1,046                   1,046 
Non-insurance warranty expense  859                   859 
Operating expenses and other  851   633   404   810   1,196   3,894 
Interest  114   127   24   96   43   404 
Total  7,553   760   428   906   1,239   10,886 
Income (loss) before income tax  344   166   (192)  (1,396)  (934)  (2,012)
Income tax (expense) benefit  (40)  (43)  48   293   26   284 
Net income (loss)  304   123   (144)  (1,103)  (908)  (1,728)
Amounts attributable to noncontrolling interests  (32)              432   400 
Net income (loss) attributable to Loews Corporation $272  $123  $(144) $(1,103) $(476) $(1,328)

(c)Amounts presented for Diamond Offshore reflect the period prior to the deconsolidation.

36
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.38
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Item 2. 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, Risk Factors included in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 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, 2020.2021. This MD&A is comprised of the following sections:


Page
No.
37
39
38
40
Consolidated Financial Results
38
40
CNA Financial
39
40
Boardwalk Pipelines
48
50
Loews Hotels & Co
49
53
Corporate
50
54
Diamond Offshore51
51
55
Parent Company
51
55
Subsidiaries
52
55
53
56
56
60
57
60
57
61

OVERVIEW

Loews Corporation is a holding company and has four reportable segments comprised of three individual consolidated operating subsidiaries, CNA Financial Corporation (“CNA”), Boardwalk Pipeline Partners, LP (“Boardwalk Pipelines”) and Loews Hotels Holding Corporation (“Loews Hotels & Co”); and the Corporate segment. In the first quarter of 2020, Diamond Offshore Drilling Inc. (“Diamond Offshore”) was a reportable segment; Diamond Offshore was deconsolidated during the second quarter of 2020. The Corporate segment is primarily comprised of Loews Corporation, excluding its operating subsidiaries, and the consolidated 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 shares certain participating rights with GIC related to capital allocation and other decisions and was therefore 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 andfor Altium Packaging seesubsequent to its deconsolidation on April 1, 2021. For information regarding the deconsolidation of Altium Packaging see Note 2 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report.in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

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 our shareholders. The ability of our subsidiaries to pay dividends is subject to, among other things, the availability of sufficient earnings and funds in such subsidiaries, applicable state laws, including in the case of the insurance subsidiaries of CNA, laws and rules governing the payment of dividends by regulated insurance companies (see(see Note 14 of thethe Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020)2021) and compliance with covenants in their respective loan agreements. Claims of creditors of our subsidiaries will generally have priority as to the assets of such subsidiaries over our claims and those of our creditors and shareholders. We are not responsible for the liabilities and obligations of our subsidiaries and there are no Parent Company guarantees.

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RESULTS OF OPERATIONS

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 and nine months ended September 30, 20212022 and 2020:2021:

Three Months EndedNine Months Ended

 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 September 30,

 2021  2020  2021  2020 2022202120222021
(In millions, except per share data)            (In millions, except per share data)  
               
CNA Financial $229  $192  $838  $272 CNA Financial$115 $229 $579 $838 
Boardwalk Pipelines 38  20  170  123 Boardwalk Pipelines34 38 164 170 
Loews Hotels & Co 13  (47) (51) (144)Loews Hotels & Co25 13 84 (51)
Corporate (60) (26) 278  (1,103)Corporate(44)(60)(179)278 
Diamond Offshore              (476)
Net income (loss) attributable to Loews Corporation $220  $139  $1,235  $(1,328)
            
Basic net income (loss) per share $0.86  $0.50  $4.71  $(4.70)
Net income attributable to Loews CorporationNet income attributable to Loews Corporation$130 $220 $648 $1,235 
               
Diluted net income (loss) per share $0.85  $0.50  $4.70  $(4.70)
Basic net income per shareBasic net income per share$0.54 $0.86 $2.65 $4.71 
  
Diluted net income per shareDiluted net income per share$0.54 $0.85 $2.64 $4.70 

Net income attributable to Loews Corporation for the three months ended September 30, 20212022 was $130 million, or $0.54 per share, compared to $220 million, or $0.85 per share compared to $139 million, or $0.50 per share in the comparable 20202021 period. Net income attributable to Loews Corporation for the nine months ended September 30, 20212022 was $1.2 billion,$648 million, or $4.70$2.64 per share, compared to a net loss of $1.3$1.2 billion, or $4.70 per share in the comparable 20202021 period.

Each ofNet income attributable to Loews Corporation in the company’s consolidated subsidiaries, CNA Financial Corporation, Boardwalk Pipelines, and Loews Hotels & Co, contributed meaningfully to the year-over-year increase in Loews’s 2021 third quarter net incomeof 2022 as compared to the comparable 2020 period. As compared to the third quarter of 2020,2021 period included higher underwriting income and increased net investment income from fixed income securities at CNA benefited from higher Property & Casualty non-catastrophe current accident year underwriting results and improved Life & Group business results primarily due to the absence of the active life premium deficiency charge recorded in the third quarter of 2020, partially offset by higher net catastrophe losses and lower investment gains.at Loews Hotels & Co posted significantly improved year-over-year third quarter results due to the continuing rebound in leisure travel, especially at resort destinations. Boardwalk Pipelines revenues for the third quarter of 2021 increased compared to the comparable prior year period, reflecting the impact of recently completed growth projectsoffset by losses from limited partnership and higher system utilization. The parent company investment portfolio experienced lowercommon stock investments and net investment losses from sales of fixed income in the third quarter of 2021 compared to the comparable prior year period.securities at CNA.

The improved results for the nine months ended September 30, 2021 compared to the comparable 2020 period are due to higher Property & Casualty non-catastrophe current accident year underwriting results at CNA, improved results for CNA’s Life & Group business which benefited from the absence of the active life premium deficiency charge recorded in the third quarter of 2020, lower net catastrophe losses at CNA, significantly higher net investment income at CNA and the parent company, and investment gains in 2021 as compared to losses in 2020 at CNA and in the parent company investment portfolio. All otherCorporate segment improvements for the nine months ended September 31, 2021 as compared to the comparable 2020 period are primarily due to the reasons discussed in the three month comparison above. In addition, the nine months ended September 30, 2021 includeincluded a gain of $438 million (after tax) related to the sale of 47% of Altium Packaging and its deconsolidation on April 1, 2021. Thein the nine months ended September 30, 2020 included a loss2021. Excluding this significant transaction, the drivers of $957 million (after tax), relatedthe decrease in net income attributable to Loews Corporation for the nine months ended September 30, 2022 as compared to the bankruptcy filing and deconsolidation of Diamond Offshore, and impairment charges totaling $774 million ($408 million after tax and noncontrolling interests) at Diamond Offshore incomparable 2021 period are consistent with the first quarter of 2020, prior to deconsolidation.

38three-month discussion above.

CNA Financial

The following table summarizes the results of operations for CNA for the three and nine months ended September 30, 20212022 and 20202021 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
September 30,
  
Nine Months Ended
September 30,
 
  2021  2020  2021  2020 
(In millions)            
             
Revenues:            
Insurance premiums $2,059  $1,953  $6,056  $5,672 
Net investment income  513   
517
   1,608   
1,380
 
Investment gains (losses)  22   
46
   117   
(101
)
Non-insurance warranty revenue  357   
317
   1,054   
926
 
Other revenues  8   
7
   19   
20
 
Total  2,959   
2,840
   8,854   
7,897
 
Expenses:                
Insurance claims and policyholders’ benefits  1,632   
1,616
   4,684   
4,683
 
Amortization of deferred acquisition costs  368   
360
   1,084   
1,046
 
Non-insurance warranty expense  330   
293
   973   
859
 
Other operating expenses  287   
268
   874   
851
 
Interest  28   
52
   85   
114
 
Total  2,645   
2,589
   7,700   
7,553
 
Income before income tax  314   
251
   1,154   
344
 
Income tax expense  (59)  
(36
)
  (219)  
(40
)
Net income  255   
215
   935   
304
 
Amounts attributable to noncontrolling interests  (26)  
(23
)
  (97)  
(32
)
Net income attributable to Loews Corporation $229  $192  $838  $272 
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Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
(In millions)  
   
Revenues:  
Insurance premiums$2,221 $2,059 $6,435 $6,056 
Net investment income422 513 1,302 1,608 
Investment gains (losses)(96)22 (166)117 
Non-insurance warranty revenue399 357 1,173 1,054 
Other revenues11 8 24 19 
Total2,957 2,959 8,768 8,854 
Expenses:  
Insurance claims and policyholders’ benefits1,665 1,632 4,703 4,684 
Amortization of deferred acquisition costs383 368 1,101 1,084 
Non-insurance warranty expense371 330 1,092 973 
Other operating expenses346 287 1,001 874 
Interest28 28 84 85 
Total2,793 2,645 7,981 7,700 
Income before income tax164 314 787 1,154 
Income tax expense(36)(59)(141)(219)
Net income128 255 646 935 
Amounts attributable to noncontrolling interests(13)(26)(67)(97)
Net income attributable to Loews Corporation$115 $229 $579 $838 

Three Months Ended September 30, 20212022 Compared to the Comparable 20202021 Period

Net income attributable to Loews Corporation increased $37decreased $114 million for the three months ended September 30, 20212022 as compared with the comparable 20202021 period primarily due to the absence of a $74 million charge ($52 million after taxlower net investment income and noncontrolling interests) related to the recognition of an active life reserve premium deficiency for long term care policies in the third quarter of 2020. Resultsinvestment losses for the three months ended September 30, 2022 as compared with investment gains in the comparable 2021 also includedperiod. Lower net investment income was driven by unfavorable limited partnership and common stock results and lower investment results were driven by net losses on fixed maturity securities. These decreases to net income were partially offset by improved non-catastrophe current accident year underwriting results. Theresults and higher net investment income from fixed income securities for the three months ended September 30, 2020 also included a $142022 as compared with the comparable 2021 period. Catastrophe losses were $114 million charge (after tax and noncontrolling interests) related to the early retirement of debt. These increases were partially offset by lower investment gains and net catastrophe losses of $178 million ($12580 million after tax and noncontrolling interests) for the three months ended September 30, 20212022 as compared to $160with $178 million ($112125 million after tax and noncontrolling interests) in the comparable 20202021 period. Net catastropheCatastrophe losses for the three months ended September 30, 2022 were driven by severe weather related events, including $87 million for Hurricane Ian. Catastrophe losses for the three months ended September 30, 2021 included $114 million for Hurricane Ida. Net catastrophe losses for the three months ended September 30, 2020 were driven by severe weather-related events, primarily Hurricanes Laura, Isaias and Sally and the Midwest derecho.

Nine Months Ended September 30, 20212022 Compared to the Comparable 20202021 Period

Net income attributable to Loews Corporation increased $566decreased $259 million for the nine months ended September 30, 20212022 as compared with the comparable 20202021 period primarily due to lower net investment income and investment losses for the nine months ended September 30, 2022 as compared with investment gains in the comparable 2021 period. Lower net investment income was driven by unfavorable limited partnership and common stock results and lower investment results were driven by the unfavorable change in fair value of non-redeemable preferred stock and net losses on fixed maturity securities. These decreases to net income were partially offset by improved current accident year underwriting results. Net catastropheresults and higher net investment income from fixed income securities for the nine months ended September 30, 2022 as compared with the comparable 2021 period. Catastrophe losses were $357$171 million ($251121 million after tax and noncontrolling interests) for the nine months ended September 30, 20212022 as compared to $536with $357 million ($377251 million after tax and noncontrolling interests) in the comparable 20202021 period. Net catastropheCatastrophe losses for the nine months ended September 30, 2022 were driven by severe weather related events, including $87 million for Hurricane Ian. Catastrophe losses for the nine months ended September 30, 2021 were driven by severe weather-relatedweather related events, primarily Hurricane Ida and Winter Storms Uri and Viola. Net catastrophe losses for the nine months ended September 30, 2020 included $273 million primarily related to severe weather-related events, $195 million related to COVID-19 and $68 million related to civil unrest. Results also reflect higher net investment income and investment gains during the nine months ended September 30, 2021 as compared with investment losses in the comparable 2020 period. Higher net investment income was driven by limited partnership and common stock returns and investment gains were driven by lower impairment losses and the favorable change in fair value of non-redeemable preferred stock for the nine months ended September 30, 2021 as compared with the comparable 2020

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period. Results for the nine months ended September 30, 2021 also reflect the absence of a $74 million charge ($52 million after tax and noncontrolling interests) related to the recognition of an active life reserve premium deficiency for long term care policies in 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, and the results of certain property and casualty businesses in run-off, including CNA Re, Asbestos & Environmental Pollutionasbestos and environmental pollution (“A&EP”), a legacy portfolio of excess workers’ compensation (“EWC”) policies and certain legacy mass tort.tort reserves. We believe the presentation of CNA as one reportable segment is appropriate in accordance with applicable accounting standards on segment reporting. However, for purposes of this discussion and analysis of the results of operations, we provide greater detail with respect to CNA’s Property & Casualty Operations and Other Insurance Operations to enhance the reader’s understanding and to provide further transparency into key drivers of CNA’s financial results.

Effective January 1, 2021, and in connection with the ceding of certain legacy reserves under a retroactive reinsurance agreement executed in February 2021, CNA changed the presentation of a legacy portfolio of excess workers’ compensation policies relating to business written in 2007 and prior. This business, which was previously reported as part of the Commercial business, is now reported as part of the Other Insurance Operations business. See Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report for further information on this retroactive reinsurance agreement. In addition, a determination was made to change the presentation of certain legacy mass tort reserves. Similar to the aforementioned excess workers’ compensation legacy business, these legacy mass tort reserves were previously reported in the Commercial business and are now reported as part of the Other Insurance Operations business. These changes were made to better reflect the manner in which CNA is organized for purposes of making operating decisions and assessing performance. Prior period information has been conformed to the new presentation.

In assessing its insurance operations, CNA utilizes the core income (loss) financial measure. Core income (loss) is calculated by excluding from net income (loss), investment gains or losses and any cumulative effects of changes in accounting guidance. In addition, core income (loss) excludes the effects of noncontrolling interests. The calculation of core income (loss) excludes investment gains or losses because investment gains or losses are generally driven by economic factors that are not necessarily reflective of CNA’s primary insurance operations. Core income (loss) is deemed to be a non-GAAP financial measure and management believes some investors may find this measure is useful for investors to evaluate itsCNA’s insurance operations. 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. CNA has incurred expenses within Other Insurance Operations related to the cybersecurity attack and expects these expenses will continue. Additionally, CNA anticipates making continued investments in technology to improve its security and infrastructure, which will increase expenses in future periods. 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.

Property & Casualty Operations

In evaluating the results of Property & Casualty Operations, CNA utilizes the loss ratio, the loss ratio excluding catastrophes and development, the expense ratio, the dividend ratio, the combined ratio and the combined ratio excluding catastrophes and development. These ratios are calculated using GAAP financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The loss ratio excluding catastrophes and development excludes net catastrophes losses and changes in estimates of claim and claim adjustment expense reserves, net of reinsurance, for prior years from the loss ratio. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders’ dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios. The combined ratio excluding catastrophes and development is the sum of the loss ratio excluding catastrophes and development, the expense ratio and the dividend ratio. In addition, renewal premium change, rate, retention and new business are also utilized in evaluating operating trends. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. Rate represents the average change in price on policies that renew excluding exposure change.

40
Index
For certain products within Small Business, where quantifiable, rate includes the influence of new business as well. Exposure represents the measure of risk used in the pricing of the insurance product. Retention represents the percentage of premium dollars renewed, excluding rate and exposure changes, in comparison to the expiring premium dollars from policies available to renew. Renewal premium change, rate and retention presented for the prior period are updated to reflect subsequent activity on policies written in the period. New business represents premiums from policies written with new customers and additional policies written with existing customers. Gross written premiums, excluding third partythird-party captives, represents gross written premiums excludingexcludes business which is ceded to third partythird-party captives, including business related to large warranty programs.

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The following tables summarize the results of CNA’s Property & Casualty Operations for the three and nine months endedended September 30, 20212022 and 2020:2021.

Three Months Ended September 30, 2021 Specialty  Commercial  International  Total 
Three Months Ended September 30, 2022Three Months Ended September 30, 2022
Specialty
Commercial
International
Total
(In millions, except %)            (In millions, except %)    
                 
Gross written premiums $1,953  $1,010  $276  $3,239 Gross written premiums$1,890 $1,187 $288 $3,365 
Gross written premiums excluding third party captives 943  1,005  276  2,224 
Gross written premiums excluding third-party captivesGross written premiums excluding third-party captives958 1,184 288 2,430 
Net written premiums 822  831  256  1,909 Net written premiums840 962 258 2,060 
Net earned premiums 773  893  271  1,937 Net earned premiums810 1,023 270 2,103 
Net investment income 116  141  14  271 Net investment income102 112 16 230 
Core income 173  27  17  217 Core income161 80 19 260 
            
Other performance metrics:            Other performance metrics:
Loss ratio excluding catastrophes and development 59.1% 61.5% 58.9% 60.2%Loss ratio excluding catastrophes and development58.4 %61.5 %58.6 %59.9 %
Effect of catastrophe impacts 0.4  18.6  3.4  9.2 Effect of catastrophe impacts0.2 10.0 4.1 5.5 
Effect of development-related items  (1.8)  0.5   1.1   (0.3)Effect of development-related items(1.9)(0.8)
Loss ratio 57.7% 80.6% 63.4% 69.1%Loss ratio56.7 %71.5 %62.7 %64.6 %
Expense ratio 30.6  30.4  32.1  30.7 Expense ratio31.7 29.9 31.7 30.8 
Dividend ratio (0.1) 0.6     0.2 Dividend ratio0.3 0.5 0.4 
Combined ratio  88.2%  111.6%  95.5%  100.0%Combined ratio88.7 %101.9 %94.4 %95.8 %
Combined ratio excluding catastrophes and development 89.6% 92.5% 91.0% 91.1%Combined ratio excluding catastrophes and development90.4 %91.9 %90.3 %91.1 %
            
Rate 9% 6% 13% 8%Rate5 %4 %6 %5 %
Renewal premium change 8  8  12  9 Renewal premium change6 8 12 8 
Retention 80  83  79  81 Retention87 84 82 85 
New business $147  $204  $54  $405 New business$130 $246 $79 $455 

Three Months Ended September 30, 2020            
Three Months Ended September 30, 2021Three Months Ended September 30, 2021
                
Gross written premiums $1,855  $915  $238  $3,008 Gross written premiums$1,953 $1,010 $276 $3,239 
Gross written premiums excluding third party captives 861  915  238  2,014 
Gross written premiums excluding third-party captivesGross written premiums excluding third-party captives943 1,005 276 2,224 
Net written premiums 795  804  222  1,821 Net written premiums822 831 256 1,909 
Net earned premiums 734  857  236  1,827 Net earned premiums773 893 271 1,937 
Net investment income 126  151  15  292 Net investment income116 141 14 271 
Core income 168  41  27  236 Core income173 27 17 217 
            
Other performance metrics:            Other performance metrics:
Loss ratio excluding catastrophes and development 60.0% 60.8% 60.1% 60.5%Loss ratio excluding catastrophes and development59.1 %61.5 %58.9 %60.2 %
Effect of catastrophe impacts 1.0  17.0  3.0  8.7 Effect of catastrophe impacts0.4 18.6 3.4 9.2 
Effect of development-related items  (2.0)  0.6   0.1   (0.4)Effect of development-related items(1.8)0.5 1.1 (0.3)
Loss ratio 59.0% 78.4% 63.2% 68.8%Loss ratio57.7 %80.6 %63.4 %69.1 %
Expense ratio 30.5  32.3  34.9  31.8 Expense ratio30.6 30.4 32.1 30.7 
Dividend ratio    0.6     0.3 Dividend ratio(0.1)0.6 0.2 
Combined ratio  89.5%  111.3%  98.1%  100.9%Combined ratio88.2 %111.6 %95.5 %100.0 %
Combined ratio excluding catastrophes and development 90.5% 93.7% 95.0% 92.6%Combined ratio excluding catastrophes and development89.6 %92.5 %91.0 %91.1 %
            
Rate 13% 11% 17% 12%Rate10 %6 %13 %8 %
Renewal premium change 15  9  15  12 Renewal premium change11 9 13 10 
Retention 87  82  69  82 Retention80 83 79 81 
New business $105  $168  $54  $327 New business$147 $204 $54 $405 

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Nine Months Ended September 30, 2022
Specialty
Commercial
International
Total
(In millions, except %)    
     
Gross written premiums$5,640 $3,824 $1,033 $10,497 
Gross written premiums excluding third-party captives2,816 3,711 1,033 7,560 
Net written premiums2,443 3,097 839 6,379 
Net earned premiums2,376 2,901 803 6,080 
Net investment income305 343 44 692 
Core income485 350 63 898 
 
Other performance metrics:
Loss ratio excluding catastrophes and development58.6 %61.5 %58.6 %60.0 %
Effect of catastrophe impacts0.1 5.0 2.7 2.8 
Effect of development-related items(1.4)(0.5)(0.6)(0.9)
Loss ratio57.3 %66.0 %60.7 %61.9 %
Expense ratio31.0 30.1 32.1 30.8 
Dividend ratio0.2 0.5 0.3 
Combined ratio88.5 %96.6 %92.8 %93.0 %
Combined ratio excluding catastrophes and development89.8 %92.1 %90.7 %91.1 %
Rate7 %5 %7 %6 %
Renewal premium change8 8 11 8 
Retention86 86 79 85 
New business$407 $754 $245 $1,406 

Nine Months Ended September 30, 2021
    
Gross written premiums$5,650 $3,284 $958 $9,892 
Gross written premiums excluding third-party captives2,656 3,176 958 6,790 
Net written premiums2,350 2,622 783 5,755 
Net earned premiums2,270 2,629 789 5,688 
Net investment income367 463 42 872 
Core income531 233 67 831 
 
Other performance metrics:
Loss ratio excluding catastrophes and development59.1 %60.8 %59.2 %59.9 %
Effect of catastrophe impacts0.4 12.6 2.0 6.3 
Effect of development-related items(1.7)0.6 0.3 (0.4)
Loss ratio57.8 %74.0 %61.5 %65.8 %
Expense ratio30.4 31.4 33.3 31.3 
Dividend ratio0.1 0.6 0.3 
Combined ratio88.3 %106.0 %94.8 %97.4 %
Combined ratio excluding catastrophes and development89.6 %92.8 %92.5 %91.5 %
 
Rate11 %8 %14 %10 %
Renewal premium change12 11 13 11 
Retention84 82 77 82 
New business$370 $615 $204 $1,189 

Nine Months Ended September 30, 2021 Specialty  Commercial  International  Total 
(In millions, except %)            
             
Gross written premiums $5,650  $3,284  $958  $9,892 
Gross written premiums excluding third party captives  2,656   3,176   958   6,790 
Net written premiums  2,350   2,622   783   5,755 
Net earned premiums  2,270   2,629   789   5,688 
Net investment income  367   463   42   872 
Core income  531   233   67   831 
                 
Other performance metrics:                
Loss ratio excluding catastrophes and development  59.1%  60.8%  59.2%  59.9%
Effect of catastrophe impacts  0.4   12.6   2.0   6.3 
Effect of development-related items  (1.7)  0.6   0.3   (0.4)
Loss ratio  57.8%  74.0%  61.5%  65.8%
Expense ratio  30.4   31.4   33.3   31.3 
Dividend ratio  0.1   0.6       0.3 
Combined ratio  88.3%  106.0%  94.8%  97.4%
Combined ratio excluding catastrophes and development  89.6%  92.8%  92.5%  91.5%
                 
Rate  10%  8%  13%  10%
Renewal premium change  10   9   12   10 
Retention  84   82   76   82 
New business $370  $615  $204  $1,189 

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Nine Months Ended September 30, 2020            
             
Gross written premiums $5,331  $3,103  $822  $9,256 
Gross written premiums excluding third party captives
  2,413   3,018   822   6,253 
Net written premiums  2,231   2,703   680   5,614 
Net earned premiums  2,124   2,470   699   5,293 
Net investment income  315   354   44   713 
Core income  354   113   15   482 
                 
Other performance metrics:                
Loss ratio excluding catastrophes and development  59.8%  60.1%  60.1%  59.9%
Effect of catastrophe impacts  5.7   14.3   8.9   10.1 
Effect of development-related items  (2.1)  0.1   (0.4)  (0.8)
Loss ratio  63.4%  74.5%  68.6%  69.2%
Expense ratio  31.5   33.2   35.6   32.9 
Dividend ratio  0.1   0.6       0.3 
Combined ratio  95.0%  108.3%  104.2%  102.4%
Combined ratio excluding catastrophes and development  91.4%  93.9%  95.7%  93.1%
                 
Rate  12%  10%  13%  11%
Renewal premium change  13   9   11   11 
Retention  86   84   71   83 
New business $275  $564  $184  $1,023 

Table of contents
Three Months Ended September 30, 20212022 Compared to the Comparable 20202021 Period

Gross written premiums, excluding third partythird-party captives, for Specialty increased $82$15 million for the three months ended September 30, 20212022 as compared with the comparable 20202021 period driven by rateretention and higher new business.rate. Net written premiums for Specialty increased $27$18 million for the three months ended September 30, 20212022 as compared with the comparable 20202021 period. The increase in net earned premiums for the three months ended September 30, 20212022 was consistent with the trend in net written premiums for Specialty.

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Gross written premiums for Commercial increased $95$177 million for the three months ended September 30, 20212022 as compared with the comparable 20202021 period driven by rate and higher new business.business and rate. Net written premiums for Commercial increased $27$131 million for the three months ended September 30, 20212022 as compared with the comparable 20202021 period. The increase in net earned premiums for the three months ended September 30, 20212022 was consistent with the trend in net written premiums for Commercial.

Gross written premiums for International increased $38$12 million for the three months ended September 30, 20212022 as compared with the comparable 20202021 period. Excluding the effect of foreign currency exchange rates, gross written premiums increased $26$31 million driven by ratehigher new business and retention. rate. Net written premiums for International increased $34$2 million for the three months ended September 30, 20212022 as compared with the comparable 20202021 period. Excluding the effect of foreign currency exchange rates, net written premiums increased $23$19 million for the three months ended September 30, 20212022 as compared with the comparable 20202021 period. The increase in netNet earned premiums for the three months ended September 30, 2021 was2022 were consistent with the trend in net written premiumscomparable 2021 period for International.

Total coreCore income decreased $19for Property & Casualty Operations increased $43 million for the three months ended September 30, 20212022 as compared with the comparable 20202021 period primarily due to improved underwriting results and higher net catastrophe losses andinvestment income from fixed income securities partially offset by lower net investment income partially offset by improved non-catastrophe current accident year underwritingfrom limited partnerships and common stock results.

Total net catastrophe losses were $178$114 million for the three months ended September 30, 20212022 as compared with $160$178 million infor the comparable 20202021 period. For the three months ended September 30, 20212022 and 2020,2021, Specialty had net catastrophe losses of $3$1 million and $7$3 million, Commercial had net catastrophe losses of $166$103 million and $146$166 million and International had net catastrophe losses of $9$10 million and $7$9 million.

Favorable net prior year loss reserve development of $10$17 million and $15$10 million was recorded for the three months ended September 30, 20212022 and 2020.2021. For the three months ended September 30, 20212022 and 2020,2021, Specialty recorded favorable net prior year loss reserve development of $15 million and $16in each period, Commercial recorded favorable net prior year loss reserve development of $2 million Commercial recordedand unfavorable net prior year loss reserve development of $2 million and $1 million and International recorded unfavorableno net prior year loss reserve development of $3 million and no net prior year loss reserve development. 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 of this Report.

Specialty’s combined ratio improved 1.3 points for the three months ended September 30, 2021 as compared with the comparable 2020 period due to a 1.3 point improvement in the loss ratio driven by improved current accident year underwriting results.

Commercial’s combined ratio increased 0.3 points for the three months ended September 30, 2021 as compared with the comparable 2020 period due to a 2.2 point increase in the loss ratio largely offset by a 1.9 improvement in the expense ratio. The increase in the loss ratio was driven by higher net catastrophe losses, which were 18.6 points of the loss ratio for the three months ended September 30, 2021 as compared with 17.0 points of the loss ratio in the comparable 2020 period. The improvement in the expense ratio was primarily due to higher net earned premiums and lower acquisition costs driven by ceded commissions.

International’s combined ratio improved 2.6 points for the three months ended September 30, 2021 as compared with the comparable 2020 period primarily due to a 2.8 point improvement in the expense ratio. The improvement in the expense ratio was driven by higher net earned premiums and lower acquisition costs.

Nine Months Ended September 30, 2021 Compared to the Comparable 2020 Period

Gross written premiums, excluding third party captives, for Specialty increased $243 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period driven by rate and higher new business. Net written premiums for Specialty increased $119 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period. The increase in net earned premiums for the nine months ended September 30, 2021 was consistent with the trend in net written premiums for Specialty.

Gross written premiums for Commercial increased $181 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period driven by rate and higher new business. Net written premiums for Commercial decreased $81 million for the nine months ended September 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 $31 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period. Net earned premiums for Commercial increased $159 million for the nine months
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Index
ended September 30, 2021 as compared with the comparable 2020 period. The increase in net earned premiums for the nine months ended September 30, 2021 was partially impacted by a reduction in estimated audit premiums related to COVID-19 in 2020 for Commercial.

Gross written premiums for International increased $136 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period. Excluding the effect of foreign currency exchange rates, gross written premiums increased $82 million driven by rate and higher new business. Net written premiums for International increased $103 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period. Excluding the effect of foreign currency exchange rates, net written premiums increased $57 million for the nine months ended September 30, 2021 as compared with the comparable 2020 period. The increase in net earned premiums for the nine months ended September 30, 2021 was consistent with the trend in net written premiums for International.

Total core income increased $349 million for the nine months ended September 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 $357 million for the nine months ended September 30, 2021 as compared with $536 million in the comparable 2020 period. For the nine months ended September 30, 2021 and 2020, Specialty had net catastrophe losses of $9 million and $120 million, Commercial had net catastrophe losses of $332 million and $354 million and International had net catastrophe losses of $16 million and $62 million.

Favorable net prior year loss reserve development of $36 million and $58 million was recorded for the nine months ended September 30, 2021 and 2020. For the nine months ended September 30, 2021 and 2020, Specialty recorded favorable net prior year loss reserve development of $40 million and $47 million, Commercial recorded unfavorable net prior loss reserve development of $2 million and favorable net prior year loss reserve development of $8 million and International recorded unfavorable net prior year loss reserve development of $2 million and favorable net prior year loss reserve development of $3 million. Further information on net prior year loss reserve development is included in Note 54 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report.

Specialty’s combined ratio improved 6.7increased 0.5 points for the ninethree months ended September 30, 20212022 as compared with the comparable 20202021 period primarily due to a 5.61.1 point increase in the expense ratio largely offset by a 1.0 point improvement in the loss ratio. The increase in the expense ratio was largely due to higher underwriting expenses driven by investments in technology and talent. The improvement in the loss ratio was primarily driven by improved current accident year underwriting results.

Commercial’s combined ratio improved 9.7 points for the three months ended September 30, 2022 as compared with the comparable 2021 period primarily due to a 9.1 point improvement in the loss ratio and a 0.5 point improvement in the expense ratio. The improvement in the loss ratio was primarily driven by lower catastrophe losses which were 10.0 points of the loss ratio for the three months ended September 30, 2022, as compared with 18.6 points of the loss ratio in the comparable 2021 period. The improvement in the expense ratio of 0.5 points was driven by higher net earned premiums and lower acquisition costs partially offset by an increase in underwriting expenses.

International’s combined ratio improved 1.1 points for the three months ended September 30, 2022 as compared with the comparable 2021 period due to a 0.7 point improvement in the loss ratio and a 0.4 point improvement in the expense ratio. The improvement in the loss ratio was primarily due to improved non-catastrophe underwriting results. Catastrophe losses were 4.1 points of the loss ratio for the three months ended September 30, 2022, as compared with 3.4 points of the loss ratio in the comparable 2021 period. The improvement in the expense ratio of 0.4 points was primarily driven by lower acquisition costs partially offset by an increase in underwriting expenses.


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Nine Months Ended September 30, 2022 Compared to the Comparable 2021 Period

Gross written premiums, excluding third-party captives, for Specialty increased $160 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period driven by retention and higher new business. Net written premiums for Specialty increased $93 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period. The increase in net earned premiums for the nine months ended September 30, 2022 was consistent with the trend in net written premiums for Specialty.

Gross written premiums for Commercial increased $540 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period driven by higher new business and retention. Net written premiums for Commercial increased $475 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period. The prior period included a one-time written premium catch-up resulting from the addition of a quota share treaty to CNA’s property reinsurance program. Excluding the impact of the prior period written premium catch-up, net written premiums increased $363 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period. The increase in net earned premiums for the nine months ended September 30, 2022 was consistent with the trend in net written premiums for Commercial.

Gross written premiums for International increased $75 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period. Excluding the effect of foreign currency exchange rates, gross written premiums increased $121 million driven by higher new business and retention. Net written premiums for International increased $56 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period. Excluding the effect of foreign currency exchange rates, net written premiums increased $97 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period. The increase in net earned premiums for the nine months ended September 30, 2022 was consistent with the trend in net written premiums for International.

Core income for Property & Casualty Operations increased $67 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period primarily due to improved underwriting results and higher net investment income from fixed income securities partially offset by lower net investment income from limited partnership and common stock results.

Total catastrophe losses were $171 million for the nine months ended September 30, 2022 as compared with $357 million for the comparable 2021 period. For the nine months ended September 30, 2022 and 2021, Specialty had catastrophe losses of $2 million and $9 million, Commercial had catastrophe losses of $148 million and $332 million and International had catastrophe losses of $21 million and $16 million.

Favorable net prior year loss reserve development of $66 million and $36 million was recorded for the nine months ended September 30, 2022 and 2021. For the nine months ended September 30, 2022 and 2021, Specialty recorded favorable net prior year loss reserve development of $35 million and $40 million, Commercial recorded favorable net prior year loss reserve development of $26 million and unfavorable net prior year loss reserve development of $2 million and International recorded favorable net prior year loss reserve development of $5 million and unfavorable net prior year loss reserve development of $2 million. Further information on net prior year loss reserve development is included in Note 4 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report.

Specialty’s combined ratio increased 0.2 points for the nine months ended September 30, 2022 as compared with the comparable 2021 period primarily due to a 0.6 point increase in the expense ratio largely offset by a 0.5 point improvement in the loss ratio. The increase in the expense ratio was largely due to higher underwriting expenses driven by investments in technology and talent. The improvement in the loss ratio was primarily driven by improved non-catastrophe current accident year underwriting results. Net catastropheCatastrophe losses were 0.4 points0.1 point of the loss ratio for the nine months ended September 30, 2021,2022, as compared with 5.70.4 points of the loss ratio in the comparable 20202021 period. The improvement in the expense ratio was driven by higher net earned premiums.

Commercial’s combined ratio improved 2.3 points for the nine months ended September 30, 2021 as compared with the comparable 2020 period primarily due to a 1.8 point improvement in the expense ratio. The improvement in the expense ratio was primarily due to higher net earned premiums and a favorable acquisition ratio. Net catastrophe losses were 12.6 points of the loss ratio for the nine months ended September 30, 2021 as compared with 14.3 points of the loss ratio for the comparable 2020 period.

International’s combined ratio improved 9.4 points for the nine months ended September 30, 20212022 as compared with the comparable 20202021 period primarily due to a 7.1an 8.0 point improvement in the loss ratio and a 2.31.3 point improvement in the expense ratio. The improvement in the loss ratio was driven by lower net catastrophe losses which were 2.05.0 points of the loss ratio for the nine months ended September 30, 20212022, as compared with 8.912.6 points of the loss ratio in the comparable 20202021 period, and favorable net prior year loss reserve development. The combined ratio excluding catastrophes and development improved non-catastrophe current accident year0.7 points for the nine months ended September 30, 2022 as compared with the comparable 2021 period. The improvement in the expense ratio of 1.3 points was driven by higher net earned premiums and lower acquisition costs partially offset by an increase in underwriting results.expenses. The loss ratio excluding catastrophes and development increased 0.7 points primarily driven by a shift in mix of business associated with the property quota share treaty purchased during June of 2021. Property coverages, which have a lower underlying loss ratio than most other commercial coverages, now represent a smaller proportion of net earned premiums.
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International’s combined ratio improved 2.0 points for the nine months ended September 30, 2022 as compared with the comparable 2021 period due to a 1.2 point improvement in the expense ratio and a 0.8 point improvement in the loss ratio. The improvement in the expense ratio was primarily driven by a favorablelower acquisition costs. The improvement in the loss ratio andwas driven by improved non-catastrophe underwriting results, partially offset by higher net earned premiums.catastrophe losses. Catastrophe losses were 2.7 points of the loss ratio for the nine months ended September 30, 2022, as compared with 2.0 points of the loss ratio in the comparable 2021 period.

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Index
Other Insurance Operations

The following table summarizes the results of CNA’s Other Insurance Operations for the three and nine months ended September 30, 20212022 and 2020:2021.

Three Months EndedNine Months Ended
  
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  September 30,
 2021  2020  2021  2020 2022202120222021
(In millions)            (In millions)  
               
Net earned premiums $123  $127  $369  $380 Net earned premiums$118 $123 $356 $369 
Net investment income 242  225  736  667 Net investment income192 242 610 736 
Core income (loss) 20  (43) 10  (82)Core income (loss)(47)20 (124)10 

Three Months Ended September 30, 20212022 Compared to the Comparable 20202021 Period

Core results improved $63for Other Insurance Operations decreased $67 million for the three months ended September 30, 20212022 as compared with the comparable 2020 period.2021 period primarily due to a $54 million pretax decline in net investment income from limited partnerships. Results for the three months ended September 30, 2022 and 2021 included no unlocking event for active lifefuture policy benefit reserves as a result of the gross premium valuation (“GPV”). Core resultsloss for the three months ended September 30, 2022 included a $25 million pretax favorable impact from the reduction in long term care claim reserves resulting from the annual claim reserve review in the third quarter of 2022. The favorable impact was driven by a $107 million release of all remaining incurred but not reported (“IBNR”) reserves established during 2020 and 2021 in response to the COVID-19 pandemic partially offset by an $82 million unfavorable impact from higher claim severity, including utilization and cost of care inflation, than anticipated in the reserve estimates. The annual structured settlement claim reserve review resulted in a $5 million pretax favorable impact from the reduction in reserves due to discount rate assumption changes. Core income for the three months ended September 30, 2021 included a $31$40 million pretax favorable impact from the reduction in long term care claim reserves resulting from the annual claim reserve reviews in the third quarter of 2021. Core results for the three months ended September 30, 2020 included a $59 million charge related to the recognition of an active life reserve premium deficiency for long term care policies. The results for the three months ended September 30, 2020 also included a $36 million charge related to the increase in structured settlement claim reserves partially offset by a $30 million favorable impact from the reduction in long term care claim reserves, both resulting from the annual claim reserve reviews in the third quarter of 2020.

Nine Months Ended September 30, 20212022 Compared to the Comparable 20202021 Period

Core results improved $92for Other Insurance Operations decreased $134 million for the nine months ended September 30, 20212022 as compared with the comparable 2020 period. The2021 period, the drivers of the improved resultswhich were generally consistent with the three month discussion above. In addition, core results for the nine months ended September 30, 20212022 included lower unfavorablehigher net prior year loss reserve development related toassociated with legacy mass tort exposuresabuse claims and an increase in expenses as a result of continued investments in technology infrastructure and security as compared with the comparable 20202021 period. CoreThese results forwere partially offset by the nine months ended September 30, 2021 also reflect expenses related to the March 2021 cybersecurity attack, theprior period recognition of a $12 million loss resulting from the legacy excess workers’ compensation loss portfolio transfer (“EWC LPT”) and lower amortization of the deferred gain related to the A&EP Loss Portfolio Transfer (“LPT”) as compared with the comparable 2020 period. For further information on the A&EP LPT, EWC LPT and net. Net prior year loss reserve development seeis further discussed in Note 54 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report.1.

Life & Group Policyholder Reserves

Annually, in the third quarter, CNA assesses the adequacy of its long term care future policy benefit reserves by performing a GPV to determine if there is a premium deficiency. See the Insurance Reserves section of our MD&A included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 20202021 for further information on the reserving process.

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The September 30, 20212022 GPV indicated that the recorded reserves included a margin of approximately $72$125 million. A summary of the changes in the estimated reserve margin is presented in the table below:

(In millions)   
    
Long term care active life reserve - change in estimated reserve margin   
    
September 30, 2020 estimated margin $- 
     
Changes in underlying discount rate assumptions (a)  65 
Changes in underlying morbidity assumptions  205 
Changes in underlying persistency assumptions  (233)
Changes in underlying premium rate action assumptions  27 
Changes in underlying expense and other assumptions  8 
     
September 30, 2021 Estimated Margin $72 

(In millions)
Long term care active life reserve - change in estimated reserve margin
September 30, 2021 estimated margin$72
Changes in underlying economic assumptions (a)
Including(130)
Changes in underlying morbidity assumptions(30)
Changes in underlying persistency assumptions40
Changes in underlying premium rate action assumptions190
Changes in underlying expense and other assumptions(17)
September 30, 2022 Estimated Margin$125

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

The increase in the margin in 20212022 was primarily driven by changes in discount rate assumptions due to higher near term expected reinvestment rates and favorable changes to underlying morbidity assumptions.higher than previously estimated rate increases on active rate increase programs. These favorable drivers were partially offset by unfavorable changes to underlying persistencyin cost of care inflation assumptions.

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

The table below summarizes the estimated pretax impact on CNA’s results of operations from various hypothetical revisions to its active lifefuture policy benefit reserve assumptions. The annual GPV process involves updating all assumptions to management’s then current best estimate, and historically all significant assumptions have been revised each year. In the table below, CNA has assumed that revisions to such assumptions would occur in each policy type, age and duration within each policy groupgroup. The impact of each sensitivity is discrete and would occur absent any changes,does not reflect the impact one factor may have on another or the mitigating or otherwise, in the other assumptions.impact from CNA’s actions, which may include additional future premium rate increases. Although such hypothetical revisions are not currently required or anticipated, CNA believes they could occur based on past variances in experience and its expectations of the ranges of future experience that could reasonably occur. Any required increase in the recorded reserves resulting from a hypothetical revision in the table below would first reduce the margin in the carried reserves before it would affect results from operations. Any actual adjustment would be dependent on the specific policies affected and, therefore, may differ from the estimates summarized below. The estimated impacts to results of operations in the table below are after consideration of the existing margin.

September 30, 2021 
Estimated Reduction
to Pretax Income
 
(In millions)   
    
Hypothetical revisions   
Morbidity:   
2.5% increase in morbidity $300 
5% increase in morbidity  600 
Persistency:    
5% decrease in active life mortality and lapse $100 
10% decrease in active life mortality and lapse  300 
Discount rates:    
25 basis point decline in new money interest rates $100 
50 basis point decline in new money interest rates  200 
Premium rate actions:    
25% decrease in anticipated future premium rate increases $- 
50% decrease in anticipated future premium rate increases  - 

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September 30, 2022Estimated Reduction to Pretax Income
(In millions)
Hypothetical revisions
Morbidity: (a)
2.5% increase in morbidity$200
5% increase in morbidity500
Persistency:
5% decrease in active life mortality and lapse$100
10% decrease in active life mortality and lapse300
Discount rates:
25 basis point decline in new money interest rates$—
50 basis point decline in new money interest rates100
(a)Represents a sensitivity in future paid claims.
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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 thethe three and nine months ended September 30, 20212022 and 2020:2021:

Three Months EndedNine Months Ended
 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 September 30,
 2021  2020  2021  2020 2022202120222021
(In millions)            (In millions)  
               
Core income (loss):            Core income (loss):  
Property & Casualty Operations $217  $236  $831  $482 Property & Casualty Operations$260 $217 $898 $831 
Other Insurance Operations 20  (43) 10  (82)Other Insurance Operations(47)20 (124)10 
Total core income 237  193  841  400 Total core income213 237 774 841 
Investment gains (losses) 18  36  94  (81)Investment gains (losses)(84)18 (127)94 
Consolidating adjustments including noncontrolling interests (26) (37) (97) (47)Consolidating adjustments including noncontrolling interests(14)(26)(68)(97)
Net income attributable to Loews Corporation $229  $192  $838  $272 Net income attributable to Loews Corporation$115 $229 $579 $838 

Boardwalk Pipelines

A significant portion of Boardwalk Pipelines’ revenues areis 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 lowerchanges in pricing on contract renewals and other factors. Boardwalk Pipelines’ operating costs and expenses do not vary significantly based upon the amount of products transported, with the exception of costs recorded in fuel and transportation expense, which are netted with fuel retained on our Consolidated Condensed Statements of Operations. 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, 2020.2021.

Boardwalk Pipelines’ operations and maintenance expenses are impacted by its compliance with the requirements of, among other regulations, the Pipeline and Hazardous Materials Safety Administration Mega Rule (“Mega Rule”), as further discussed in Results of Operations of our MD&A included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021.


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The following table summarizes the results of operations for Boardwalk Pipelines for the three and nine months ended September 30, 20212022 and 20202021, as presented in Note 11 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:Report.Boardwalk Pipelines also utilizes earnings before interest, income tax expense, depreciation and amortization (“EBITDA”), a non-GAAP measure, as a financial measure to assess its operating and financial performance and return on invested capital. Management believes some investors may find this measure useful in evaluating Boardwalk Pipelines’ performance.

Three Months EndedNine Months Ended

 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 September 30,
 2021  2020  2021  2020 2022202120222021
(In millions)            (In millions)  
               
Revenues:            Revenues:  
Operating revenues and other $307  $289  $991  $926 Operating revenues and other$339 $307 $1,045 $991 
Total 307  
289
  991  
926
 Total339 307 1,045 991 
Expenses:            Expenses:
Operating and other 215  
219
  641  
633
 
Operating and other:Operating and other:
Operating costs and expensesOperating costs and expenses147 123 401 364 
Depreciation and amortizationDepreciation and amortization103 92 297 277 
Interest  40   
44
   121   
127
 Interest42 40 126 121 
Total 255  
263
  762  
760
 Total292 255 824 762 
Income before income tax 52  
26
  229  
166
 Income before income tax47 52 221 229 
Income tax expense (14) 
(6
)
 (59) 
(43
)
Income tax expense(13)(14)(57)(59)
Net income attributable to Loews Corporation $38  $20  $170  $123 Net income attributable to Loews Corporation$34 $38 $164 $170 
EBITDAEBITDA$192 $184 $644 $627 

Three Months Ended September 30, 20212022 Compared to the Comparable 20202021 Period

Total revenues increased $18 million for the three months ended September 30, 2021 as compared with the comparable 2020 period. Including fuel and transportation expense, revenues increased $21 million, primarily driven by revenues from recently completed growth projects and higher utilization-based revenues.

Operating and other expensesNet income attributable to Loews Corporation decreased $4 million for the three months ended September 30, 20212022 as compared with the comparable 20202021 period. Excluding fuel and transportation expense, which was offset with operating revenues, operating and other expenses were essentially flat.

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Interest expenses decreased $4EBITDA increased $8 million for the three months ended September 30, 20212022 as compared with the comparable 2020 period,2021 period. The decrease in net income as compared with the increase in EBITDA is primarily due to lower averagethe increase in depreciation and amortization expense and interest rates and lower average outstanding long term debt balances.expense as discussed below.

Nine Months Ended September 30, 2021 Compared to the Comparable 2020 Period

Total revenues increased $65$32 million for the ninethree months ended September 30, 20212022 as compared with the comparable 2020 period, 2021 period. Including the items in fuel and transportation expense, operating revenues increased $28 million, primarily driven by an increase in transportation revenues of $25 million due to recently completed growth projects, higher utilization-based revenues and re-contracting at higher system utilization from colder winter weather experienced during the first quarter of 2021.rates. In addition, storage and parking and lending revenues increased $5 million due to favorable market conditions.

Operating costs and other expenses increased $8$24 million for the ninethree months ended September 30, 20212022 as compared with the comparable 20202021 period. Excluding items offset with operating revenues, operating costs and expenses increased $20 million, primarily due to increased costs from maintenance projects associated with compliance with the requirements of the Mega Rule and asset impairment charges resulting from an increase in the estimate of existing asset retirement obligations related to retired assets.

Depreciation and amortization expenses increased $11 million for the three months ended September 30, 2022 as compared with the comparable 2021 period primarily due to an increased asset base from recently completed growth projects.projects and a change in the estimated life of certain assets.

Interest expenseexpenses increased $2 million for the three months ended September 30, 2022 as compared with the comparable 2021 period, primarily due to higher average outstanding long-term debt.


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Nine Months Ended September 30, 2022 Compared to the Comparable 2021 Period

Net income attributable to Loews Corporation decreased $6 million for the nine months ended September 30, 20212022 as compared with the comparable 20202021 period. EBITDA increased $17 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period. The decrease in net income as compared with the increase in EBITDA is primarily due to the increase in depreciation and amortization expense and interest expense as discussed below.

Total revenues increased $54 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period. Including the items in fuel and transportation expense, operating revenues increased $50 million, primarily driven by an increase in transportation revenues of $41 million due to recently completed growth projects, re-contracting at higher rates and higher utilization-based revenues. In addition, storage and parking and lending revenues increased $11 million due to favorable market conditions.

Operating costs and expenses increased $37 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period. Excluding items offset with operating revenues, operating costs and expenses increased $33 million, primarily due to increased costs from maintenance projects associated with compliance with the requirements of the Mega Rule and asset impairment charges resulting from an increase in the estimate of existing asset retirement obligations related to retired assets.

Depreciation and amortization expenses increased $20 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period due to an increased asset base from recently completed growth projects and a change in the estimated life of certain assets.

Interest expense increased $5 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period primarily due to lower average interest rates and lowerhigher average outstanding long term debt balances.long-term debt.

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

The following table for Boardwalk Pipelines presents a reconciliation of net income attributable to Loews Corporation to EBITDA for the three and nine months ended September 30, 2022 and 2021:

Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
(In millions)
Net income attributable to Loews Corporation$34 $38 $164 $170 
Income tax expense13 14 57 59 
Depreciation and amortization103 92 297 277 
Interest42 40 126 121 
EBITDA$192 $184 $644 $627 

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Loews Hotels & Co

The following table summarizes the results of operations for Loews Hotels & Co for the three and nine months ended September 30, 20212022 and 20202021, as presented in Note 11 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:Report.

   
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2021  2020  2021  2020 
(In millions)            
             
Revenues:            
Operating revenue $107  $22  $222  $140 
Gain on sale of assets      
24
       
37
 
Revenues related to reimbursable expenses  27   
14
   67   
59
 
Total  134   
60
   289   
236
 
Expenses:                
Operating and other:                
Operating  93   
53
   231   
219
 
Asset impairments      
10
       
30
 
Reimbursable expenses  27   
14
   67   
59
 
Depreciation  15   
15
   47   
45
 
Equity (income) loss from joint ventures  (26)  
22
   (17)  
51
 
Interest  8   
8
   25   
24
 
Total  117   
122
   353   
428
 
Income (loss) before income tax  17   
(62
)
  (64)  
(192
)
Income tax (expense) benefit  (4)  
15
   13   
48
 
Net income (loss) attributable to Loews Corporation $13  $(47) $(51) $(144)

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, culminating with all hotels having resumed operations by June 30, 2021. During 2021, occupancy rates have gradually improved as social distancing restrictions were scaled back and vaccinations helped reduce infection rates, with hotel properties located in resort destinations improving sooner than hotel properties located in city centers. However, occupancy levels have not reached pre-pandemic levels at many hotels owned and/or operated by Loews Hotels & Co.

49
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
(In millions)  
   
Revenues:  
Operating revenue$149 $107 $440 $222 
Revenues related to reimbursable expenses31 27 92 67 
Total180 134 532 289 
Expenses:
Operating and other:
Operating128 93 359 231 
Asset impairment8 22 
Reimbursable expenses31 27 92 67 
Depreciation and amortization expense16 15 47 47 
Equity income from joint ventures(36)(26)(115)(17)
Interest(1)8 7 25 
Total146 117 412 353 
Income (loss) before income tax34 17 120 (64)
Income tax (expense) benefit(9)(4)(36)13 
Net income (loss) attributable to Loews Corporation$25 $13 $84 $(51)
Index

The increase in operating revenues of $85Net income (loss) attributable to Loews Corporation improved by $12 million and the increase in operating expenses of $40 million for the three months ended September 30, 2021 as compared with the comparable 2020 period, when operations were significantly impacted by the pandemic, was due to improved performance. For the nine months ended September 30, 2021 operating revenues improved by $82 million and operating expenses increased $12 million as compared with the comparable 2020 period. The nine-month comparison is impacted by pre-pandemic business levels prior to mid-March 2020 followed by results that were significantly impacted by the pandemic for the remainder of 2020. Through 2021, occupancy levels have gradually increased leading to improved revenues at most hotel properties, with operating expenses also increasing to support the increased demand levels. As all properties have not resumed all levels of pre-pandemic service offerings, hotel operating expenses, including staffing levels, will increase as those return.

Equity (income) loss from joint ventures improved $48 million and $68$135 million for the three and nine months ended September 30, 20212022 as compared to the comparable prior year periods.

Loews Hotels & Co’s results significantly improved for the three and nine months ended September 30, 2022 as compared with the comparable 20202021 periods driven byas overall travel demand and resulting business levels were considerably higher in 2022. Travel has significantly rebounded from the resumption of operations and associated occupancy improvement at all joint venture hotels. The three months ended September 30, 2021 was the first quarter during which all 9,000 rooms that are partimpacts of the Universal Orlando Resort joint ventures were open for the full quarter. In addition, pre-opening costs included in equity (income) loss from joint ventures decreased $1COVID-19 pandemic, causing overall occupancy rates to improve.

Operating revenues improved by $42 million and $8$218 million and operating expenses increased by $35 million and $128 million for the three and nine months ended September 30, 20212022 as compared with the comparable 20202021 periods. The increase in operating revenues was driven by stronger occupancy levels and higher average daily rates at many hotels in 2022 as compared to 2021. Operating expenses have likewise increased to support the higher demand levels and resumption of additional pre-pandemic services.

Loews Hotels & Co considers events or changes in circumstances that indicate the carrying amount of its assets may not be recoverable. For the three and nine months ended September 30, 2020, Loews Hotels & Co recorded impairment charges ofEquity income from joint ventures improved $10 million and $30 million to reduce the carrying value of certain assets to their estimated fair value.

Loews Hotels & Co recorded gains on the sale of assets of $24 million and $37$98 million for the three and nine months ended September 30, 2020 related2022 as compared with the comparable 2021 periods. The increase in equity income from joint ventures was driven by stronger occupancy levels and higher average daily rates at many joint venture hotels, particularly at the Universal Orlando Resort, during 2022 as compared to sales2021. Operating expenses have likewise increased to support the higher demand levels and resumption of additional pre-pandemic services at those joint venture hotels. Additionally, improvement in the 2022 nine months period also resulted from having all 9,000 rooms available at the Universal Orlando Resort for the entire 2022 period whereas certain properties were not available for periods of 2021.

The three and nine months ended September 30, 2022 include impairment charges of $8 million and $22 million to reduce the carrying value of an office buildingasset to its estimated fair value.
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Interest expense decreased $9 million and $18 million for the three and nine months ended September 30, 2022 as compared with the comparable 2021 periods due primarily to the increase in fair value of an interest rate cap of $7 million and $11 million that was executed in the thirdfirst quarter of 2022, higher capitalized interest on a project under development, and an owned hotel in the second quarter.lower average debt balances.

Corporate

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. Corporate also includes the operating resultsconsolidated operations of Altium Packaging through March 31, 2021 and the loss related to the Parent Company’s equity method investment inof accounting for Altium Packaging beginningsubsequent to its deconsolidation 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 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report for further information.2021.

The following table summarizes the results of operations for Corporate for the three and nine months ended September 30, 20212022 and 20202021 as presented in Note 11 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:


 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2021  2020  2021  2020 
(In millions)            
             
Revenues:            
Net investment income (loss) $(30) $23  $40  $(33)
Investment gains (losses)          540   
(1,211
)
Operating revenues and other  1   
253
   282   
754
 
Total  (29)  
276
   862   
(490
)
Expenses:                
Operating and other  27   
275
   365   
810
 
Interest  23   
33
   93   
96
 
Total  50   
308
   458   
906
 
Income (loss) before income tax  (79)  
(32
)
  404   
(1,396
)
Income tax (expense) benefit  19   
6
   (126)  
293
 
Net income (loss) attributable to Loews Corporation $(60) $(26) $278  
$
(1,103
)

50
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
(In millions)  
   
Revenues:  
Net investment income (loss)$(19)$(30)$(100)$40 
Investment gains540 
Operating revenues and other4 1 6 282 
Total(15)(29)(94)862 
Expenses:  
Operating and other17 27 62 365 
Interest23 23 67 93 
Total40 50 129 458 
Income (loss) before income tax(55)(79)(223)404 
Income tax (expense) benefit11 19 44 (126)
Net income (loss) attributable to Loews Corporation$(44)$(60)$(179)$278 

Index
Net investment loss for the Parent Company was $30decreased $11 million for the three months ended September 30, 20212022 as compared with net investment income of $23 million for the comparable 20202021 period primarily due to lowerimproved results from equity basedshort term investments in the Parent Company trading portfolio. Net investment incomeloss was $100 million for the Parent Company for the nine months ended September 30, 2021 was $40 million2022 as compared with a net investment lossincome of $33$40 million forin the comparable 20202021 period primarily due to improved results fromthe decline in fair value of equity based investments in the Parent Company trading portfolio.investments.

Investment gains of $540 million for the nine months ended September 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 nine months ended September 30, 2020 was due to the loss recognized upon deconsolidation of Diamond Offshore as a result of its Chapter 11 Filing.

Operating revenuesPackaging and other include Altium Packaging revenues of $280 million for 2021, prior to its deconsolidation on April 1, 2021,2021.

Operating revenues and $253 million and $753 millionother for the three and nine months ended September 30, 2020.

Operating and other expenses decreased by $248 million and $445 million for the three and nine months ended September 30, 2021 as compared with the comparable 2020 periods primarily due to the deconsolidationinclude $280 million of consolidated operating revenues for Altium Packaging as the three and nine months ended September 30, 2020 included $247 million and $729 million of through March 31, 2021.

Operating and other expenses for Altium Packaging. Operating and other expenses also include legal and other corporate overhead expenses at the Parent Company. In addition, pursuant to the deconsolidation of Altium Packaging, the related loss 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 September 30, 20212022 as compared with the comparable 20202021 period, primarily due to lower corporate expenses at the deconsolidationParent Company. Operating and other expenses decreased $303 million for the nine months ended September 30, 2022 as compared with the comparable 2021 period, primarily due to $279 million of operating expenses for Altium Packaging asthrough March 31, 2021 prior to its deconsolidation and use of the threeequity method for Altium Packaging since its deconsolidation. In addition, there were lower corporate expenses at the Parent Company for the nine months ended September 30, 2020 included $12 million2022 as compared with the comparable 2021 period.

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Table of interest expense for Altium packaging. contents
Interest expenses decreased $3$26 million for the nine months ended September 30, 20212022 as compared with the comparable 20202021 period primarily due to the deconsolidation ofconsolidated interest expenses for Altium Packaging as of April 1,through March 31, 2021, partially offset by the May 2020 issuance of the Parent Company’s $500 million 3.2% senior notes andwhich included 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.debt.

Income tax expense was $126of $126 million for the nine months endedSeptember 30, 2021 as compared with an income tax benefit of $293 million for the comparable 2020 period. The income tax expense for the nine months ended September 30, 2021 is primarily due to includes the recognition of $117 million of taxes on the investment gain related to the sale of 47% of Altium Packaging and also includes the recognition of a $40 million deferred tax liability, resulting from the asset held for sale designationboth of Altium Packaging in the first quarter of 2021. The income tax benefit for the nine months ended September 30, 2020 is primarily due to the recognition of taxes on the investment losswhich are related to the deconsolidationsale of Diamond Offshore.

Diamond Offshore

Amounts presented for Diamond Offshore for the nine months ended September 30, 2020 reflect the periods prior to its deconsolidation in the second quarter47% of 2020. Contract drilling revenues and contract drilling expenses were $287 million and $254 million for the nine months ended September 30, 2020. Operating and other expenses for the nine months ended September 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 of this Report.Altium Packaging.

LIQUIDITY AND CAPITAL RESOURCES

Parent Company

Parent Company cash and investments, net of receivables and payables, totaled $3.6$3.2 billion at September 30, 20212022 as compared to $3.5$3.4 billion at December 31, 2020.2021. During the nine months ended September 30, 2021, 2022, we received $460$778 million in cash dividends from CNA, including a special cash dividend of $182$486 million. We also received a $199 million dividend from Altium Packaging in February of 2021. Cash outflows during the nine months ended September 30, 2021 2022 included the payment of $825$611 million to fund treasury stock purchases, $49$46 million of cash dividends to our shareholders, $26 million to purchase common shares of CNA and $32equity contributions of $33 million of cash contributions to Loews Hotels & Co. On April 1, 2021, Loews Corporation sold its 47% interest in Co and $79 million to Altium Packaging to GIC and received $420 million in cash consideration.Packaging. As a holding company we depend on dividends from our subsidiaries and returns on our investment portfolio to fund our obligations. We

51
Index
also have an effective Registration Statementshelf registration statement on file with the Securities and Exchange Commission (“SEC”) registering the future sale of an unlimitedunspecified amount of our debt, and equity or hybrid securities from time to time. We are not responsible for the liabilities and obligations of our subsidiaries and there are no Parent Company guarantees.

Depending on market and other conditions, we may purchase our shares and shares of our subsidiaries’subsidiaries outstanding common stock in the open market, in privately negotiated transactions or otherwise. During the nine months ended September 30, 2021,2022, we purchased 15.710.5 million shares of Loews Corporation common stock and 0.7 million shares of CNA’s common stock. As of October 29, 2021,28, 2022, we had purchased an additional 0.10.7 million shares of Loews Corporation common stock in 20212022 at an additional aggregate cost of $5$38 million. As of October 29, 2021,28, 2022, there were 253,684,412237,427,052 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.

Subsidiaries

CNA’s cash provided by operating activities was $1,354 million$2.0 billion for the nine months ended September 30, 20212022 and $1,408 million$1.4 billion for the comparable 20202021 period. The decreaseincrease in cash provided by operating activities was driven by the prior year payment of the EWC LPT premium, increased ceded premiums paid and higher taxes paid, partially offset by an increase in gross premiums collected, lower claim payments and a higher level of distributions from limited partnerships. For further information on the EWC LPT see Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report.premium.

CNA paid cash dividends of $1.89$3.20 per share on its common stock, including a special cash dividend of $0.75$2.00 per share, during the nine months ended September 30, 2021.2022. On October 29, 2021,28, 2022, CNA’s Board of Directors declared a quarterly cash dividend of $0.38$0.40 per share payable December 2, 20211, 2022 to shareholders of record on November 15, 2021.2022. 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. CNA believes that its present cash flows from operating, investing and financing activities are sufficient to fund its current and expected working capital and debt obligation needs and does not expect this to change in the near term.

Dividends to CNA 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 September 30, 2021,2022, CCC was in a positive earned surplus position. CCC paid dividends of $600$845 million and $855$600 million during the nine months ended September 30, 20212022 and 2020.2021. 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.

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

Boardwalk Pipelines’ cash provided by operating activities increased $26$55 million for the nine months ended September 30, 20212022 as compared towith the comparable 20202021 period, primarily due to the change in net income.timing of gas transportation receivables and the impacts of higher natural gas prices on fuel tracker activities.

For the nine months ended September 30, 20212022 and 2020,2021, Boardwalk Pipelines’ capital expenditures were $239$208 million and $351$239 million, consisting primarily of a combination of growth capital expenditures of $122 million and $130 million and maintenance capital.

In May 2021,capital expenditures of $79 million and $89 million. During the nine months ended September 30, 2022, Boardwalk Pipelines entered into an amended revolving credit agreementalso spent $7 million on natural gas to decreasebe used in its integrated natural gas pipeline system. During 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 ofnine months ended September 30, 2021, Boardwalk Pipelines had no outstanding borrowings underacquired certain natural gas pipeline assets for approximately $20 million.

Boardwalk Pipelines anticipates that its existing capital resources, including its cash on hand, revolving credit facility. In the second quarter offacility and cash flows from operating activities, will be adequate to fund its operations and capital expenditures for 2022 Boardwalk Pipelines expectsand to retire the outstanding $300 million outstanding aggregate principal amount of its 4.0%3.4% senior notes at maturity through available capital resources, including, but not limited to, using available cash, borrowing under its revolving credit facility or publicly issuing debt securities.due in February of 2023 (“2023 Notes”). Boardwalk Pipelines also has an effective shelf registration statement on file with the SEC under which it may publicly issue $1.0 billion of debt securities, warrants or rights from time to time.

52
Index
CertainIn February of 2022, Boardwalk Pipelines completed a public offering of $500 million aggregate principal amount of its 3.6% senior notes due September 1, 2032, which utilized $500 million of capacity under its shelf registration statement. Boardwalk Pipelines used the proceeds to retire the outstanding $300 million aggregate principal amount of its 4.0% senior notes due June 2022 in March of 2022, to fund growth capital expenditures and for general corporate purposes. In September of 2022, Boardwalk Pipelines notified the holders of the hotels wholly or partially owned by subsidiaries2023 Notes that it intends to retire the 2023 Notes on November 1, 2022, at a redemption price of Loews Hotels & Co are financed by debt facilities, with a number of different lenders. Each100% of the loan agreements underlying these facilities contain a variety of financialprincipal amount plus any unpaid and operational covenants. As a resultaccrued interest. Boardwalk Pipelines will fund the retirement of the impacts2023 Notes from available cash.

In June of COVID-19,2022, Boardwalk Pipelines’ revolving credit facility was amended to, among other things, extend the maturity date by one year to May 27, 2027, while preserving the two one-year extensions that can be exercised at Boardwalk Pipelines’ election and complete a full transition to interest rates based on the term Secured Overnight Financing Rate (“SOFR”). As of September 30, 2022, Boardwalk Pipelines had no outstanding borrowings and all of the $1.0 billion available borrowing capacity under its revolving credit facility.

As of September 30, 2022, Loews Hotels & Co has proactively requested certain lenders, where applicable,a $13 million loan that matures within twelve months, which it currently intends to (1) temporarily waive certain covenants to avoid an eventpay off in the fourth quarter of default and/or further restriction of the hotel’s cash balances through the establishment of lockboxes and other measures; (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 were temporarily suspended or significantly impacted by a decline in occupancy.2022. Loews Hotels & Co, also continuesthrough its subsidiaries, has loans maturing beyond twelve months which it will work to work with lenders onrefinance prior to maturity. Extending any indebtedness, including loans that are being reviewed for extension. These discussions with lenders are ongoing andof unconsolidated joint venture partnerships, may require Loews Hotels & Co to make principal paydowns,pay downs, establish restricted cash reserves or provide guaranties of athe subsidiary’s debt to otherwise avoid an event of default.debt. Through the date of this Report, none of Loews Hotels & Co’s subsidiaries isare in default on any of itstheir loans.

AsIn October of September 30, 2021,2022, Loews Hotels & Co has three subsidiaries with mortgage loans that mature within twelve months and is actively working with lenders to refinance $190contributed $34 million as an initial investment in current maturities of long-term debt.

In October 2021 Loews Hotels & Co announced thetwo joint venture development of the Loews Arlington Hotel and Convention Center in Arlington, Texas. The hotel, for which Loews Hotels & Co will serve as manager and hold a majority equity interest, isprojects expected to open in early 2024 with2025. These projects are currently estimated to require an aggregate investment of approximately 888 guestrooms and over 250,000 square feet of function space. The approximately $550$200 million hotel project will be funded through a mix of partnerin capital contributions in 2021 and 2022 before drawing on a $300 million construction loan.from Loews Hotels & Co. Based on the timing of constructioncapital calls relative to the seasonality of Loews Hotels & Co’s business, acapital contributions from Loews Corporation capital contributionto Loews Hotels & Co may be required.

Through October 29, 2021,28, 2022, Loews Hotels & Co received capital contributions in 2021 of $32$33 million from Loews Corporation.Corporation to fund development projects during 2022.

In August of 2022, we made a cash contribution of $79 million to our equity method investee, Altium Packaging. These funds and a pro rata contribution from our joint venture partner were used by Altium Packaging for acquisitions which expand its offerings and increase its bottle manufacturing capabilities throughout key industries and geographies.

INVESTMENTS

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

The Parent Company enters into short sales and invests in certain derivative instruments that are used for asset and liability management activities, income enhancements to its portfolio management strategy and to benefit from anticipated
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future movements in the underlying markets. If such movements do not occur as anticipated, then significant losses may occur. Monitoring procedures include senior management review of daily reports of existing positions and valuation fluctuations to seek to ensure that open positions are consistent with the portfolio strategy.

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. 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.

Insurance

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. CNA’s investment portfolio supports its obligation to pay future insurance claims and provides investment returns which are an important part of CNA’s overall profitability.

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Index
Net Investment Income

The significant components of CNA’s net investment income are presented in the following table. Fixed income securities, as presented, include both fixed maturity securities and non-redeemable preferred stock.

Three Months EndedNine Months Ended
 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 September 30,
 2021  2020  2021  2020 2022202120222021
(In millions)            (In millions)  
               
Fixed income securities:            Fixed income securities:  
Taxable fixed income securities $360  $363  $1,075  $1,094 Taxable fixed income securities$410 $360 $1,163 $1,075 
Tax-exempt fixed income securities 77  80  236  238 Tax-exempt fixed income securities55 77 194 236 
Total fixed income securities 437  443  1,311  1,332 Total fixed income securities465 437 1,357 1,311 
Limited partnership and common stock investments 77  71  294  30 Limited partnership and common stock investments(44)77 (51)294 
Other, net of investment expense  (1)  3   3   18 Other, net of investment expense1 (1)(4)3 
Net investment income $513  $517  $1,608  $1,380 Net investment income$422 $513 $1,302 $1,608 
            
Effective income yield for the fixed income securities portfolio 4.3
% 4.5
%
 4.3
% 4.6
%
Limited partnership and common stock return 3.8
% 4.1
% 16.4
% 1.7
%

Effective income yield for the fixed income securities portfolio4.4 %4.3 %4.3 %4.3 %
Limited partnership and common stock return(2.1)%3.8 %(2.4)%16.4 %

CNA’s net investment income increased $228decreased $91 million and $306 million for the three and nine months ended September 30, 20212022 as compared with the comparable 2020 period,2021 periods, driven by unfavorable limited partnership and common stock returnsresults, partially offset by lower yields in thehigher income from fixed income portfolio.securities.


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Investment Gains (Losses)

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

Three Months EndedNine Months Ended
 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 September 30,
 2021  2020  2021  2020 2022202120222021
(In millions)            (In millions)  
               
Investment gains (losses):            Investment gains (losses):  
Fixed maturity securities:            
Fixed maturity securities: (a)
Fixed maturity securities: (a)
  
Corporate and other bonds $36  $14  $115  $(105)Corporate and other bonds$(41)$36 $(68)$115 
States, municipalities and political subdivisions 1  6     39 States, municipalities and political subdivisions6 1 28 
Asset-backed  (15)  6   (24)  34 Asset-backed(17)(15)(29)(24)
Total fixed maturity securities 22  26  91  (32)Total fixed maturity securities(52)22 (69)91 
Non-redeemable preferred stock (2) 25  17  (45)Non-redeemable preferred stock(2)(2)(111)17 
Short term and other 2  (5) 9  (24)
Derivatives, short term and otherDerivatives, short term and other(42)2 14 9 
Total investment gains (losses) 22  46  117  (101)Total investment gains (losses)(96)22 (166)117 
Income tax (expense) benefit (4) (10) (23) 20 Income tax (expense) benefit12 (4)39 (23)
Amounts attributable to noncontrolling interests  (2)  (3)  (10)  9 Amounts attributable to noncontrolling interests8 (2)12 (10)
Investment gains (losses) attributable to Loews Corporation
 $16  $33  $84  $(72)Investment gains (losses) attributable to Loews Corporation$(76)$16 $(115)$84 

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

CNA’s pretax investment gains (losses)results decreased $24$118 million for the three months ended September 30, 20212022 as compared with the comparable 20202021 period, driven by the net losses on fixed maturity securities in the three months ended September 30, 2022 as compared to net gains in the comparable 2021 period.

Additionally, Derivatives, short term and other for the three months ended September 30, 2022 includes a $35 million non-economic net loss related to the expected novation of a coinsurance agreement on CNA’s legacy annuity business in its Other Insurance Operations and the associated funds withheld embedded derivative.

CNA’s pretax investment gains (losses) increased $218results decreased $283 million for the nine months ended September 30, 20212022 as compared with the comparable 20202021 period, driven by lower impairment losses and the favorableunfavorable change in fair value of non-redeemable preferred stock.stock and net losses on fixed maturity securities in the nine months ended September 30, 2022 as compared to net gains in the comparable 2021 period.

Further information on CNA’s investment gains and losses is set forth in Note 32 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report.

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Portfolio Quality

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

  September 30, 2021  December 31, 2020 
     
Estimated
Fair Value
  
Net
Unrealized
Gains
(Losses)
  
Estimated
Fair Value
  
Net
Unrealized
Gains
(Losses)
 
(In millions)            
             
U.S. Government, Government agencies and Government-sponsored enterprises
 $2,938  $57  $3,672  $117 
AAA  3,778   371   3,627   454 
AA  7,737   833   7,159   1,012 
A  9,538   1,159   9,543   1,390 
BBB  18,505   2,215   18,007   2,596 
Non-investment grade  2,573   123   2,623   149 
Total $45,069  $4,758  $44,631  $5,718 

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September 30, 2022December 31, 2021
 Estimated
Fair Value
Net
Unrealized Gains (Losses)
Estimated
Fair Value
 Net
Unrealized Gains
(Losses)
(In millions)    
     
U.S. Government, Government agencies and Government-sponsored enterprises$2,452 $(357)$2,600 $42 
AAA2,374 (250)3,784 360 
AA6,387 (792)7,665 823 
A8,739 (667)9,511 1,087 
BBB15,267 (1,776)18,458 2,043 
Non-investment grade2,032 (234)2,362 91 
Total$37,251 $(4,076)$44,380 $4,446 

As of September 30, 20212022 and December 31, 2020,2021, 1% of CNA’s fixed maturity portfolio was rated internally. AAA rated securities included $1.7$0.4 billion and $1.8$1.7 billion of pre-refunded municipal bonds as of September 30, 20212022 and December 31, 2020.2021.

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

September 30, 2021 
Estimated
Fair Value
  
Gross
Unrealized
Losses
 
September 30, 2022September 30, 2022Estimated
Fair Value
Gross Unrealized Losses
(In millions)      (In millions)  
         
U.S. Government, Government agencies and Government-sponsored enterprises $1,200  $9 U.S. Government, Government agencies and
Government-sponsored enterprises		$2,360 $360 
AAA 388  5 AAA1,566 318 
AA 906  16 AA4,430 917 
A 1,191  18 A6,548 838 
BBB 1,187  31 BBB13,394 1,902 
Non-investment grade 396  10 Non-investment grade1,646 248 
Total $5,268  $89 Total$29,944 $4,583 

The following table presents the maturity profile for these available-for-sale fixed maturity securities. Securities not due to mature on a single date are allocated based on weighted average life:

September 30, 2021 
Estimated
Fair Value
  
Gross
Unrealized
Losses
 
September 30, 2022September 30, 2022Estimated
Fair Value
Gross Unrealized Losses
(In millions)      (In millions)  
         
Due in one year or less $133  $5 Due in one year or less$699 $11 
Due after one year through five years 709  13 Due after one year through five years7,492 541 
Due after five years through ten years 2,639  33 Due after five years through ten years10,701 1,705 
Due after ten years 1,787  38 Due after ten years11,052 2,326 
Total $5,268  $89 Total$29,944 $4,583 

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Duration

A primary objective in the management of CNA’s investment portfolio is to optimize return relative to the corresponding liabilities and respective liquidity needs. CNA’s views on the current interest rate environment, tax regulations, asset class valuations, specific security issuer and broader industry segment conditions as well as domestic and global economic conditions, are some of the factors that enter into an investment decision. CNA also continually monitors exposure to issuers of securities held and broader industry sector exposures and may from time to time adjust such exposures based on its views of a specific issuer or industry sector.

A further consideration in the management of CNA’s investment portfolio is the characteristics of the corresponding liabilities and the ability to align the duration of the portfolio to those liabilities and to meet future liquidity needs, minimize interest rate risk and maintain a level of income sufficient to support the underlying insurance liabilities. For portfolios where future liability cash flows are determinable and typically long term in nature, CNA segregates investments for asset/liability management purposes. The segregated investments support the long term care and structured settlement liabilities in Other Insurance Operations.

The effective durations of CNA’s fixed income securities and short term investments are presented in the following table. Amounts presented are net of payable and receivable amounts for securities purchased and sold, but not yet settled.

 September 30, 2021  December 31, 2020 September 30, 2022December 31, 2021
 
Estimated
Fair Value
  
Effective
Duration
(Years)
  
Estimated
Fair Value
  
Effective
Duration
(Years)
  Estimated
Fair Value		Effective Duration (Years)Estimated
Fair Value		Effective Duration (Years)
(In millions of dollars)            (In millions of dollars)    
               
Investments supporting Other Insurance Operations $18,431  9.3  
$
18,518
  9.2 Investments supporting Other Insurance Operations$14,253 9.8$18,458 9.2
Other investments 28,520  5.1   
28,839
  4.5 Other investments24,739 4.828,915 4.9
Total $46,951  6.7  
$
47,357
  6.3 Total$38,992 6.7$47,373 6.6

The effective duration of investments supporting Other Insurance Operations liabilities at September 30, 2022 lengthened as compared with December 31, 2021, reflecting strategic repositioning to capitalize on higher rates and reduce reinvestment risk.

CNA’s investment portfolio is periodically analyzed for changes in duration and related price risk. Certain securities have duration characteristics that are variable based on market interest rates, credit spreads and other factors that may drive variability in the amount and timing of cash flows. Additionally, CNA periodically reviews the sensitivity of the portfolio to the level of foreign exchange rates and other factors that contribute to market price changes. A summary of these risks and specific analysis on changes is included in the Quantitative and Qualitative Disclosures about Market Risk included under Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2020.2021.

Short Term Investments

The carrying value of the components of CNA’s Short term investments are presented in the following table:


 
September 30,
2021
  
December 31,
2020
 
(In millions)
      
       
Short term investments:      
U.S. Treasury securities $916  $1,702 
Other  219   205 
Total short term investments $1,135  $1,907 

CRITICAL ACCOUNTING ESTIMATES

Certain accounting policies require us to make estimates and judgments that affect the amounts reflected in the Consolidated Condensed Financial Statements. Such estimates and judgments necessarily involve varying, and possibly significant, degrees of uncertainty. Accordingly, certain amounts currently recorded or disclosed in the financial statements will likely be adjusted in the future based on new available information and changes in other facts and circumstances. See the Critical Accounting Estimates and the Insurance Reserves sections of our MD&A included under Item 7 of our Annual Report on Form 10-K for the year endedended December 31, 20202021 for further information.

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ACCOUNTING STANDARDS UPDATE

In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update 2018-12, “Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.” The updated accounting guidance requires changes to the measurement and disclosure of long-duration contracts. For the Company, this includes CNA’s long term care and fully-ceded single premium immediate annuity business.


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The most significant impact will be the effect of updating the discount rate assumption quarterly to reflect an upper-medium grade fixed-income instrument yield, rather than the expected investment portfolio yield. This will be partially offset by the de-recognition of Shadow Adjustments associated with long-duration contracts. The net impact of these changes is expected to be a decrease of approximately $2.1 billion (after tax and noncontrolling interests) in Accumulated other comprehensive income as of the transition date of January 1, 2021. To illustrate the sensitivity of this adjustment, had the interest rates in effect as of September 30, 2022 been used in the calculation, the transition impact to AOCI would have been approximately zero.

The requirement to review, and update if there is a change, cash flow assumptions at least annually is expected to change the pattern of earnings being recognized. Under current accounting guidance, the third quarter 2022 gross premium valuation assessment indicated a pretax reserve margin of $125 million, with no unlocking event. However under the new guidance, the effect of changes in cash flow assumptions from the assessment would be recorded in results of operations (except for discount rate changes which would be recorded quarterly through AOCI).

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

FORWARD-LOOKING STATEMENTS

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. Such statements may contain the words “expect,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “will be,” “will continue,” “will likely result,” and similar expressions. In addition, any statement concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible actions taken by us or our subsidiaries are also forward-looking statements as defined by the Act. 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, 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 Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 and in our and our subsidiaries’ other filings with the SEC, could cause our and our subsidiaries’ 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. Forward-looking statements speak only as of the date they are made and we and our subsidiaries expressly disclaim any obligation or undertaking to update these statements to reflect any change in our expectations or beliefs or any change in events, conditions or circumstances on which any forward-looking statement is based.

Item 3.Quantitative and Qualitative Disclosures about Market Risk.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There were no material changes in our market risk components as ofof September 30, 2021.2022. See the Quantitative and Qualitative Disclosures about Market Risk included under Item 7A of our Annual Report on Form 10-K for the year ended December 31, 20202021 for further information. Additional information related to portfolio duration and market conditions is discussed in the Investments section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included under Part I, Item 2.

Item 4.Controls and Procedures.
Item 4. Controls and Procedures.

The Company maintains a system of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), which is designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, including this Report, is recorded, processed, summarized and reported on a timely basis. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Company under the Exchange Act is accumulated and communicated to the Company’s management on a timely basis to allow decisions regarding required disclosure.

The Company’s management, including the Company’s principal executive officer (“CEO”) and principal financial officer (“CFO”) conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures as of
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the end of the period covered by this Report and, based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as ofof September 30, 2021.2022.

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 20212022 that have materially affected or that are reasonably likely to materially affect the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.Legal Proceedings.
Item 1. Legal Proceedings.

Information on our legal proceedings is set forth in Note 9 to the Consolidated Condensed Financial Statements included under Part I, Item 1.

Item 1A.Risk Factors.

Item 1A. Risk Factors.
Our business and the businesses of our subsidiaries face many risks and uncertainties. These risks and uncertainties could lead to events or circumstances that have a material adverse effect on our business, results of operations, cash flows, financial condition or equity and/or the business, results of operations, cash flows, financial condition, or equity of one or more of our subsidiaries.
Our Annual Report on Form 10-K for the year ended December 31, 2020 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 include detailed discussionsincludes a discussion of certainmaterial risk factors facing the company. Except as described below, thereCompany. There have been no material changes to thesuch risk factors previously disclosed in Part I, Item 1A, Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2020 and Part II, Item 1A. Risk Factors of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021.

Risks Related to Us and Our Subsidiary, CNA Financial Corporation (“CNA”)

Any significant interruption in the operation of CNA’s business functions, facilities and systems or its vendors’ facilities and systems could result in a materially adverse effect on its operations.

CNA’s business is highly dependent upon its ability to perform, in an efficient and uninterrupted manner, through its employees or vendor relationships, necessary business functions, such as internet support and 24-hour call centers, processing new and renewal business, processing and paying claims and other obligations and issuing financial statements.

CNA’s, or its vendors’, facilities and systems could become unavailable, inoperable, or otherwise impaired from a variety of causes, including natural events, such as hurricanes, tornadoes, windstorms, earthquakes, severe winter weather and fires, or other events, such as explosions, terrorist attacks, computer security breaches or cyber attacks, riots, hazardous material releases, medical epidemics or pandemics, utility outages, interruptions of CNA’s data processing and storage systems or the systems of third-party vendors, or unavailability of communications facilities. An interruption of CNA’s system availability occurred in March of 2021 as a result of a cybersecurity attack sustained by CNA. Please refer to the immediately following risk factor for further information regarding this incident. Likewise, CNA could experience a significant failure, interruption or corruption of one or more of its vendors’ information technology, telecommunications, or other systems for various reasons, including significant failures or interruptions that might occur as existing systems are replaced or upgraded. The shut-down or unavailability of one or more of CNA’s or its vendors’ systems or facilities for these and other reasons could significantly impair CNA’s ability to perform critical business functions on a timely basis.

In addition, because CNA’s information technology and telecommunications systems interface with and depend on third-party systems, CNA could experience service denials if demand for such service exceeds capacity or a third-party system fails or experiences an interruption. If sustained or repeated, such events could result in a deterioration of CNA’s ability to write and process new and renewal business, provide customer service, pay claims in a timely manner, or perform other necessary business functions, including the ability to issue financial statements in a timely manner.

The foregoing risks could also expose CNA to monetary and reputational damages. Potential exposures resulting from the March 2021 cybersecurity attack, described in the immediately following risk factor, as well as any future incidents may include substantially increased compliance costs, as well as increased costs relating to investments in computer system and security-related upgrades, with those costs potentially not recoverable under relevant insurance coverage. CNA anticipates making continued investments to improve its security and infrastructure. These expenses are not recoverable under relevant insurance coverage. If CNA’s business continuity plans or system security do not sufficiently address these risks, they could have a material adverse effect on CNA’s business, results of operations and financial condition.

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Based on the information currently known, CNA does not believe that the March 2021 cybersecurity attack will have a material impact on its business, results of operations or financial condition, but no assurances can be given as it continues to assess the full impact from the incident, including costs, expenses and insurance coverage. CNA may also be subject to future incidents that could have a material adverse effect on its business, results of operations or financial condition or may result in operational impairments and financial losses, as well as significant harm to its reputation.

Any significant breach in CNA’s data security infrastructure or its vendors’ facilities and systems could disrupt business, cause financial losses and damage its reputation, and insurance coverage may not be available for claims related to a breach.

A significant breach of CNA’s data security infrastructure may result from actions by its employees, vendors, third-party administrators, or unknown third parties or through cyber attacks. The risk of a breach can exist whether software services are in CNA’s data centers or CNA uses cloud-based software services. Breaches have occurred, and may occur again, in CNA’s systems and in the systems of its vendors and third party administrators.

Such a breach could affect CNA’s data framework or cause a failure to protect the personal information of its customers, claimants or employees, or sensitive and confidential information regarding its business and may result in operational impairments and financial losses, as well as significant harm to its reputation. The breach of confidential information also could give rise to legal liability and regulatory action under data protection and privacy laws, as well as evolving regulation in this regard. During the third quarter of 2021, CNA was notified of a breach of certain systems of a third party administrator, which resulted in breach notifications sent by such administrator to potentially impacted persons, including a limited number of CNA claimants. While CNA does not believe such notifications and resultant actions will have a material adverse effect on its business, this or similar incidents, or any other such breach of CNA’s or its vendors’ data security infrastructure could have a material adverse effect on its business, results of operations and financial condition.

CNA sustained a sophisticated cybersecurity attack in March of 2021 involving ransomware that caused a network disruption and impacted certain of its systems. Upon detection, CNA undertook steps to address the incident, including engaging a team of third-party forensic experts and notifying law enforcement and key regulators. CNA restored network systems and resumed normal operations. CNA is continuing to assess all actions that it will take to improve its existing systems.

CNA’s investigation revealed that an unauthorized third party copied some personal information relating to certain current and former employees, contractor workers and their dependents and certain other persons, including some policyholders. In July of 2021, CNA provided notifications to the impacted individuals and to regulators, in accordance with applicable law. Although CNA currently has no indication that the impacted data has been misused, or that CNA or its policyholder data was specifically targeted by the unauthorized third party, it may be subject to subsequent investigations, claims or actions in addition to other costs, fines, penalties, or other obligations related to impacted data, whether or not such data is misused. In addition, the misuse, or perceived misuse, of sensitive or confidential information regarding its business or policyholders could cause harm to CNA’s reputation and result in the loss of business with existing or potential customers, which could adversely impact its business, results of operations and financial condition.

Although CNA maintains cybersecurity insurance coverage insuring against costs resulting from cyber attacks (including the March 2021 attack), CNA does not expect that the amount available under its coverage and/or its coverage policy to cover all losses. Costs and expenses incurred and likely to be incurred by CNA in connection with the March 2021 attack include both direct and indirect costs and not all may be covered by its insurance coverage. In addition, potential disputes with its insurers about the availability of insurance coverage for claims relating to the March 2021 attack or any future incident could occur. Further, both as a result of the March 2021 attackdate of this Report.

Item 2. Unregistered Sales of Equity Securities and industry trends generally, CNA will incur higher costs for the replenishmentUse of its current policy through the end of the term, as well as future cybersecurity insurance coverage beyond the current term.Proceeds.

Based on the information currently known, CNA does not believe that the March 2021 cybersecurity attack will have a material impact on its business, results of operations or financial condition, but no assurances can be given as it continues to assess the full impact from the incident, including costs, expenses and insurance coverage. CNA may also be subject to future incidents that could have a material adverse effect on its business, results of operations or financial condition or may result in operational impairments and financial losses, as well as significant harm to CNA’s reputation.

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Risks Related to Us and Our Subsidiaries Generally

Failures or interruptions in or breaches to our or our subsidiaries’ computer systems or those of our third party vendors could materially and adversely affect our or our subsidiaries’ operations.

We and our subsidiaries are dependent upon information technologies, computer systems and networks, including those maintained by us and our subsidiaries and those maintained and provided to us and our subsidiaries by third parties (for example, “software-as-a-service” and cloud solutions), to conduct operations and are reliant on technology to help increase efficiency in our and their businesses. We and our subsidiaries are dependent upon operational and financial computer systems to process the data necessary to conduct almost all aspects of our and their businesses. Any failure of our or our subsidiaries’ computer systems, or those of our or their customers, vendors or others with whom we and they do business, could materially disrupt business operations.

Computer, telecommunications and other business facilities and systems could become unavailable or impaired from a variety of causes, including cyber attacks or other cyber incidents, storms and other natural disasters, terrorist attacks, fires, utility outages, theft, design defects, human error or complications encountered as existing systems are replaced or upgraded. Cyber attacks and other cyber incidents are occurring more frequently, are constantly evolving in nature, are becoming more sophisticated and are being carried out by groups and individuals with a wide range of expertise and motives. The U.S. government has issued public warnings that indicate energy assets may be specific targets of cyber attacks, which can have catastrophic consequences, and hotel chains, among other consumer-facing businesses, have been subject to various cyber attacks targeting payment card and other sensitive consumer information. Cyber attacks and cyber incidents take many forms, including cyber extortion, denial of service, social engineering, introduction of viruses or malware, exploiting vulnerabilities in hardware, software or other infrastructure, hacking, website defacement, theft of passwords and other credentials, unauthorized use of computing resources for digital currency mining and business email compromise. CNA was recently subjected to a cybersecurity incident. In addition, one of CNA’s vendors also recently experienced a cybersecurity incident. For additional information about these incidents see “Risks Related to Us and Our Subsidiary, CNA Financial Corporation” above under this Part II, Item 1A.

As with other large companies, we and our subsidiaries and our and their third party vendors have experienced cyber attacks and other cyber incidents and expect this to continue. If we and our subsidiaries and our and their third party vendors do not allocate and effectively manage the resources necessary to continue to build and maintain our and their information technology security infrastructure, or if we or our subsidiaries or our or our subsidiaries’ vendors fail to timely identify or appropriately respond to cyber attacks or other cyber incidents, then this may disrupt our and our subsidiaries’ operations, cause significant damage to our or their assets and surrounding areas, cause loss of life or serious bodily injury, impact our or their data framework or cause a failure to protect personal information of customers or employees.

The foregoing risks relating to disruption of service, interruption of operations and data loss could impact our and our subsidiaries’ ability to timely perform critical business functions, resulting in disruption or deterioration in our and our subsidiaries’ operations and business and expose us and our subsidiaries to significant financial losses and monetary and reputational damages. In addition, potential exposures include substantially increased compliance costs and required computer system upgrades and security related investments. The breach of confidential information also could give rise to legal liability and regulatory action under data protection and privacy laws and regulations, both in the U.S. and foreign jurisdictions.

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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

Items 2 (a) and (b) are inapplicable.

(c) STOCK REPURCHASES

Period 
(a) Total number
of shares
purchased
  
(b) Average
price paid per
share
  
(c) Total number of
shares purchased as
part of publicly
announced plans or
programs
  
(d) Maximum number of shares
(or approximate dollar value)
of shares that may yet be
purchased under the plans or
programs (in millions)
 
             
July 1, 2021 -            
July 31, 2021
  
2,590,255
  
$
54.01
   
N/A
   
N/A
 

                
August 1, 2021 -                
August 31, 2021
  
1,730,048
   
54.60
   
N/A
   
N/A
 
                 
September 1, 2021 -                
September 30, 2021
  
1,834,131
   
53.74
   
N/A
   
N/A
 
Period
(a) Total number
of shares
purchased
(b) Average
price paid per
share
(c) Total number of shares purchased as
part of publicly announced plans or programs
(d) Maximum number of shares (or approximate dollar value)
of shares that may yet be purchased under the plans or programs (in millions)
     
July 1, 2022 - July 31, 20221,311,355$57.19 N/AN/A
     
August 1, 2022 - August 31, 20221,705,85356.10 N/AN/A
     
September 1, 2022 - September 30, 20221,100,00053.99 N/AN/A

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Item 6. Exhibits.

Item 6.Exhibits.

Description of ExhibitExhibit
Number
By-Laws of Registrant as amended and restated as of May 10, 2022, incorporated herein by reference to Exhibit 3.02 to Registrant’s Report on Form 8-K filed with the SEC on May 11, 2022 (File No. 001-06541)
Exhibit
Number3.1
Certification by the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) and Rule 15d-14(a)
31.1*
Certification by the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) and Rule 15d-14(a)
31.2*
Certification by the Chief Executive Officer of the Company pursuant to 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of 2002)
32.1*
Certification by the Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of 2002)
32.2*
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document101.INS *
Inline XBRL Taxonomy Extension Schema101.SCH *
Inline XBRL Taxonomy Extension Calculation Linkbase101.CAL *
Inline XBRL Taxonomy Extension Definition Linkbase101.DEF *
Inline XBRL Taxonomy Label Linkbase101.LAB *
Inline XBRL Taxonomy Extension Presentation Linkbase101.PRE *
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)104*

*Filed herewith.

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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.


LOEWS CORPORATION
(Registrant)
LOEWS CORPORATION
(Registrant)
Dated:  November 1, 2021
By:
/s/ David B. Edelson
Dated: October 31, 2022By:
DAVID B. EDELSON
/s/ Jane J. Wang
JANE J. WANG
Senior Vice President and

Chief Financial Officer

(Duly authorized officer

and principal financial
officer)

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officer)


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