Document and Entity Information
Document and Entity Information | ||
3 Months Ended
Mar. 31, 2010 | Apr. 28, 2010
| |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | 2010-03-31 | |
Document Fiscal Year Focus | 2,010 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | L | |
Entity Registrant Name | LOEWS CORP | |
Entity Central Index Key | 0000060086 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 418,496,799 |
CONSOLIDATED CONDENSED BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS (USD $) | ||
In Millions | Mar. 31, 2010
| Dec. 31, 2009
|
Investments: | ||
Fixed maturities, amortized cost of $37,591 and $35,824 | $38,104 | $35,816 |
Equity securities, cost of $938 and $943 | 1,047 | 1,007 |
Limited partnership investments | 2,164 | 1,996 |
Short term investments | 6,187 | 7,215 |
Total investments | 47,502 | 46,034 |
Cash | 135 | 190 |
Receivables | 10,000 | 10,212 |
Property, plant and equipment | 13,249 | 13,274 |
Deferred income taxes | 869 | 627 |
Goodwill | 856 | 856 |
Other assets | 1,693 | 1,346 |
Deferred acquisition costs of insurance subsidiaries | 1,109 | 1,108 |
Separate account business | 442 | 423 |
Total assets | 75,855 | 74,070 |
Insurance reserves: | ||
Claim and claim adjustment expense | 26,559 | 26,816 |
Future policy benefits | 8,090 | 7,981 |
Unearned premiums | 3,283 | 3,274 |
Policyholders' funds | 177 | 192 |
Total insurance reserves | 38,109 | 38,263 |
Payable to brokers | 662 | 540 |
Short term debt | 62 | 10 |
Long term debt | 9,549 | 9,475 |
Other liabilities | 5,038 | 4,274 |
Separate account business | 442 | 423 |
Total liabilities | 53,862 | 52,985 |
Preferred stock, $0.10 par value: Authorized - 100,000,000 shares | ||
Common stock, $0.01 par value: Authorized - 1,800,000,000 shares Issued - 425,547,829 and 425,497,522 shares | 4 | 4 |
Additional paid-in capital | 3,745 | 3,637 |
Retained earnings | 14,085 | 13,693 |
Accumulated other comprehensive loss | (75) | (419) |
Stockholders equity subtotal before treasury stock | 17,759 | 16,915 |
Less treasury stock, at cost (5,814,800 and 427,200 shares) | (213) | (16) |
Total shareholders' equity | 17,546 | 16,899 |
Noncontrolling interests | 4,447 | 4,186 |
Total equity | 21,993 | 21,085 |
Total liabilities and equity | $75,855 | $74,070 |
1_CONSOLIDATED CONDENSED BALANC
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) (USD $) | ||
In Millions, except Share data | Mar. 31, 2010
| Dec. 31, 2009
|
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) | ||
Fixed maturities, amortized cost | $37,591 | $35,824 |
Equity securities, cost | $938 | $943 |
Preferred stock, par value | 0.1 | 0.1 |
Preferred stock, authorized | 100,000,000 | 100,000,000 |
Common stock, par value | 0.01 | 0.01 |
Common stock, authorized | 1,800,000,000 | 1,800,000,000 |
Common stock, issued | 425,547,829 | 425,497,522 |
Treasury stock, shares | 5,814,800 | 427,200 |
CONSOLIDATED CONDENSED STATEMEN
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (USD $) | ||
In Millions, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Revenues: | ||
Insurance premiums | $1,615 | $1,672 |
Net investment income | 617 | 447 |
Investment gains (losses): | ||
Other-than-temporary impairment losses | (90) | (614) |
Portion of other-than-temporary impairment losses recognized in Other comprehensive income | 30 | |
Net impairment losses recognized in earnings | (60) | (614) |
Other net investment gains | 81 | 83 |
Total investment gains (losses) | 21 | (531) |
Contract drilling revenues | 844 | 856 |
Other | 616 | 579 |
Total | 3,713 | 3,023 |
Expenses: | ||
Insurance claims and policyholders' benefits | 1,308 | 1,342 |
Amortization of deferred acquisition costs | 342 | 349 |
Contract drilling expenses | 305 | 294 |
Impairment of natural gas and oil properties | 1,036 | |
Other operating expenses | 732 | 776 |
Interest | 130 | 94 |
Total | 2,817 | 3,891 |
Income (loss) before income tax | 896 | (868) |
Income tax (expense) benefit | (273) | 395 |
Net income (loss) | 623 | (473) |
Amounts attributable to noncontrolling interests | (203) | (174) |
Net income (loss) attributable to Loews Corporation | $420 | ($647) |
Basic and diluted net income (loss) per share | 0.99 | -1.49 |
Dividends per share | 0.0625 | 0.0625 |
Weighted-average shares outstanding: | ||
Shares of common stock | 422.77 | 435.12 |
Dilutive potential shares of common stock | 0.87 | |
Total weighted-average shares outstanding assuming dilution | 423.64 | 435.12 |
2_CONSOLIDATED CONDENSED STATEM
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Net income (loss) | $623 | ($473) |
Changes in: | ||
Net unrealized gains on investments with other-than-temporary impairments | 25 | |
Net other unrealized gains on investments | 307 | 399 |
Total unrealized gains on available-for-sale investments | 332 | 399 |
Unrealized gains on cash flow hedges | 61 | 15 |
Foreign currency | (10) | (7) |
Pension liability | 2 | (1) |
Other comprehensive income | 385 | 406 |
Comprehensive income (loss) | 1,008 | (67) |
Amounts attributable to noncontrolling interests | (245) | (223) |
Total comprehensive income (loss) attributable to Loews Corporation | $763 | ($290) |
3_CONSOLIDATED CONDENSED STATEM
CONSOLIDATED CONDENSED STATEMENT OF EQUITY (USD $) | |||||||
In Millions | Loews Common Stock
| Additional Paid-in Capital
| Retained Earnings
| Accumulated Other Comprehensive Income (Loss)
| Common Stock Held in Treasury
| Noncontrolling Interests
| Total
|
Balance at Dec. 31, 2009 | $4 | $3,637 | $13,693 | ($419) | ($16) | $4,186 | $21,085 |
Sale of subsidiary common units | 83 | 1 | 195 | 279 | |||
Net income | 420 | 203 | 623 | ||||
Other comprehensive income | 343 | 42 | 385 | ||||
Dividends paid | (26) | (166) | (192) | ||||
Purchase of Loews treasury stock | (197) | (197) | |||||
Issuance of Loews common stock | 1 | 1 | |||||
Stock-based compensation | 5 | 1 | 6 | ||||
Other | 19 | (2) | (14) | 3 | |||
Ending Balance at Mar. 31, 2010 | $4 | $3,745 | $14,085 | ($75) | ($213) | $4,447 | $21,993 |
4_CONSOLIDATED CONDENSED STATEM
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Operating Activities: | ||
Net income (loss) | $623 | ($473) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities, net: | 175 | 1,360 |
Changes in operating assets and liabilities, net: | ||
Reinsurance receivables | 254 | 16 |
Other receivables | (4) | 76 |
Deferred acquisition costs | (1) | (7) |
Insurance reserves | (135) | (139) |
Other liabilities | (42) | (133) |
Trading securities | (584) | 457 |
Other, net | 8 | (19) |
Net cash flow operating activities | 294 | 1,138 |
Investing Activities: | ||
Purchases of fixed maturities | (5,351) | (7,079) |
Proceeds from sales of fixed maturities | 2,737 | 7,046 |
Proceeds from maturities of fixed maturities | 846 | 827 |
Purchases of equity securities | (42) | (134) |
Proceeds from sales of equity securities | 25 | 146 |
Purchases of property, plant and equipment | (212) | (567) |
Change in collateral on loaned securities and derivatives | 1 | 45 |
Change in short term investments | 1,628 | (1,457) |
Other, net | (43) | 65 |
Net cash flow investing activities | (411) | (1,108) |
Financing Activities: | ||
Dividends paid | (26) | (27) |
Dividends paid to noncontrolling interests | (166) | (161) |
Purchases of treasury shares | (188) | |
Issuance of common stock | 1 | 1 |
Proceeds from sale of subsidiary stock | 333 | |
Principal payments on debt | (1) | (10) |
Issuance of debt | 125 | 171 |
Policyholders' investment contract net deposits (withdrawals) | (2) | (7) |
Other, net | (12) | 12 |
Net cash flow financing activities | 64 | (21) |
Effect of foreign exchange rate on cash | (2) | (2) |
Net change in cash | (55) | 7 |
Cash, beginning of period | 190 | 131 |
Cash, end of period | $135 | $138 |
Basis of Presentation
Basis of Presentation | |
3 Months Ended
Mar. 31, 2010 | |
Basis of Presentation | 1. Basis of Presentation Loews Corporation is a holding company. Its subsidiaries are engaged in the following lines of business: commercial property and casualty insurance (CNA Financial Corporation ("CNA"), a 90% owned subsidiary); the operation of offshore oil and gas drilling rigs (Diamond Offshore Drilling, Inc. ("Diamond Offshore"), a 50.4% owned subsidiary); exploration, production and marketing of natural gas and natural gas liquids (HighMount Exploration Production LLC ("HighMount"), a wholly owned subsidiary); the operation of interstate natural gas pipeline systems (Boardwalk Pipeline Partners, LP ("Boardwalk Pipeline"), a 66% owned subsidiary); and the operation of hotels (Loews Hotels Holding Corporation ("Loews Hotels"), a wholly owned subsidiary). In the first quarter of 2010 the Company sold 11.5 million common units of its subsidiary, Boardwalk Pipeline, for $333 million, reducing the Company's ownership interest from 72% to 66%. Unless the context otherwise requires, the terms "Company," "Loews" and "Registrant" as used herein mean Loews Corporation excluding its subsidiaries and the term "Net income (loss) Loews" as used herein means Net income (loss) attributable to Loews Corporation. In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 2010 and December 31, 2009 and the results of operations, comprehensive income (loss) and changes in cash flows for the three months ended March 31, 2010 and 2009. Net income (loss) for the first quarter of each of the years is not necessarily indicative of net income (loss) for that entire year. Reference is made to the Notes to Consolidated Financial Statements in the 2009 Annual Report on Form 10-K which should be read in conjunction with these Consolidated Condensed Financial Statements. The Company presents basic and diluted earnings per share on the Consolidated Condensed Statements of Operations. Basic earnings 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 earnings 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. Stock options and stock appreciation rights ("SARs") of 2.4 million shares were not included in the diluted weighted average shares amount for the three months ended March 31, 2010 due to the exercise price being greater than the average stock price. For the three months ended March 31, 2009, 5.6 million of common equivalent shares, consisting solely of stock options and SARs, are not included in the diluted weighted average shares amount as their effects are antidilutive. Accounting changes In June of 2009, the Financial Accounting Standards Board ("FASB") issued updated accounting guidance which amended the requirements for determination of the primary beneficiary of a variable interest entity, required an ongoing asses |
Investments
Investments | |
3 Months Ended
Mar. 31, 2010 | |
Investments | 2. Investments Three Months Ended March31 2010 2009 (In millions) Net investment income consisted of: Fixed maturity securities $ 510 $ 475 Short term investments 7 11 Limited partnerships 80 (70) Equity securities 10 14 Income from trading portfolio 21 26 Other 3 3 Total investment income 631 459 Investment expenses (14 ) (12) Net investment income $ 617 $ 447 Investment gains (losses) are as follows: Fixed maturity securities $ 27 $ (358) Equity securities 3 (216) Derivative instruments (13 ) 31 Short term investments 3 14 Other 1 (2) Investment gains (losses) (a) $ 21 $ (531) (a) Includes gross realized gains of $102 and $108 and gross realized losses of $72 and $682 on available-for-sale securities for the three months ended March31, 2010 and 2009. The components of other-than-temporary impairment ("OTTI") losses recognized in earnings by asset type are as follows: Three Months Ended March31 2010 2009 (In millions) Fixed maturity securities available-for-sale: Asset-backed securities: Residential mortgage-backed securities $ 26 $ 149 Commercial mortgage-backed securities 2 16 Other asset-backed securities 31 Total asset-backed securities 28 196 States, municipalities and political subdivisions-tax-exempt securities 14 Corporate and other taxable bonds 18 190 Redeemable preferred stock 9 Total fixed maturities available-for-sale 60 395 Equity securities available-for-sale: Common stock 3 Preferred stock 216 Total equity securities available-for-sale - 219 Net OTTI losses recognized in earnings $ 60 $ 614 A security is impaired if the fair value of the security is less than its cost adjusted for accretion, amortization and previously recorded OTTI losses, otherwise defined as an unrealized loss. When a security is impaired, the impairment is evaluated to determine whether it is temporary or other-than-temporary. Significant judgment is required in the determination of whether an OTTI loss has occurred for a security. CNA follows a consistent and systematic process for determining and recording an OTTI loss. CNA has established a committee responsible for the OTTI process. This committee, referred to as the Impairment Committee, is made up of three officers appointed by CNA's Chief Financial Officer. The Impairment Committee is responsible for evaluating securities in an unrealized loss position on at least a quarterly basis. The Impairment Committee's assessment of whether an OTTI loss has occurred incorporates both quantitative and qualitative information. Fixed maturity securities that CNA intends to sell, or it more likely than not will be required to sell before recovery of amortized cost, are considered to be other-than-temporarily impaired and the entire dif |
Fair Value
Fair Value | |
3 Months Ended
Mar. 31, 2010 | |
Fair Value | 3. 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. The Company attempts to establish fair value as an exit price in an orderly transaction consistent with normal settlement market conventions. The Company is responsible for the valuation process and seeks to obtain quoted market prices for all securities. When quoted market prices in active markets are not available, the Company uses a number of methodologies to establish fair value estimates, including discounted cash flow models, prices from recently executed transactions of similar securities or broker/dealer quotes, utilizing market observable information to the extent possible. In conjunction with modeling activities, the Company may use external data as inputs. The modeled inputs are consistent with observable market information, when available, or with the Company's assumptions as to what market participants would use to value the securities. The Company also uses pricing services as a significant source of data. The Company monitors all the pricing inputs to determine if the markets from which the data is gathered are active. As further validation of the Company's valuation process, the Company samples its past fair value estimates and compares the valuations to actual transactions executed in the market on similar dates. The fair values of CNA's life settlement contracts investments are included in Other assets. Derivative assets are included in Receivables and derivative liabilities are included in Payable to brokers. Assets and liabilities measured at fair value on a recurring basis are summarized in the tables below: March31, 2010 Level1 Level 2 Level3 Total (In millions) Fixed maturity securities: U.S. Treasury securities and obligations of government agencies $ 130 $ 50 $ 180 Asset-backed securities: Residential mortgage-backed securities 6,259 $ 679 6,938 Commercial mortgage-backed securities 617 112 729 Other asset-backed securities 441 368 809 Total asset-backed securities - 7,317 1,159 8,476 States, municipalities and political subdivisions-tax-exempt securities 5,572 737 6,309 Corporate and other taxable bonds 118 21,830 680 22,628 Redeemable preferred stock 3 53 4 |
Derivative Financial Instrument
Derivative Financial Instruments | |
3 Months Ended
Mar. 31, 2010 | |
Derivative Financial Instruments | 4. Derivative Financial Instruments The Company invests in certain derivative instruments for a number of purposes, including: (i) asset and liability management activities, (ii) income enhancements for its portfolio management strategy and (iii) to benefit from anticipated 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 detailed reports of existing positions and valuation fluctuations to ensure that open positions are consistent with the Company's portfolio strategy. The Company does not believe that any of the derivative instruments utilized by it are unusually complex, nor do these instruments contain embedded leverage features which would expose the Company to a higher degree of risk. The Company uses derivatives in the normal course of business, primarily in an attempt to reduce its exposure to market risk (principally interest rate risk, equity stock price risk, commodity price risk and foreign currency risk) stemming from various assets and liabilities and credit risk (the ability of an obligor to make timely payment of principal and/or interest). The Company's principal objective under such risk strategies is to achieve the desired reduction in economic risk, even if the position does not receive hedge accounting treatment. CNA's use of derivatives is limited by statutes and regulations promulgated by the various regulatory bodies to which it is subject, and by its own derivative policy. The derivative policy limits the authorization to initiate derivative transactions to certain personnel. Derivatives entered into for hedging, regardless of the choice to designate hedge accounting, shall have a maturity that effectively correlates to the underlying hedged asset or liability. The policy prohibits the use of derivatives containing greater than one-to-one leverage with respect to changes in the underlying price, rate or index. The policy also prohibits the use of borrowed funds, including funds obtained through securities lending, to engage in derivative transactions. The Company has exposure to economic losses due to interest rate risk arising from changes in the level of, or volatility of, interest rates. The Company attempts to mitigate its exposure to interest rate risk in the normal course of portfolio management, which includes rebalancing its existing portfolios of assets and liabilities. In addition, various derivative financial instruments are used to modify the interest rate risk exposures of certain assets and liabilities. These strategies include the use of interest rate swaps, interest rate caps and floors, options, futures, forwards and commitments to purchase securities. These instruments are generally used to lock interest rates or market values, to shorten or lengthen durations of fixed maturity securities or investment contracts, or to hedge (on an economic basis) interest rate risks associated with investments and variable rate debt. The Company infrequently designates these types of instruments as hedges against specific assets or liabilities. The Compan |
Claim and Claim Adjustment Expe
Claim and Claim Adjustment Expense Reserves | |
3 Months Ended
Mar. 31, 2010 | |
Claim and Claim Adjustment Expense Reserves | 5. Claim and Claim Adjustment Expense Reserves CNA's property and casualty insurance claim and claim adjustment expense reserves represent the estimated amounts necessary to resolve all outstanding claims, including claims that are incurred but not reported ("IBNR") as of the reporting date. CNA's reserve projections are based primarily on detailed analysis of the facts in each case, CNA's experience with similar cases and various historical development patterns. Consideration is given to such historical patterns as field reserving trends and claims settlement practices, loss payments, pending levels of unpaid claims and product mix, as well as court decisions, economic conditions and public attitudes. All of these factors can affect the estimation of claim and claim adjustment expense reserves. 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 all 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 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. 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. CNA reported catastrophe losses, net of reinsurance, of $40 million and $13 million for the three months ended March 31, 2010 and 2009 for events occurring in those periods. Catastrophe losses in the first quarter of 2010 related primarily to winter storms and the Chilean earthquake. There can be no assurance that CNA's ultimate cost for catastrophes will not exceed current estimates. The following provides discussion of the Company's Asbestos and Environmental Pollution (AE) reserves. AE Reserves The Company's property and casualty insurance subsidiaries have actual and potential exposures related to AE claims. The following table provides data related to the Company's AE claim and claim adjustment expense reserves. March31, 2010 December31, 2009 Asbestos EnvironmentalPollution Asbestos EnvironmentalPollution (In millions) Gross reserves $ 1,991 $ 467 $ 2,046 $ 482 Ceded reserves (895) (195) (909 ) (196) Net reserves $ 1,096 $ 272 $ 1,137 $ 286 Asbestos The table below provides a reconciliatio |
Benefit Plans
Benefit Plans | |
3 Months Ended
Mar. 31, 2010 | |
Benefit Plans | 6. Benefit Plans Pension Plans - The Company has several non-contributory defined benefit plans for eligible employees. Benefits for certain plans are determined annually based on a specified percentage of annual earnings (based on the participant's age or years of service) and a specified interest rate (which is established annually for all participants) applied to accrued balances. The benefits for another plan which cover salaried employees are based on formulas which include, among others, years of service and average pay. The Company's funding policy is to make contributions in accordance with applicable governmental regulatory requirements. Other Postretirement Benefit Plans - The Company has several postretirement benefit plans covering eligible employees and retirees. Participants generally become eligible after reaching age 55 with required years of service. Actual requirements for coverage vary by plan. Benefits for retirees who were covered by bargaining units vary by each unit and contract. Benefits for certain retirees are in the form of a Company health care account. Benefits for retirees reaching age 65 are generally integrated with Medicare. Other retirees, based on plan provisions, must use Medicare as their primary coverage, with the Company reimbursing a portion of the unpaid amount; or are reimbursed for the Medicare Part B premium or have no Company coverage. The benefits provided by the Company are basically health and, for certain retirees, life insurance type benefits. The Company funds certain of these benefit plans and accrues postretirement benefits during the active service of those employees who would become eligible for such benefits when they retire. The components of net periodic benefit cost are as follows: Other PensionBenefits PostretirementBenefits Three Months Ended March31 2010 2009 2010 2009 (In millions) Service cost $ 6 $ 7 $ 1 $ 1 Interest cost 42 43 3 3 Expected return on plan assets (44 ) (39 ) (1 ) (1) Amortization of unrecognized net loss 7 7 1 1 Amortization of unrecognized prior service cost (6 ) (6) Regulatory asset decrease 1 1 Net periodic benefit cost $ 11 $ 18 $ (1 ) $ (1) |
Business Segments
Business Segments | |
3 Months Ended
Mar. 31, 2010 | |
Business Segments | 7. Business Segments The Company's reportable segments are primarily based on its individual operating subsidiaries. Each of the principal operating subsidiaries are headed by a chief executive officer who is responsible for the operation of its business and has the duties and authority commensurate with that position. Investment gains (losses) and the related income taxes, excluding those of CNA, are included in the Corporate and other segment. CNA's core property and casualty commercial insurance operations are reported in two business segments: CNA Specialty and CNA Commercial. CNA Specialty provides a broad array of professional, financial and specialty property and casualty products and services, primarily through insurance brokers and managing general underwriters. CNA Commercial includes property and casualty coverages sold to small businesses and middle market entities and organizations primarily through an independent agency distribution system. CNA Commercial also includes commercial insurance and risk management products sold to large corporations primarily through insurance brokers. CNA's non-core operations are managed in two segments: Life Group Non-Core and Other Insurance. Life Group Non-Core primarily includes the results of the life and group lines of business that are in run-off. Other Insurance primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business primarily in run-off, including CNA Re. This segment also includes the results related to the centralized adjusting and settlement of AE. Diamond Offshore's business primarily consists of operating 47 offshore drilling rigs that are chartered on a contract basis for fixed terms by companies engaged in exploration and production of hydrocarbons. Offshore rigs are mobile units that can be relocated based on market demand. On March 31, 2010, Diamond Offshore's drilling rigs were located offshore twelve countries in addition to the United States. HighMount's business consists primarily of natural gas exploration and production operations located in the Permian Basin in Texas, the Antrim Shale in Michigan and the Black Warrior Basin in Alabama. In April of 2010, HighMount sold its exploration and production assets located in the Antrim Shale in Michigan and entered into a definitive agreement with another purchaser to sell its exploration and production assets located in the Black Warrior Basin in Alabama. Boardwalk Pipeline is engaged in the interstate transportation and storage of natural gas. This segment consists of three interstate natural gas pipeline systems originating in the Gulf Coast area and running north and east through Texas, Louisiana, Mississippi, Alabama, Florida, Arkansas, Tennessee, Kentucky, Indiana, Ohio, Illinois and Oklahoma. Loews Hotels owns and/or operates 19 hotels, 17 of which are in the United States and two are in Canada. The Loews Atlanta Hotel, which is operated under a management contract, opened on April 1, 2010. The Corporate and other segment consists primarily of corporate investment income, including investment gains (losses) from |
Legal Proceedings
Legal Proceedings | |
3 Months Ended
Mar. 31, 2010 | |
Legal Proceedings | 8. Legal Proceedings On August 1, 2005, CNA and certain insurance subsidiaries were joined as defendants, along with other insurers and brokers, in multidistrict litigation pending in the United States District Court for the District of New Jersey, In re Insurance Brokerage Antitrust Litigation, Civil No. 04-5184 (FSH). The plaintiffs allege bid rigging and improprieties in the payment of contingent commissions in connection with the sale of insurance that violated federal and state antitrust laws, the federal Racketeer Influenced and Corrupt Organizations ("RICO") Act and state common law. After discovery, the District Court dismissed the federal antitrust claims and the RICO claims, and declined to exercise supplemental jurisdiction over the state law claims. The plaintiffs have appealed the dismissal of their complaint to the Third Circuit Court of Appeals. The parties have filed their briefs on the appeal. Oral argument was held on April 21, 2009, and the Court took the matter under advisement. CNA believes it has meritorious defenses to this action and intends to defend the case vigorously. The extent of losses beyond any amounts that may be accrued are not readily determinable at this time. However, based on facts and circumstances presently known, in the opinion of management, an unfavorable outcome will not materially affect the equity of the Company, although results of operations may be adversely affected. CNA is also a party to litigation and claims related to AE cases arising in the ordinary course of business. See Note 5 for further discussion. The Company has been named as a defendant in the following three cases alleging substantial damages based on alleged health effects caused by smoking cigarettes, exposure to tobacco smoke or exposure to asbestos fibers incorporated into filter material used in one brand of cigarette that ceased manufacture more than 50 years ago, all of which also name a former subsidiary, Lorillard, Inc. or one of its subsidiaries, as a defendant. In Cypret vs. The American Tobacco Company, Inc. et al. (1998, Circuit Court, Jackson County, Missouri), the Company would contest jurisdiction and make use of all available defenses in the event it receives personal service of this action. In Clalit vs. Philip Morris, Inc., et al. (1998, Jerusalem District Court of Israel), the court initially permitted plaintiff to serve the Company outside the jurisdiction but it cancelled the leave of service in response to the Company's application, and plaintiff's appeal is pending. In Young vs. The American Tobacco Company, Inc. et al. (1997, Civil District Court, Orleans Parish, Louisiana), the Company filed an exception for lack of personal jurisdiction during 2000, which remains pending. The Company does not believe it is a proper defendant in any tobacco related cases and as a result, does not believe the outcome will have a material affect on its results of operations or equity. Further, pursuant to the Separation Agreement dated May 7, 2008 between the Company and Lorillard Inc. and its subsidiaries, Lorillard, Inc. and its subsidiaries have agreed to indemnify and hold the Company harmless from al |
Commitments and Contingencies
Commitments and Contingencies | |
3 Months Ended
Mar. 31, 2010 | |
Commitments and Contingencies | 9. Commitments and Contingencies Guarantees In the course of selling business entities and assets to third parties, CNA has agreed to indemnify purchasers for losses arising out of breaches of representation and warranties with respect to the business entities or assets being sold, including, in certain cases, losses arising from undisclosed liabilities or certain named litigation. Such indemnification provisions generally survive for periods ranging from nine months following the applicable closing date to the expiration of the relevant statutes of limitation. As of March 31, 2010, the aggregate amount of quantifiable indemnification agreements in effect for sales of business entities, assets and third party loans was $819 million. In addition, CNA has agreed to provide indemnification to third party purchasers for certain losses associated with sold business entities or assets that are not limited by a contractual monetary amount. As of March 31, 2010, CNA had outstanding unlimited indemnifications in connection with the sales of certain of its business entities or assets that included tax liabilities arising prior to a purchaser's ownership of an entity or asset, defects in title at the time of sale, employee claims arising prior to closing and in some cases losses arising from certain litigation and undisclosed liabilities. These indemnification agreements survive until the applicable statutes of limitation expire, or until the agreed upon contract terms expire. As of March 31, 2010 and December 31, 2009, CNA has recorded liabilities of approximately $16 million related to indemnification agreements and management believes that it is not likely that any future indemnity claims will be significantly greater than the amounts recorded. |
Consolidating Financial Informa
Consolidating Financial Information | |
3 Months Ended
Mar. 31, 2010 | |
Consolidating Financial Information | 10. Consolidating Financial Information The following schedules present the Company's consolidating balance sheet information at March 31, 2010 and December 31, 2009, and consolidating statements of operations information for the three months ended March 31, 2010 and 2009. These schedules present the individual subsidiaries of the Company and their contribution to the consolidated condensed financial statements. Amounts presented will not necessarily be the same as those in the individual financial statements of the Company's subsidiaries due to adjustments for purchase accounting, income taxes and noncontrolling interests. In addition, many of the Company's subsidiaries use a classified balance sheet which also leads to differences in amounts reported for certain line items. The Corporate and Other column primarily reflects the parent company's investment in its subsidiaries, invested cash portfolio and corporate long term debt. The elimination adjustments are for intercompany assets and liabilities, interest and dividends, the parent company's investment in capital stocks of subsidiaries, and various reclasses of debit or credit balances to the amounts in consolidation. Purchase accounting adjustments have been pushed down to the appropriate subsidiary. Loews Corporation Consolidating Balance Sheet Information March31, 2010 CNAFinancial DiamondOffshore HighMount BoardwalkPipeline LoewsHotels Corporateand Other Eliminations Total (In millions) Assets: Investments $ 42,826 $ 933 $ 144 $ 113 $ 39 $ 3,447 $ 47,502 Cash 95 24 1 13 2 135 Receivables 8,908 808 164 89 39 138 $ (146 ) 10,000 Property, plant and equipment 297 4,424 1,798 6,334 358 38 13,249 Deferred income taxes 1,133 583 (847 ) 869 Goodwill 86 20 584 163 3 856 Investments in capital stocks of subsidiaries 15,576 (15,576 ) - Other assets 727 530 42 356 23 15 1,693 Deferred acquisition costs of insurance subsidiaries 1,109 1,109 Separate account business 442 442 Total assets $ 55,623 $ 6,739 $ 3,316 $ 7,068 $ 464 $ 19,214 $ (16,569 ) $ 75,855 Liabilities and Equity: Insurance reserves $ 38,109 $ 38,109 Payable to brokers 289 $ 101 $ 183 $ 89 662 Short term debt 4 $ 58 62 Long term debt 2,304 1,487 1,600 $ 3,225 166 867 $ (100 ) 9,549 Deferred income taxes 534 356 45 446 (1,381 ) - Other lia |