Exhibit 99.1
Contact: Peter W. Keegan
Senior Vice President
(212) 521-2950
Candace Leeds
V.P. of Public Affairs
(212) 521-2416
Joshua E. Kahn
Investor Relations
(212) 521-2788
FOR IMMEDIATE RELEASE
- ---------------------
LOEWS CORPORATION REPORTS
-------------------------
RESULTS FOR THE THIRD QUARTER OF 2003
-------------------------------------
NEW YORK, November 12, 2003-Loews Corporation (NYSE:LTR;CG) today
reported a consolidated net loss (including both the Loews Group and Carolina
Group) for the 2003 third quarter of $1,382.9 million, compared to net income
of $239.1 million for the third quarter of 2002. Consolidated net loss for the
nine months ended September 30, 2003 amounted to $978.1 million, compared to
net income of $650.7 million for the nine months ended September 30, 2002.
The 2003 third quarter results include significant charges by CNA
Financial Corporation, the Company's 90% owned subsidiary, following its
recently completed reserve reviews. CNA announced a plan to strengthen its
capital base, which includes significant financial support from Loews as
described below.
The third quarter of 2003 results include the following charges at CNA,
net of tax and minority interest:
. Net prior year development of $1,345.8 million, which includes premium
and claim and allocated claim adjustment expense development.
. Increase in bad debt reserves for insurance and reinsurance receivables
of $298.9 million.
The net prior year development consists of $880.4 million related to core
reserves and $465.4 million related to asbestos, environmental pollution and
mass tort ("APMT") reserves (after tax and minority interest). The primary
factors that led to the net prior year development were CNA's previously
announced third quarter of 2003 comprehensive reserve reviews, which include
construction defect and other volatile exposures, and a ground up analysis of
APMT exposures. The net prior year development also resulted in additional
cessions to CNA's reinsurance contracts, including the corporate aggregate
reinsurance treaties. These additional cessions resulted in $60.3 million of
interest expense (after tax and minority interest), which is recorded as a
reduction in investment income.
Page 1 of 8
To support statutory capital adversely impacted by the significant third
quarter charges, CNA has developed a capital plan, which includes substantial
support from Loews and possible sales or other dispositions of businesses and
assets. Under an agreement approved by a special committee of independent
members of CNA's Board of Directors, Loews has agreed to purchase $750 million
of a new series of CNA non-voting convertible preferred stock, having terms
that make it economically equivalent to CNA common stock. The conversion price
is based on current average market prices of CNA common stock. Proceeds from
the preferred stock sale will be applied by CNA to increase the statutory
surplus of CNA's principal insurance subsidiary, Continental Casualty Company
("CCC"). Under the agreement, Loews has also committed up to $500 million of
additional capital support, through the purchase of surplus notes of CCC, in
the event that certain additions to CCC's statutory capital are not achieved
by February 26, 2004 from business or asset sales and related actions. The
obligation of Loews to consummate this agreement is subject to certain
customary closing conditions. In addition, Loews has indicated its commitment
to provide up to an additional $150 million by March 31, 2004, in a form to be
determined, to support the statutory capital of CCC in the event of additional
shortfalls in relation to business and asset sales. Other elements of the
capital plan include the October of 2003 sale of CNA Re renewal rights and
withdrawal from the assumed reinsurance business, CNA's previously announced
initiative to reduce operating expenses by $200 million and planned changes in
the ownership structure of certain insurance subsidiaries to align statutory
capital more efficiently.
The following table summarizes the revenues, net (loss) income and
earnings per share information:
September 30,
------------------------------------------
Three Months Nine Months
------------------------------------------
(In millions, except per share data) 2003 2002(a) 2003 2002(a)
------------------------------------------
<s> <c> <c> <c> <c>
Consolidated:
Revenues (b) $ 3,940.0 $4,071.3 $12,125.3 $13,496.4
Net (loss) income $(1,382.9) $ 239.1 $ (978.1) $ 650.7
Per Share: (c)
(Loss) income per share of Loews common stock:
(Loss) income from continuing operations $ (7.90) $ 1.05 $ (6.01) $ 3.26
Discontinued operations-net 0.30 0.30 (0.15)
Cumulative effect of change in accounting
principle-net (0.21)
------------------------------------------
Net (loss) income per share of Loews common stock $ (7.60) $ 1.05 $ (5,71) $ 2.90
==========================================
Net income per share of Carolina Group stock $ 0.67 $ 1.10 $ 2.01 $ 2.58
==========================================
(a) Restated to reflect an adjustment to the Company's historical accounting
for CNA's investment in life settlement contracts and the related revenue
recognition. The impact of this adjustment on operating results in 2002
was insignificant.
(b) Revenue includes premiums of $1,151.0 for the nine months ended September
30, 2002, related to the National Postal Mail Handlers contract at CNA
which was transferred on July 1, 2002.
(c) The Company has two classes of common stock, Loews common stock and
Carolina Group stock, issued in February 2002.
Page 2 of 8
Three Months Ended September 30, 2003 Compared With 2002
- --------------------------------------------------------
Consolidated net loss in the third quarter of 2003 includes a gain from
discontinued operations of $55.8 million or $0.30 per share of Loews common
stock related to the sale of a hotel property, as compared to $0.4 million in
the prior year related to the operating results for that property.
Consolidated loss from continuing operations for the third quarter of
2003 was $1,438.7 million, compared to income of $238.7 million in the
comparable period of the prior year. Loss from continuing operations includes
net investment gains of $106.5 million (after tax and minority interest),
compared to $9.1 million (after tax and minority interest) in the comparable
period of the prior year. The net loss reflects the unfavorable net prior year
premium and loss development and increase in bad debt reserves recorded in the
third quarter of 2003 as discussed above and lower results from Lorillard,
partially offset by the improvement in net investment gains.
Loss from continuing operations attributable to Loews common stock for
the third quarter of 2003 amounted to $1,465.5 million or $7.90 per share,
compared to income of $194.3 million or $1.05 per share in the comparable
period of the prior year. Loss from continuing operations in the third quarter
of 2003 includes net investment gains attributable to Loews common stock of
$107.8 million, compared to $5.8 million in the comparable period of the prior
year.
Net investment gains increased $102.0 million (after tax and minority
interest) in the third quarter of 2003 as compared with the same period in
2002. This increase was due primarily to increased gains related to derivative
securities and a decrease in investment related impairment charges for other-
than-temporary declines in market values of fixed maturity and equity
securities, partially offset by decreased gains on sales of fixed maturity
securities. Investment related impairment losses (after tax and minority
interest) were $9.0 million for the third quarter of 2003 as compared with
$129.6 million for the same period in 2002.
Net income attributable to Carolina Group stock for the third quarter of
2003 was $26.8 million or $0.67 per Carolina Group share, compared to $44.4
million, or $1.10 per Carolina Group share in the third quarter of 2002. The
Company is issuing a separate press release reporting the actual and pro forma
results of the Carolina Group for the quarter and nine months ended September
30, 2003 and 2002.
Nine Months Ended September 30, 2003 Compared With 2002
- -------------------------------------------------------
Net loss for the first nine months of 2003 includes a gain from
discontinued operations of $55.4 million or $0.30 per share of Loews common
stock related to the sale of a hotel property, as compared to a loss from
discontinued operations of $28.8 million or $0.15 per share of Loews common
stock in the prior year primarily related to CNA's sale of its life operations
in Chile. Net income in 2002 also included a charge for accounting changes of
$39.6 million or $0.21 per share of Loews common stock, related to accounting
for goodwill and other intangible assets at CNA.
Page 3 of 8
Consolidated loss from continuing operations for the first nine months of
2003 was $1,033.5 million, compared to income of $719.1 million in the
comparable period of the prior year. Loss from continuing operations includes
net investment gains of $300.6 million (after tax and minority interest),
compared to a loss of $93.0 million (after tax and minority interest) in the
comparable period of the prior year. The net loss reflects the unfavorable net
prior year premium and loss development and increase in bad debt reserves
recorded in the third quarter of 2003 as discussed above and lower results
from Lorillard, partially offset by the improvement in net investment gains.
Loss from continuing operations attributable to Loews common stock for
the first nine months of 2003 amounted to $1,113.9 million or $6.01 per share,
compared to income of $615.3 million or $3.26 per share in the comparable
period of the prior year. Loss from continuing operations includes net
investment gains attributable to Loews common stock of $302.2 million,
compared to losses of $97.8 million in the comparable period of the prior
year.
Net income attributable to Carolina Group stock for the first nine months
of 2003 amounted to $80.4 million or $2.01 per Carolina Group share, compared
to $103.8 million or $2.58 per share in the comparable period of the prior
year.
Components of Net (Loss) Income
- -------------------------------
September 30,
----------------------------------------
Three Months Nine Months
----------------------------------------
(In millions) 2003 2002 2003 2002
----------------------------------------
<s> <c> <c> <c> <c>
(Loss) income before net investment gains (losses)
attributable to Loews common stock $(1,573.3) $ 188.5 $(1,416.1) $ 713.1
Net investment gains (losses) 107.8 5.8 302.2 (97.8)
----------------------------------------
(Loss) income from continuing operations (1,465.5) 194.3 (1,113.9) 615.3
Discontinued operations-net (a) 55.8 0.4 55.4 (28.8)
Cumulative effect of change in accounting
principle-net (b) (39.6)
-----------------------------------------
Net (loss) income attributable to Loews common stock $(1,409.7) $ 194.7 $(1,058.5) $ 546.9
=========================================
(a) Includes a gain of $56.7 in the quarter and nine months ended September
30, 2003 from the sale of a hotel property. The nine months ended
September 30, 2002 includes a $31.0 loss from CNA's sale of its life
operations in Chile.
(b) Represents the effect of the adoption of SFAS No. 142, which was a change
in accounting for goodwill and other intangible assets at CNA.
Page 4 of 8
# # #
At September 30, 2003, the book value per share of Loews common stock was
$57.48 per Loews common share compared to $61.68 per Loews common share at
December 31, 2002.
At September 30, 2003, there were 185,447,050 shares of Loews common
stock outstanding and 39,910,000 shares of Carolina Group stock outstanding.
Depending on market conditions, the Company from time to time purchases shares
of its, and its subsidiaries', outstanding common stock in the open market or
otherwise.
In February 2002 the Company created a class of common stock, called
Carolina Group stock, a tracking stock intended to reflect the economic
performance of a group of the Company's assets and liabilities, called the
Carolina Group, principally consisting of the Company's subsidiary Lorillard,
Inc. In an initial public offering, the Company issued shares of Carolina
Group Stock representing an interest in the economic performance of the
Carolina Group. Loews common stock represents the economic performance of the
Company's remaining assets, including the interest in the Carolina Group not
represented by Carolina Group Stock. At September 30, 2003, the outstanding
Carolina Group stock represents a 23.01% economic interest in the economic
performance of the Carolina Group.
A conference call to discuss the third quarter results of Loews
Corporation has been scheduled for 10:00 a.m. EST, Wednesday, November 12,
2003. A live broadcast of the call will be available online at the Loews
Corporation website (www.loews.com). Please go to the website at least ten
minutes before the event begins to register and to download and install any
necessary audio software. Those interested in participating in the question
and answer session of the conference call should dial (877) 692-2592. An
online replay will be available at the Company's website for one week
following the call.
A conference call to discuss the third quarter results of CNA has been
scheduled for 8:00 a.m. EST, Wednesday, November 12, 2003. A live broadcast of
the call will be available online at the CNA website
(http://investors.cna.com). Please go to the website at least ten minutes
before the event begins to register and to download and install any necessary
audio software. Those interested in participating in the question and answer
session of the conference call should dial (800) 967-7140. An online replay
will be available at CNA's website for one week following the call.
FORWARD-LOOKING STATEMENTS
Statements contained in this press release which are not historical facts
are "forward-looking statements" within the meaning of the federal securities
laws. When included in this press release, the words "believes," "expects,"
"plans," "intends," "anticipates," "estimates," "should," and similar
expressions, and other statements concerning the Company's future plans,
objectives, and expected performance are intended to identify forward-looking
statements. Forward-looking statements contained in this release include
statements regarding the insurance business of the Company's CNA subsidiary,
including the implementation of CNA's capital plan, regular and ongoing
insurance reserve reviews by CNA, ongoing state regulatory exams of
Page 5 of 8
CNA's primary insurance company subsidiaries and CNA's responses to the
results of those reviews and exams. These matters are highly complex and their
outcome is inherently uncertain. Therefore, forward-looking statements in this
release regarding these matters are inherently uncertain and subject to a
variety of risks that could cause actual results to differ materially from
those expected by management of the Company and CNA.
A discussion of the important risk factors and other considerations that
could materially impact these matters as well as the Company's overall
business and financial performance can be found in the Company's reports filed
with the Securities and Exchange Commission and readers of this release are
urged to review those reports carefully when considering these forward-looking
statements. Copies of these reports are available through the Company's
website (www.loews.com). Given these risk factors, investors and analysts
should not place undue reliance on forward-looking statements.
These forward-looking statements speak only as of the date of this press
release. The Company expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statement to
reflect any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any forward-looking
statement is based.
Page 6 of 8
Loews Corporation and Subsidiaries
Financial Review
September 30,
-------------------------------------------
Three Months Nine Months
-------------------------------------------
2003 2002 (g) 2003 2002 (g)
-------------------------------------------
(Amounts in millions, except per share data)
<s> <c> <c> <c> <c>
Revenues:
Insurance premiums and net investment income (a) $ 2,678.1 $ 2,684.7 $ 8,479.4 $ 9,177.6
Manufactured products (b) 880.1 1,004.4 2,578.4 3,077.2
Other 381.8 382.2 1,067.5 1,241.6
-------------------------------------------
Total 3,940.0 4,071.3 12,125.3 13,496.4
--------------------------------------------
Expenses:
Insurance claims & policyholders' benefits 4,032.2 1,850.1 7,968.9 6,542.4
Cost of manufactured products sold (b) 532.7 553.2 1,489.6 1,761.4
Other 1,925.7 1,255.9 4,632.4 3,965.1
--------------------------------------------
Total 6,490.6 3,659.2 14,090.9 12,268.9
--------------------------------------------
(2,550.6) 412.1 (1,965.6) 1,227.5
--------------------------------------------
Income tax (benefit) expense (916.4) 156.5 (735.3) 449.2
Minority interest (195.5) 16.9 (196.8) 59.2
--------------------------------------------
Total (1,111.9) 173.4 (932.1) 508.4
--------------------------------------------
(Loss) income from continuing operations (1,438.7) 238.7 (1,033.5) 719.1
Discontinued operations-net (c) 55.8 0.4 55.4 (28.8)
Cumulative effect of change in accounting
principles-net (d) (39.6)
--------------------------------------------
Net (loss) income $(1,382.9) $ 239.1 $ (978.1) $ 650.7
============================================
Net (loss) income attributable to:
Loews common stock:
(Loss) income from continuing operations $(1,465.5) $ 194.3 $(1,113.9) $ 615.3
Discontinued operations-net (c) 55.8 0.4 55.4 (28.8)
Cumulative effect of change in accounting
principles-net (d) (39.6)
--------------------------------------------
Loews common stock (1,409.7) 194.7 (1,058.5) 546.9
Carolina Group stock (e) 26.8 44.4 80.4 103.8
--------------------------------------------
$(1,382.9) $ 239.1 $ (978.1) $ 650.7
============================================
(Loss) income per share of Loews common stock (f):
(Loss) income from continuing operations $ (7.90) $ 1.05 $ (6.01) $ 3.26
Discontinued operations-net (c) 0.30 0.30 (0.15)
Cumulative effect of changes in accounting
principles-net (d) (0.21)
--------------------------------------------
Net (loss) income $ (7.60) $ 1.05 $ (5.71) $ 2.90
============================================
Net income per share of Carolina Group stock (f) $ 0.67 $ 1.10 $ 2.01 $ 2.58
============================================
Weighted number of shares outstanding:
Loews common stock 185.45 185.71 185.45 188.31
Carolina Group stock 39.91 40.19 39.91 40.23
(a) Includes investment gains (losses) of $179.5, $26.5, $503.2 and $(145.0)
for the respective periods.
(b) Includes excise taxes of $173.1, $161.5, $493.4 and $518.0 paid on sales
of manufactured products for the respective periods.
(c) Includes a gain of $56.7 in the quarter and nine months ended September
30, 2003 from the sale of a hotel property. The nine months ended
September 30, 2002 includes a $31.0 loss from CNA's sale of its life
operations in Chile.
(d) Adoption of SFAS No. 142, accounting for goodwill and other intangible
assets at the CNA subsidiary.
(e) Represents 23.01% of the economic interest in the Carolina Group for 2003
and 23.14% and 23.16% for the three and eight months ended September 30,
2002.
(f) Earnings per common share-assuming dilution is not presented because
securities that could potentially dilute basic earnings per common share
in the future would have been insignificant or antidilutive for the
periods presented.
(g) Restated to reflect an adjustment to the Company's historical accounting
for CNA's investment in life settlement contracts and the related revenue
recognition.
Page 7 of 8
Loews Corporation and Subsidiaries
Additional Financial Information
September 30,
-------------------------------------------
Three Months Nine Months
-------------------------------------------
2003 2002 (g) 2003 2002 (g)
-------------------------------------------
(In millions)
<s> <c> <c> <c> <c>
Revenues:
CNA Financial $ 2,561.5 $ 2,763.3 $ 8,202.7 $ 9,682.6
Lorillard (a) 854.0 977.8 2,497.4 3,000.0
Loews Hotels 65.9 61.8 213.5 202.3
Diamond Offshore (b) 185.0 186.3 504.9 594.0
Texas Gas 45.0 68.1
Bulova 37.6 41.2 112.4 115.3
Investment income-net and other (c) 11.5 14.4 23.1 47.2
-------------------------------------------
3,760.5 4,044.8 11,622.1 13,641.4
-------------------------------------------
Investment gains (losses):
CNA Financial 164.3 23.9 476.9 (137.4)
Corporate and other 15.2 2.6 26.3 (7.6)
-------------------------------------------
179.5 26.5 503.2 (145.0)
-------------------------------------------
Total $ 3,940.0 $ 4,071.3 $12,125.3 $13,496.4
===========================================
(Loss) Income Before Taxes:
CNA Financial $ (2,940.9) $ 55.9 $(3,053.9) $ 432.5
Lorillard (d)(e) 196.9 277.0 578.5 791.8
Loews Hotels (0.1) (1.1) 17.6 15.8
Diamond Offshore (8.4) 8.3 (56.1) 44.6
Texas Gas 4.1 6.7
Bulova 2.4 4.5 9.6 12.1
Investment income-net and other (c) (29.4) (27.5) (102.4) (88.4)
--------------------------------------------
(2,775.4) 317.1 (2,600.0) 1,208.4
--------------------------------------------
Investment gains (losses):
CNA Financial 164.3 23.9 476.9 (137.4)
Corporate and other 17.1 (2.5) 28.7 (15.0)
--------------------------------------------
181.4 21.4 505.6 (152.4)
--------------------------------------------
Loews common stock (2,594.0) 338.5 (2,094.4) 1,056.0
Carolina Group stock (f) 43.4 73.6 128.8 171.5
--------------------------------------------
Total $ (2,550.6) $ 412.1 $(1,965.6) $ 1,227.5
============================================
Net (Loss) Income:
CNA Financial $ (1,675.5) $ 35.6 $(1,708.2) $ 261.2
Lorillard (d)(e) 121.9 165.9 361.2 478.6
Loews Hotels (0.5) 11.2 10.4
Diamond Offshore (5.1) 2.8 (26.5) 13.2
Texas Gas 2.2 3.8
Bulova 1.6 2.3 6.5 6.5
Investment income-net and other (c) (18.4) (17.6) (64.1) (56.8)
--------------------------------------------
(1,573.3) 188.5 (1,416.1) 713.1
--------------------------------------------
Investment gains (losses):
CNA Financial 94.7 14.8 281.2 (76.9)
Corporate and other 13.1 (9.0) 21.0 (20.9)
--------------------------------------------
107.8 5.8 302.2 (97.8)
---------------------------------------------
(Loss) income from continuing operations (1,465.5) 194.3 (1,113.9) 615.3
Discontinued operations-net (g) 55.8 0.4 55.4 (28.8)
Cumulative effect of changes in accounting
principles-net (39.6)
---------------------------------------------
Loews common stock (1,409.7) 194.7 (1,058.5) 546.9
Carolina Group stock (f) 26.8 44.4 80.4 103.8
---------------------------------------------
Total $ (1,382.9) $ 239.1 $ (978.1) $ 650.7
=============================================
(a) Includes excise taxes of $173.1, $161.5, $493.4 and $518.0 paid on sales
of manufactured products for the respective periods.
(b) Revenue for 2002 has been restated for comparative purposes to reflect
the adoption of new accounting principles related to reimbursements
received by Diamond Offshore for "Out-of-Pocket" expenses incurred.
(c) Consists primarily of corporate investment income, interest expenses and
other unallocated expenses.
(d) Represents the Loews Group's intergroup interest in the earnings of the
Carolina Group.
(e) Includes a $26.0 charge in the nine months ended September 30, 2003
($16.8 after taxes) to settle litigation with tobacco growers and a $28.0
charge in the nine months ended September 30, 2003 ($17.1 after taxes) to
resolve indemnification claims and trademark matters in connection with
the 1977 sale by Lorillard of its international business.
(f) Represents 23.01% of the economic interest in the Carolina Group for 2003
and 23.14% and 23.16% for the three and eight months ended September 30,
2002.
(g) Includes a gain of $56.7 in the quarter and nine months ended September
30, 2003 from the sale of a hotel property. The nine months ended
September 30, 2002 includes a $31.0 loss from CNA's sale of its life
operations in Chile.
(h) Restated to reflect an adjustment to the Company's historical accounting
for CNA's investment in life settlement contracts and the related revenue
recognition.
Page 8 of 8