x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
|
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)
|
|
Delaware
|
|
13-2646102
|
(State
or other jurisdiction of incorporation or
organization)
|
|
(I.R.S.
Employer Identification
No.)
|
|
X
|
|
|
|
Large
accelerated filer
|
X
|
Accelerated
filer
|
Non-accelerated
filer
|
|
X
|
|
|
|
Class
|
Outstanding
at October 19, 2007
|
|
Common
stock, $0.01 par value
|
529,600,391
shares
|
|
Carolina
Group stock, $0.01 par value
|
108,446,141
shares
|
Page
|
||
No.
|
||
Part
I. Financial Information
|
||
Item
1. Financial
Statements (unaudited)
|
||
Consolidated
Condensed Balance
Sheets
|
||
September
30, 2007 and December
31, 2006
|
3
|
|
Consolidated
Condensed
Statements of Income
|
||
Three
and nine months ended
September 30, 2007 and 2006
|
4
|
|
Consolidated
Condensed
Statements of Shareholders’ Equity
|
||
September
30, 2007 and
2006
|
6
|
|
Consolidated
Condensed
Statements of Cash Flows
|
||
Nine
months ended September 30,
2007 and 2006
|
7
|
|
Notes
to Consolidated Condensed
Financial Statements
|
9
|
|
Item
2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
56
|
|
Item
3. Quantitative
and Qualitative Disclosures about Market Risk
|
95
|
|
Item
4. Controls and
Procedures
|
98
|
|
Part
II. Other Information
|
||
Item
1. Legal
Proceedings
|
99
|
|
Item
1A. Risk
Factors
|
99
|
|
Item
2. Unregistered Sales of
Equity Securities and Use of Proceeds
|
104
|
|
Item
6. Exhibits
|
105
|
September
30,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(In
millions)
|
||||||||
Assets:
|
||||||||
Investments:
|
||||||||
Fixed
maturities, amortized cost of $34,820.4 and $36,852.6
|
$ |
34,894.9
|
$ |
37,569.7
|
||||
Equity
securities, cost of $1,031.4 and $967.0
|
1,350.9
|
1,308.8
|
||||||
Limited
partnership investments
|
2,446.5
|
2,160.5
|
||||||
Other
investments
|
84.4
|
27.4
|
||||||
Short-term
investments
|
11,880.6
|
12,822.4
|
||||||
Total
investments
|
50,657.3
|
53,888.8
|
||||||
Cash
|
127.0
|
133.8
|
||||||
Receivables
|
12,908.8
|
13,027.3
|
||||||
Property,
plant and equipment
|
9,636.7
|
5,501.3
|
||||||
Deferred
income taxes
|
845.4
|
620.9
|
||||||
Goodwill
and other intangible assets
|
1,346.5
|
298.9
|
||||||
Other
assets
|
1,782.2
|
1,716.5
|
||||||
Deferred
acquisition costs of insurance subsidiaries
|
1,189.3
|
1,190.4
|
||||||
Separate
account business
|
471.7
|
503.0
|
||||||
Total
assets
|
$ |
78,964.9
|
$ |
76,880.9
|
||||
Liabilities
and Shareholders’ Equity:
|
||||||||
Insurance
reserves:
|
||||||||
Claim
and claim adjustment expense
|
$ |
28,992.4
|
$ |
29,636.0
|
||||
Future
policy benefits
|
6,993.2
|
6,644.7
|
||||||
Unearned
premiums
|
3,751.0
|
3,783.8
|
||||||
Policyholders’
funds
|
1,012.9
|
1,015.4
|
||||||
Total
insurance reserves
|
40,749.5
|
41,079.9
|
||||||
Payable
for securities purchased
|
3,598.5
|
1,046.7
|
||||||
Collateral
on loaned securities and derivatives
|
83.4
|
3,601.5
|
||||||
Short-term
debt
|
164.2
|
4.6
|
||||||
Long-term
debt
|
7,068.0
|
5,567.8
|
||||||
Reinsurance
balances payable
|
482.7
|
539.1
|
||||||
Other
liabilities
|
5,415.3
|
5,140.2
|
||||||
Separate
account business
|
471.7
|
503.0
|
||||||
Total
liabilities
|
58,033.3
|
57,482.8
|
||||||
Minority
interest
|
3,652.3
|
2,896.3
|
||||||
Preferred
stock, $0.10 par value,
|
||||||||
Authorized
– 100,000,000 shares
|
||||||||
Common
stock:
|
||||||||
Loews
common stock, $0.01 par value:
|
||||||||
Authorized
– 1,800,000,000 shares
|
||||||||
Issued
– 544,384,240 and 544,203,457 shares
|
5.4
|
5.4
|
||||||
Carolina
Group stock, $0.01 par value:
|
||||||||
Authorized
– 600,000,000 shares
|
||||||||
Issued
– 108,785,516 and 108,665,806 shares
|
1.1
|
1.1
|
||||||
Additional
paid-in capital
|
4,071.0
|
4,017.6
|
||||||
Earnings
retained in the business
|
13,822.2
|
12,098.7
|
||||||
Accumulated
other comprehensive income
|
59.1
|
386.7
|
||||||
17,958.8
|
16,509.5
|
|||||||
Less treasury stock, at cost (14,789,949 shares of Loews common stock as of | ||||||||
September
30, 2007 and 340,000 shares of Carolina Group stock as of
|
||||||||
September
30, 2007 and December 31, 2006)
|
679.5
|
7.7
|
||||||
Total
shareholders’ equity
|
17,279.3
|
16,501.8
|
||||||
Total
liabilities and shareholders’ equity
|
$ |
78,964.9
|
$ |
76,880.9
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions, except per share data)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Insurance
premiums
|
$ |
1,882.1
|
$ |
1,943.4
|
$ |
5,616.1
|
$ |
5,704.0
|
||||||||
Net
investment income
|
678.9
|
694.5
|
2,253.1
|
2,039.5
|
||||||||||||
Investment
(losses) gains
|
(51.0 | ) |
28.5
|
(179.9 | ) | (62.8 | ) | |||||||||
Gain
on issuance of subsidiary stock
|
0.2
|
9.0
|
138.7
|
9.0
|
||||||||||||
Manufactured
products (including excise taxes of
|
||||||||||||||||
$180.7,
$185.8, $522.4 and $526.4)
|
1,093.4
|
1,035.5
|
3,148.0
|
2,954.6
|
||||||||||||
Other
|
1,049.7
|
796.3
|
2,974.3
|
2,384.7
|
||||||||||||
Total
|
4,653.3
|
4,507.2
|
13,950.3
|
13,029.0
|
||||||||||||
Expenses:
|
||||||||||||||||
Insurance
claims and policyholders’ benefits
|
1,574.4
|
1,521.9
|
4,495.7
|
4,446.1
|
||||||||||||
Amortization
of deferred acquisition costs
|
384.5
|
390.4
|
1,137.1
|
1,132.4
|
||||||||||||
Cost
of manufactured products sold
|
638.2
|
598.0
|
1,839.0
|
1,706.0
|
||||||||||||
Other
operating expenses
|
950.5
|
802.8
|
2,603.4
|
2,410.6
|
||||||||||||
Restructuring
and other related charges
|
(12.9 | ) | ||||||||||||||
Interest
|
82.2
|
78.7
|
233.9
|
224.0
|
||||||||||||
Total
|
3,629.8
|
3,391.8
|
10,309.1
|
9,906.2
|
||||||||||||
1,023.5
|
1,115.4
|
3,641.2
|
3,122.8
|
|||||||||||||
Income
tax expense
|
321.4
|
363.6
|
1,175.2
|
1,035.0
|
||||||||||||
Minority
interest
|
146.5
|
122.4
|
482.0
|
341.3
|
||||||||||||
Total
|
467.9
|
486.0
|
1,657.2
|
1,376.3
|
||||||||||||
Income
from continuing operations
|
555.6
|
629.4
|
1,984.0
|
1,746.5
|
||||||||||||
Discontinued
operations, net
|
0.1
|
5.7
|
(6.6 | ) | (1.7 | ) | ||||||||||
Net
income
|
$ |
555.7
|
$ |
635.1
|
$ |
1,977.4
|
$ |
1,744.8
|
||||||||
Net
income attributable to:
|
||||||||||||||||
Loews
common stock:
|
||||||||||||||||
Income
from continuing operations
|
$ |
409.9
|
$ |
511.5
|
$ |
1,579.0
|
$ |
1,467.2
|
||||||||
Discontinued
operations, net
|
0.1
|
5.7
|
(6.6 | ) | (1.7 | ) | ||||||||||
Loews
common stock
|
410.0
|
517.2
|
1,572.4
|
1,465.5
|
||||||||||||
Carolina
Group stock
|
145.7
|
117.9
|
405.0
|
279.3
|
||||||||||||
Total
|
$ |
555.7
|
$ |
635.1
|
$ |
1,977.4
|
$ |
1,744.8
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions, except per share data)
|
||||||||||||||||
Basic
net income per Loews common share:
|
||||||||||||||||
Income
from continuing operations
|
$ |
0.77
|
$ |
0.93
|
$ |
2.94
|
$ |
2.64
|
||||||||
Discontinued
operations, net
|
0.01
|
(0.01 | ) | |||||||||||||
Net
income
|
$ |
0.77
|
$ |
0.94
|
$ |
2.93
|
$ |
2.64
|
||||||||
Diluted
net income per Loews common share:
|
||||||||||||||||
Income
from continuing operations
|
$ |
0.77
|
$ |
0.93
|
$ |
2.93
|
$ |
2.64
|
||||||||
Discontinued
operations, net
|
0.01
|
(0.01 | ) | |||||||||||||
Net
income
|
$ |
0.77
|
$ |
0.94
|
$ |
2.92
|
$ |
2.64
|
||||||||
Basic and diluted net income per Carolina Group | ||||||||||||||||
share
|
$ |
1.34
|
$ |
1.17
|
$ |
3.73
|
$ |
3.16
|
||||||||
Basic weighted average number of shares | ||||||||||||||||
outstanding:
|
||||||||||||||||
Loews
common stock
|
531.86
|
550.59
|
536.53
|
554.45
|
||||||||||||
Carolina
Group stock
|
108.44
|
100.48
|
108.42
|
88.33
|
||||||||||||
Diluted weighted average number of shares | ||||||||||||||||
outstanding:
|
||||||||||||||||
Loews
common stock
|
533.19
|
551.44
|
537.71
|
555.26
|
||||||||||||
Carolina
Group stock
|
108.58
|
100.59
|
108.55
|
88.43
|
Earnings
|
Accumulated
|
Common
|
||||||||||||||||||||||||||
Comprehensive
|
Loews
|
Carolina
|
Additional
|
Retained
|
Other
|
Stock
|
||||||||||||||||||||||
Income
|
Common
|
Group
|
Paid-in
|
in
the
|
Comprehensive
|
Held
in
|
||||||||||||||||||||||
(Loss)
|
Stock
|
Stock
|
Capital
|
Business
|
Income
|
Treasury
|
||||||||||||||||||||||
(In
millions, except per share data)
|
||||||||||||||||||||||||||||
Balance,
January 1, 2006
|
$ |
5.6
|
$ |
0.8
|
$ |
2,417.9
|
$ |
10,364.4
|
$ |
311.1
|
$ | (7.7 | ) | |||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
income
|
$ |
1,744.8
|
1,744.8
|
|||||||||||||||||||||||||
Other
comprehensive income
|
70.6
|
70.6
|
||||||||||||||||||||||||||
Comprehensive
income
|
$ |
1,815.4
|
||||||||||||||||||||||||||
Dividends
paid:
|
||||||||||||||||||||||||||||
Loews
common stock, $0.175
|
||||||||||||||||||||||||||||
per
share
|
(97.1 | ) | ||||||||||||||||||||||||||
Carolina
Group stock, $1.365
|
||||||||||||||||||||||||||||
per
share
|
(127.3 | ) | ||||||||||||||||||||||||||
Purchase
of Loews treasury stock
|
(254.8 | ) | ||||||||||||||||||||||||||
Retirement
of treasury stock
|
(7.3 | ) | (48.4 | ) |
55.7
|
|||||||||||||||||||||||
Issuance
of Loews common stock
|
13.8
|
|||||||||||||||||||||||||||
Issuance
of Carolina Group stock
|
0.3
|
1,630.6
|
||||||||||||||||||||||||||
Stock-based
compensation
|
7.8
|
|||||||||||||||||||||||||||
Other
|
1.7
|
|||||||||||||||||||||||||||
Balance,
September 30, 2006
|
$ |
5.6
|
$ |
1.1
|
$ |
4,064.5
|
$ |
11,836.4
|
$ |
381.7
|
$ | (206.8 | ) | |||||||||||||||
|
||||||||||||||||||||||||||||
Balance,
January 1, 2007
|
$ |
5.4
|
$ |
1.1
|
$ |
4,017.6
|
$ |
12,098.7
|
$ |
386.7
|
$ | (7.7 | ) | |||||||||||||||
Adjustment
to initially apply:
|
||||||||||||||||||||||||||||
FIN
No. 48 (Note 1)
|
(36.6 | ) | ||||||||||||||||||||||||||
FSP
FTB 85-4-1 (Note 1)
|
33.7
|
|||||||||||||||||||||||||||
Balance,
January 1, 2007, as adjusted
|
5.4
|
1.1
|
4,017.6
|
12,095.8
|
386.7
|
(7.7 | ) | |||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
income
|
$ |
1,977.4
|
1,977.4
|
|||||||||||||||||||||||||
Other
comprehensive loss
|
(327.6 | ) | (327.6 | ) | ||||||||||||||||||||||||
Comprehensive
income
|
$ |
1,649.8
|
||||||||||||||||||||||||||
Dividends
paid:
|
||||||||||||||||||||||||||||
Loews
common stock, $0.1875
|
||||||||||||||||||||||||||||
per
share
|
(100.5 | ) | ||||||||||||||||||||||||||
Carolina
Group stock, $1.365
|
||||||||||||||||||||||||||||
per
share
|
(148.0 | ) | ||||||||||||||||||||||||||
Purchase
of Loews treasury stock
|
(671.8 | ) | ||||||||||||||||||||||||||
Issuance
of Loews common stock
|
3.3
|
|||||||||||||||||||||||||||
Issuance
of Carolina Group stock
|
3.2
|
|||||||||||||||||||||||||||
Stock-based
compensation
|
18.6
|
|||||||||||||||||||||||||||
Other
|
1.9
|
(2.5 | ) | |||||||||||||||||||||||||
Deferred
tax benefit related to
|
||||||||||||||||||||||||||||
interest
expense imputed on
|
||||||||||||||||||||||||||||
Diamond
Offshore’s 1.5%
|
||||||||||||||||||||||||||||
debentures
(Note 9)
|
26.4
|
|||||||||||||||||||||||||||
Balance,
September 30, 2007
|
$ |
5.4
|
$ |
1.1
|
$ |
4,071.0
|
$ |
13,822.2
|
$ |
59.1
|
$ | (679.5 | ) |
Nine
Months Ended September 30
|
2007
|
2006
|
||||||
(In
millions)
|
||||||||
Operating
Activities:
|
||||||||
Net
income
|
$ |
1,977.4
|
$ |
1,744.8
|
||||
Adjustments to reconcile net income to net cash | ||||||||
provided
(used) by operating activities, net
|
539.3
|
596.5
|
||||||
Changes
in operating assets and liabilities, net:
|
||||||||
Reinsurance
receivables
|
590.8
|
1,533.9
|
||||||
Other
receivables
|
(58.2 | ) | (100.0 | ) | ||||
Federal
income tax
|
22.5
|
69.1
|
||||||
Prepaid
reinsurance premiums
|
21.8
|
(27.7 | ) | |||||
Deferred
acquisition costs
|
1.0
|
(23.0 | ) | |||||
Insurance
reserves and claims
|
(271.3 | ) | (314.7 | ) | ||||
Reinsurance
balances payable
|
(56.4 | ) | (750.4 | ) | ||||
Other
liabilities
|
108.0
|
9.8
|
||||||
Trading
securities
|
1,677.6
|
(1,054.4 | ) | |||||
Other,
net
|
(162.4 | ) | (0.6 | ) | ||||
Net
cash flow operating activities - continuing operations
|
4,390.1
|
1,683.3
|
||||||
Net
cash flow operating activities - discontinued operations
|
(15.9 | ) |
0.3
|
|||||
Net
cash flow operating activities - total
|
4,374.2
|
1,683.6
|
||||||
Investing
Activities:
|
||||||||
Purchases
of fixed maturities
|
(53,495.9 | ) | (47,185.3 | ) | ||||
Proceeds
from sales of fixed maturities
|
53,002.5
|
42,022.3
|
||||||
Proceeds
from maturities of fixed maturities
|
3,719.6
|
6,794.0
|
||||||
Purchases
of equity securities
|
(160.1 | ) | (277.2 | ) | ||||
Proceeds
from sales of equity securities
|
182.3
|
153.2
|
||||||
Purchases
of property and equipment
|
(1,395.3 | ) | (615.9 | ) | ||||
Proceeds
from sales of property and equipment
|
12.6
|
11.7
|
||||||
Change
in collateral on loaned securities and derivatives
|
(3,518.1 | ) |
1,618.0
|
|||||
Change
in short-term investments
|
200.9
|
(5,527.8 | ) | |||||
Change
in other investments
|
(103.4 | ) | (190.3 | ) | ||||
Acquisition
of business, net of cash acquired
|
(4,029.1 | ) | ||||||
Net
cash flow investing activities - continuing operations
|
(5,584.0 | ) | (3,197.3 | ) | ||||
Net cash flow investing activities - discontinued operations, including proceeds | ||||||||
from
disposition
|
42.1
|
23.7
|
||||||
Net
cash flow investing activities - total
|
(5,541.9 | ) | (3,173.6 | ) |
Nine
Months Ended September 30
|
2007
|
2006
|
||||||
(In
millions)
|
||||||||
Financing
Activities:
|
||||||||
Dividends
paid
|
$ | (248.5 | ) | $ | (224.4 | ) | ||
Dividends
paid to minority interest
|
(339.5 | ) | (124.3 | ) | ||||
Purchases
of treasury shares
|
(671.8 | ) | (254.8 | ) | ||||
Issuance
of common stock
|
6.5
|
1,639.1
|
||||||
Proceeds
from subsidiaries’ equity issuances
|
314.7
|
234.5
|
||||||
Principal
payments on debt
|
(3.8 | ) | (89.4 | ) | ||||
Issuance
of debt
|
2,110.3
|
818.1
|
||||||
Receipts
of investment contract account balances
|
2.0
|
1.8
|
||||||
Return
of investment contract account balances
|
(59.3 | ) | (510.3 | ) | ||||
Excess
tax benefits from share-based payment arrangements
|
8.0
|
4.9
|
||||||
Other
|
9.2
|
6.1
|
||||||
Net
cash flow financing activities - continuing operations
|
1,127.8
|
1,501.3
|
||||||
Net
change in cash
|
(39.9 | ) |
11.3
|
|||||
Net
cash transactions from:
|
||||||||
Continuing
operations to discontinued operations
|
59.2
|
15.3
|
||||||
Discontinued
operations to continuing operations
|
(59.2 | ) | (15.3 | ) | ||||
Cash,
beginning of period
|
174.0
|
182.0
|
||||||
Cash,
end of period
|
$ |
134.1
|
$ |
193.3
|
||||
Cash,
end of period:
|
||||||||
Continuing
operations
|
$ |
127.0
|
$ |
155.7
|
||||
Discontinued
operations
|
7.1
|
37.6
|
||||||
Total
|
$ |
134.1
|
$ |
193.3
|
Number
of Life
|
Fair
Value of Life
|
Face
Amount of
|
||||||||||
Settlement
|
Settlement
|
Life
Insurance
|
||||||||||
Contracts
|
Contracts
|
Policies
|
||||||||||
(In
millions of dollars)
|
||||||||||||
Estimated
maturity during:
|
||||||||||||
2007
|
20
|
$ |
4.0
|
$ |
13.0
|
|||||||
2008
|
80
|
15.0
|
51.0
|
|||||||||
2009
|
80
|
13.0
|
50.0
|
|||||||||
2010
|
80
|
12.0
|
50.0
|
|||||||||
2011
|
80
|
11.0
|
50.0
|
|||||||||
Thereafter
|
1,076
|
56.0
|
536.0
|
|||||||||
Total
|
1,416
|
$ |
111.0
|
$ |
750.0
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Net
investment income consisted of:
|
||||||||||||||||
Fixed
maturity securities
|
$ |
501.4
|
$ |
478.0
|
$ |
1,523.0
|
$ |
1,387.8
|
||||||||
Short-term
investments
|
94.3
|
93.2
|
294.2
|
276.9
|
||||||||||||
Limited
partnerships
|
30.6
|
52.3
|
172.7
|
189.5
|
||||||||||||
Equity
securities
|
7.4
|
3.9
|
18.5
|
23.2
|
||||||||||||
Income
from trading portfolio
|
32.2
|
54.2
|
220.8
|
180.6
|
||||||||||||
Interest
on funds withheld and other deposits
|
(10.8 | ) | (0.8 | ) | (65.4 | ) | ||||||||||
Other
|
24.4
|
33.8
|
66.8
|
82.9
|
||||||||||||
Total
investment income
|
690.3
|
704.6
|
2,295.2
|
2,075.5
|
||||||||||||
Investment
expenses
|
(11.4 | ) | (10.1 | ) | (42.1 | ) | (36.0 | ) | ||||||||
Net
investment income
|
$ |
678.9
|
$ |
694.5
|
$ |
2,253.1
|
$ |
2,039.5
|
Investment
gains (losses) are as follows:
|
||||||||||||||||
Fixed
maturities
|
$ | (39.5 | ) | $ |
39.9
|
$ | (322.2 | ) | $ | (63.4 | ) | |||||
Equity
securities, including short positions
|
16.3
|
(2.4 | ) |
30.3
|
9.0
|
|||||||||||
Derivative
instruments
|
(44.2 | ) | (13.0 | ) |
94.1
|
(7.5 | ) | |||||||||
Short-term
investments
|
9.7
|
(1.4 | ) |
9.9
|
(6.2 | ) | ||||||||||
Other,
including guaranteed separate account business
|
6.7
|
5.4
|
8.0
|
5.3
|
||||||||||||
Investment
gains (losses)
|
(51.0 | ) |
28.5
|
(179.9 | ) | (62.8 | ) | |||||||||
Gain
on issuance of subsidiary stock (Note 9)
|
0.2
|
9.0
|
138.7
|
9.0
|
||||||||||||
(50.8 | ) |
37.5
|
(41.2 | ) | (53.8 | ) | ||||||||||
Income
tax (expense) benefit
|
17.3
|
(4.4 | ) |
12.9
|
22.5
|
|||||||||||
Minority
interest
|
3.6
|
(2.3 | ) |
15.2
|
3.3
|
|||||||||||
Investment
gains (losses), net
|
$ | (29.9 | ) | $ |
30.8
|
$ | (13.1 | ) | $ | (28.0 | ) |
Gross
Unrealized Losses
|
||||||||||||||||||||
Greater
|
||||||||||||||||||||
Amortized
|
Unrealized
|
Less
Than
|
Than
|
|||||||||||||||||
September
30, 2007
|
Cost
|
Gains
|
12
Months
|
12
Months
|
Fair
Value
|
|||||||||||||||
(In
millions)
|
||||||||||||||||||||
Fixed
maturity securities:
|
||||||||||||||||||||
U.S.
government and obligations
|
||||||||||||||||||||
of
government agencies
|
$ |
3,059.1
|
$ |
78.1
|
$ |
1.3
|
$ |
1.5
|
$ |
3,134.4
|
||||||||||
Asset-backed
securities
|
11,616.9
|
30.7
|
234.1
|
167.0
|
11,246.5
|
|||||||||||||||
States,
municipalities and political
|
||||||||||||||||||||
subdivisions-tax
exempt
|
6,573.0
|
189.3
|
63.5
|
4.0
|
6,694.8
|
|||||||||||||||
Corporate
|
7,693.3
|
215.3
|
77.5
|
10.7
|
7,820.4
|
|||||||||||||||
Other
debt
|
3,834.8
|
182.6
|
23.4
|
5.5
|
3,988.5
|
|||||||||||||||
Redeemable
preferred stocks
|
1,158.6
|
8.9
|
27.5
|
1,140.0
|
||||||||||||||||
Fixed
maturities available-for-sale
|
33,935.7
|
704.9
|
427.3
|
188.7
|
34,024.6
|
|||||||||||||||
Fixed
maturities, trading
|
884.7
|
5.8
|
5.1
|
15.1
|
870.3
|
|||||||||||||||
Total
fixed maturities
|
34,820.4
|
710.7
|
432.4
|
203.8
|
34,894.9
|
|||||||||||||||
Equity
securities:
|
||||||||||||||||||||
Equity
securities available-for-sale
|
345.9
|
264.0
|
1.9
|
0.2
|
607.8
|
|||||||||||||||
Equity
securities, trading
|
685.5
|
101.7
|
29.1
|
15.0
|
743.1
|
|||||||||||||||
Total
equity securities
|
1,031.4
|
365.7
|
31.0
|
15.2
|
1,350.9
|
|||||||||||||||
Short-term
investments:
|
||||||||||||||||||||
Short-term
investments available-for-
|
||||||||||||||||||||
sale
|
9,738.7
|
3.2
|
0.2
|
9,741.7
|
||||||||||||||||
Short-term
investments, trading
|
2,138.9
|
2,138.9
|
||||||||||||||||||
Total
short-term investments
|
11,877.6
|
3.2
|
0.2
|
-
|
11,880.6
|
|||||||||||||||
Total
|
$ |
47,729.4
|
$ |
1,079.6
|
$ |
463.6
|
$ |
219.0
|
$ |
48,126.4
|
December
31, 2006
|
||||||||||||||||||||
Fixed
maturity securities:
|
||||||||||||||||||||
U.S.
government and obligations of
|
||||||||||||||||||||
government
agencies
|
$ |
5,055.6
|
$ |
86.2
|
$ |
2.6
|
$ |
1.6
|
$ |
5,137.6
|
||||||||||
Asset-backed
securities
|
13,822.8
|
27.7
|
20.8
|
151.0
|
13,678.7
|
|||||||||||||||
States,
municipalities and political
|
||||||||||||||||||||
subdivisions-tax
exempt
|
4,915.2
|
236.9
|
1.2
|
4.6
|
5,146.3
|
|||||||||||||||
Corporate
|
6,810.8
|
337.8
|
7.5
|
9.7
|
7,131.4
|
|||||||||||||||
Other
debt
|
3,442.7
|
207.6
|
6.6
|
2.0
|
3,641.7
|
|||||||||||||||
Redeemable
preferred stocks
|
885.0
|
27.8
|
0.5
|
912.3
|
||||||||||||||||
Fixed
maturities available-for-sale
|
34,932.1
|
924.0
|
39.2
|
168.9
|
35,648.0
|
|||||||||||||||
Fixed
maturities, trading
|
1,920.5
|
6.0
|
4.4
|
0.4
|
1,921.7
|
|||||||||||||||
Total
fixed maturities
|
36,852.6
|
930.0
|
43.6
|
169.3
|
37,569.7
|
|||||||||||||||
Equity
securities:
|
||||||||||||||||||||
Equity
securities available-for-sale
|
348.4
|
249.0
|
0.2
|
0.2
|
597.0
|
|||||||||||||||
Equity
securities, trading
|
618.6
|
111.6
|
10.4
|
8.0
|
711.8
|
|||||||||||||||
Total
equity securities
|
967.0
|
360.6
|
10.6
|
8.2
|
1,308.8
|
|||||||||||||||
Short-term
investments:
|
||||||||||||||||||||
Short-term
investments available-for-
|
||||||||||||||||||||
sale
|
8,436.9
|
8,436.9
|
||||||||||||||||||
Short-term
investments, trading
|
4,385.2
|
0.4
|
0.1
|
4,385.5
|
||||||||||||||||
Total
short-term investments
|
12,822.1
|
0.4
|
0.1
|
-
|
12,822.4
|
|||||||||||||||
Total
|
$ |
50,641.7
|
$ |
1,291.0
|
$ |
54.3
|
$ |
177.5
|
$ |
51,700.9
|
September
30, 2007
|
December
31, 2006
|
|||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Estimated
|
Unrealized
|
Estimated
|
Unrealized
|
|||||||||||||
Fair
Value
|
Loss
|
Fair
Value
|
Loss
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Available-for-sale
fixed maturity securities:
|
||||||||||||||||
Investment
grade:
|
||||||||||||||||
0-6
months
|
$ |
6,101.9
|
$ |
311.4
|
$ |
9,829.3
|
$ |
23.7
|
||||||||
7-12
months
|
1,115.8
|
78.4
|
1,267.1
|
11.8
|
||||||||||||
13-24
months
|
1,145.4
|
36.8
|
5,247.9
|
127.4
|
||||||||||||
Greater
than 24 months
|
4,444.4
|
150.0
|
1,021.4
|
41.1
|
||||||||||||
Total
investment grade available-for-sale
|
12,807.5
|
576.6
|
17,365.7
|
204.0
|
||||||||||||
Non-investment
grade:
|
||||||||||||||||
0-6
months
|
1,889.0
|
37.3
|
509.0
|
2.1
|
||||||||||||
7-12
months
|
4.0
|
0.2
|
87.3
|
1.5
|
||||||||||||
13-24
months
|
28.1
|
1.9
|
23.9
|
0.5
|
||||||||||||
Greater
than 24 months
|
1.6
|
2.3
|
||||||||||||||
Total
non-investment grade available-for-sale
|
1,922.7
|
39.4
|
622.5
|
4.1
|
||||||||||||
Total
fixed maturity securities available-for-sale
|
14,730.2
|
616.0
|
17,988.2
|
208.1
|
||||||||||||
Available-for-sale
equity securities:
|
||||||||||||||||
0-6
months
|
82.6
|
1.3
|
9.8
|
0.2
|
||||||||||||
7-12
months
|
1.7
|
0.6
|
0.7
|
|||||||||||||
13-24
months
|
||||||||||||||||
Greater
than 24 months
|
2.9
|
0.2
|
2.9
|
0.2
|
||||||||||||
Total
available-for-sale equity securities
|
87.2
|
2.1
|
13.4
|
0.4
|
||||||||||||
Total available-for-sale fixed maturity and equity | ||||||||||||||||
securities
|
$ |
14,817.4
|
$ |
618.1
|
$ |
18,001.6
|
$ |
208.5
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions, except %)
|
||||||||||||||||
Loews
common stock:
|
||||||||||||||||
Consolidated
net income
|
$ |
555.7
|
$ |
635.1
|
$ |
1,977.4
|
$ |
1,744.8
|
||||||||
Less
income attributable to Carolina Group stock
|
145.7
|
117.9
|
405.0
|
279.3
|
||||||||||||
Income
attributable to Loews common stock
|
$ |
410.0
|
$ |
517.2
|
$ |
1,572.4
|
$ |
1,465.5
|
||||||||
Carolina
Group stock:
|
||||||||||||||||
Income
available to Carolina Group stock
|
$ |
233.6
|
$ |
202.9
|
$ |
649.4
|
$ |
540.2
|
||||||||
Weighted
average economic interest of the Carolina
|
||||||||||||||||
Group
|
62.4 | % | 58.1 | % | 62.4 | % | 51.7 | % | ||||||||
Income
attributable to Carolina Group stock
|
$ |
145.7
|
$ |
117.9
|
$ |
405.0
|
$ |
279.3
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Loews
common stock:
|
||||||||||||||||
Weighted
average shares outstanding-basic
|
531.86
|
550.59
|
536.53
|
554.45
|
||||||||||||
Stock
options and stock appreciation rights
|
1.33
|
0.85
|
1.18
|
0.81
|
||||||||||||
Weighted
average shares outstanding-diluted
|
533.19
|
551.44
|
537.71
|
555.26
|
||||||||||||
Carolina
Group stock:
|
||||||||||||||||
Weighted
average shares outstanding-basic
|
108.44
|
100.48
|
108.42
|
88.33
|
||||||||||||
Stock
options and stock appreciation rights
|
0.14
|
0.11
|
0.13
|
0.10
|
||||||||||||
Weighted
average shares outstanding-diluted
|
108.58
|
100.59
|
108.55
|
88.43
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Loews
common stock
|
705,689
|
2,610
|
237,034
|
76,098
|
||||||||||||
Carolina
Group stock
|
101,630
|
-
|
34,245
|
17,372
|
Adjustments
|
||||||||||||||||||||||||
Carolina
Group
|
Loews
|
and
|
||||||||||||||||||||||
September
30, 2007
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Investments
|
$ |
1,817.7
|
$ |
101.0
|
$ |
1,918.7
|
$ |
48,738.6
|
$ |
50,657.3
|
||||||||||||||
Cash
|
0.5
|
0.6
|
1.1
|
125.9
|
127.0
|
|||||||||||||||||||
Receivables
|
14.0
|
0.1
|
14.1
|
12,906.3
|
$ | (11.6 | ) (a) |
12,908.8
|
||||||||||||||||
Property,
plant and
|
||||||||||||||||||||||||
equipment
|
208.0
|
208.0
|
9,428.7
|
9,636.7
|
||||||||||||||||||||
Deferred
income taxes
|
540.9
|
540.9
|
304.5
|
845.4
|
||||||||||||||||||||
Goodwill
and other intangible
|
||||||||||||||||||||||||
assets
|
1,346.5
|
1,346.5
|
||||||||||||||||||||||
Other
assets
|
319.2
|
319.2
|
1,463.0
|
1,782.2
|
||||||||||||||||||||
Investment
in combined
|
||||||||||||||||||||||||
attributed
net assets of the
|
||||||||||||||||||||||||
Carolina
Group
|
1,035.6
|
(829.1 | ) (a) | |||||||||||||||||||||
(206.5 | ) (b) | |||||||||||||||||||||||
Deferred
acquisition costs of
|
||||||||||||||||||||||||
insurance
subsidiaries
|
1,189.3
|
1,189.3
|
||||||||||||||||||||||
Separate
account business
|
471.7
|
471.7
|
||||||||||||||||||||||
Total
assets
|
$ |
2,900.3
|
$ |
101.7
|
$ |
3,002.0
|
$ |
77,010.1
|
$ | (1,047.2 | ) | $ |
78,964.9
|
|||||||||||
Liabilities
and Shareholders’ Equity:
|
||||||||||||||||||||||||
Insurance
reserves
|
$ |
40,749.5
|
$ |
40,749.5
|
||||||||||||||||||||
Payable
for securities
|
||||||||||||||||||||||||
purchased
|
3,598.5
|
3,598.5
|
||||||||||||||||||||||
Collateral
on loaned securities and derivatives
|
83.4
|
83.4
|
||||||||||||||||||||||
Short-term
debt
|
164.2
|
164.2
|
||||||||||||||||||||||
Long-term
debt
|
$ |
829.1
|
$ |
829.1
|
7,068.0
|
$ | (829.1 | ) (a) |
7,068.0
|
|||||||||||||||
Reinsurance
balances payable
|
482.7
|
482.7
|
||||||||||||||||||||||
Other
liabilities
|
$ |
1,615.7
|
8.5
|
1,624.2
|
3,802.7
|
(11.6 | ) (a) |
5,415.3
|
||||||||||||||||
Separate
account business
|
471.7
|
471.7
|
||||||||||||||||||||||
Total
liabilities
|
1,615.7
|
837.6
|
2,453.3
|
56,420.7
|
(840.7 | ) |
58,033.3
|
|||||||||||||||||
Minority
interest
|
3,652.3
|
3,652.3
|
||||||||||||||||||||||
Shareholders’
equity
|
1,284.6
|
(735.9 | ) |
548.7
|
16,937.1
|
(206.5 | ) (b) |
17,279.3
|
||||||||||||||||
Total
liabilities and
|
||||||||||||||||||||||||
shareholders’
equity
|
$ |
2,900.3
|
$ |
101.7
|
$ |
3,002.0
|
$ |
77,010.1
|
$ | (1,047.2 | ) | $ |
78,964.9
|
(a)
|
To
eliminate the intergroup notional debt and interest
payable/receivable.
|
(b)
|
To
eliminate the Loews Group’s 37.6% equity interest in the combined
attributed net assets of the Carolina
Group.
|
Carolina
Group
|
Loews
|
Adjustments
and
|
||||||||||||||||||||||
December
31, 2006
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Investments
|
$ |
1,767.5
|
$ |
101.0
|
$ |
1,868.5
|
$ |
52,020.3
|
$ |
53,888.8
|
||||||||||||||
Cash
|
1.2
|
0.3
|
1.5
|
132.3
|
133.8
|
|||||||||||||||||||
Receivables
|
15.6
|
0.4
|
16.0
|
13,028.2
|
$ | (16.9 | ) (a) |
13,027.3
|
||||||||||||||||
Property, plant and | ||||||||||||||||||||||||
equipment
|
196.4
|
196.4
|
5,304.9
|
5,501.3
|
||||||||||||||||||||
Deferred
income taxes
|
495.7
|
495.7
|
125.2
|
620.9
|
||||||||||||||||||||
Goodwill and other intangible | ||||||||||||||||||||||||
assets
|
298.9
|
298.9
|
||||||||||||||||||||||
Other
assets
|
282.8
|
282.8
|
1,433.7
|
1,716.5
|
||||||||||||||||||||
Investment in combined | ||||||||||||||||||||||||
attributed
net assets of the
|
||||||||||||||||||||||||
Carolina
Group
|
1,288.3 | (1,229.7 | ) (a) | |||||||||||||||||||||
(58.6 | ) (b) | |||||||||||||||||||||||
Deferred acquisition costs of | ||||||||||||||||||||||||
insurance
subsidiaries
|
1,190.4
|
1,190.4
|
||||||||||||||||||||||
Separate
account business
|
503.0
|
503.0
|
||||||||||||||||||||||
Total
assets
|
$ |
2,759.2
|
$ |
101.7
|
$ |
2,860.9
|
$ |
75,325.2
|
$ | (1,305.2 | ) | $ |
76,880.9
|
|||||||||||
Liabilities
and Shareholders’ Equity:
|
||||||||||||||||||||||||
Insurance
reserves
|
$ |
41,079.9
|
$ |
41,079.9
|
||||||||||||||||||||
Payable for securities | ||||||||||||||||||||||||
purchased
|
1,046.7
|
1,046.7
|
||||||||||||||||||||||
Collateral
on loaned securities
|
3,601.5
|
3,601.5
|
||||||||||||||||||||||
Short-term
debt
|
4.6
|
4.6
|
||||||||||||||||||||||
Long-term
debt
|
$ |
1,229.7
|
$ |
1,229.7
|
5,567.8
|
$ | (1,229.7 | ) (a) |
5,567.8
|
|||||||||||||||
Reinsurance
balances payable
|
539.1
|
539.1
|
||||||||||||||||||||||
Other
liabilities
|
$ |
1,463.9
|
11.5
|
1,475.4
|
3,681.7
|
(16.9 | ) (a) |
5,140.2
|
||||||||||||||||
Separate
account business
|
503.0
|
503.0
|
||||||||||||||||||||||
Total
liabilities
|
1,463.9
|
1,241.2
|
2,705.1
|
56,024.3
|
(1,246.6 | ) |
57,482.8
|
|||||||||||||||||
Minority
interest
|
2,896.3
|
2,896.3
|
||||||||||||||||||||||
Shareholders’
equity
|
1,295.3
|
(1,139.5 | ) |
155.8
|
16,404.6
|
(58.6 | ) (b) |
16,501.8
|
||||||||||||||||
Total liabilities and | ||||||||||||||||||||||||
shareholders’
equity
|
$ |
2,759.2
|
$ |
101.7
|
$ |
2,860.9
|
$ |
75,325.2
|
$ | (1,305.2 | ) | $ |
76,880.9
|
(a)
|
To
eliminate the intergroup notional debt and interest
payable/receivable.
|
(b)
|
To
eliminate the Loews Group’s 37.7% equity interest in the combined
attributed net assets of the Carolina
Group.
|
Three
Months Ended
|
Carolina
Group
|
Loews
|
Adjustments
and
|
|||||||||||||||||||||
September
30, 2007
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Insurance
premiums
|
$ |
1,882.1
|
$ |
1,882.1
|
||||||||||||||||||||
Net
investment income
|
$ |
30.8
|
$ |
2.3
|
$ |
33.1
|
663.8
|
$ | (18.0 | ) (a) |
678.9
|
|||||||||||||
Investment
gains (losses)
|
2.8
|
2.8
|
(53.8 | ) | (51.0 | ) | ||||||||||||||||||
Gain on issuance of subsidiary | ||||||||||||||||||||||||
stock
|
0.2
|
0.2
|
||||||||||||||||||||||
Manufactured
products
|
1,043.8
|
1,043.8
|
49.6
|
1,093.4
|
||||||||||||||||||||
Other
|
1,049.7
|
1,049.7
|
||||||||||||||||||||||
Total
|
1,077.4
|
2.3
|
1,079.7
|
3,591.6
|
(18.0 | ) |
4,653.3
|
|||||||||||||||||
Expenses:
|
||||||||||||||||||||||||
Insurance claims and | ||||||||||||||||||||||||
policyholders’
benefits
|
1,574.4
|
1,574.4
|
||||||||||||||||||||||
Amortization of deferred | ||||||||||||||||||||||||
acquisition
costs
|
384.5
|
384.5
|
||||||||||||||||||||||
Cost of manufactured products | ||||||||||||||||||||||||
sold
|
613.9
|
613.9
|
24.3
|
638.2
|
||||||||||||||||||||
Other
operating expenses
|
81.8
|
81.8
|
868.7
|
950.5
|
||||||||||||||||||||
Interest
|
1.1
|
18.0
|
19.1
|
81.1
|
(18.0 | ) (a) |
82.2
|
|||||||||||||||||
Total
|
696.8
|
18.0
|
714.8
|
2,933.0
|
(18.0 | ) |
3,629.8
|
|||||||||||||||||
380.6
|
(15.7 | ) |
364.9
|
658.6
|
-
|
1,023.5
|
||||||||||||||||||
Income
tax expense (benefit)
|
136.9
|
(5.6 | ) |
131.3
|
190.1
|
-
|
321.4
|
|||||||||||||||||
Minority
interest
|
146.5
|
146.5
|
||||||||||||||||||||||
Total
|
136.9
|
(5.6 | ) |
131.3
|
336.6
|
-
|
467.9
|
|||||||||||||||||
Income
(loss) from operations
|
243.7
|
(10.1 | ) |
233.6
|
322.0
|
555.6
|
||||||||||||||||||
Equity
in earnings of the
|
||||||||||||||||||||||||
Carolina
Group
|
87.9
|
(87.9 | ) (b) | |||||||||||||||||||||
Income (loss) from continuing | ||||||||||||||||||||||||
operations
|
243.7
|
(10.1 | ) |
233.6
|
409.9
|
(87.9 | ) |
555.6
|
||||||||||||||||
Discontinued
operations, net
|
0.1
|
0.1
|
||||||||||||||||||||||
Net
income (loss)
|
$ |
243.7
|
$ | (10.1 | ) | $ |
233.6
|
$ |
410.0
|
$ | (87.9 | ) | $ |
555.7
|
(a)
|
To
eliminate interest on the intergroup notional
debt.
|
(b)
|
To
eliminate the Loews Group’s intergroup interest in the earnings of the
Carolina Group.
|
Three
Months Ended
|
Carolina
Group
|
Loews
|
Adjustments
And
|
|||||||||||||||||||||
September
30, 2006
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Insurance
premiums
|
$ |
1,943.4
|
$ |
1,943.4
|
||||||||||||||||||||
Net
investment income
|
$ |
27.4
|
$ |
2.2
|
$ |
29.6
|
693.1
|
$ | (28.2 | ) (a) |
694.5
|
|||||||||||||
Investment
gains (losses)
|
0.1
|
0.1
|
28.4
|
28.5
|
||||||||||||||||||||
Gain on issuance of subsidiary | ||||||||||||||||||||||||
stock
|
9.0
|
9.0
|
||||||||||||||||||||||
Manufactured
products
|
986.0
|
986.0
|
49.5
|
1,035.5
|
||||||||||||||||||||
Other
|
796.3
|
796.3
|
||||||||||||||||||||||
Total
|
1,013.5
|
2.2
|
1,015.7
|
3,519.7
|
(28.2 | ) |
4,507.2
|
|||||||||||||||||
Expenses:
|
||||||||||||||||||||||||
Insurance claims and | ||||||||||||||||||||||||
policyholders’
benefits
|
1,521.9
|
1,521.9
|
||||||||||||||||||||||
Amortization of deferred | ||||||||||||||||||||||||
acquisition
costs
|
390.4
|
390.4
|
||||||||||||||||||||||
Cost
of manufactured products
|
||||||||||||||||||||||||
sold
|
573.7
|
573.7
|
24.3
|
598.0
|
||||||||||||||||||||
Other
operating expenses
|
83.5
|
0.1
|
83.6
|
719.2
|
802.8
|
|||||||||||||||||||
Interest
|
0.1
|
28.2
|
28.3
|
78.6
|
(28.2 | ) (a) |
78.7
|
|||||||||||||||||
Total
|
657.3
|
28.3
|
685.6
|
2,734.4
|
(28.2 | ) |
3,391.8
|
|||||||||||||||||
356.2
|
(26.1 | ) |
330.1
|
785.3
|
-
|
1,115.4
|
||||||||||||||||||
Income
tax expense (benefit)
|
137.3
|
(10.1 | ) |
127.2
|
236.4
|
363.6
|
||||||||||||||||||
Minority
interest
|
122.4
|
122.4
|
||||||||||||||||||||||
Total
|
137.3
|
(10.1 | ) |
127.2
|
358.8
|
-
|
486.0
|
|||||||||||||||||
Income
(loss) from operations
|
218.9
|
(16.0 | ) |
202.9
|
426.5
|
-
|
629.4
|
|||||||||||||||||
Equity
in earnings of the
|
||||||||||||||||||||||||
Carolina
Group
|
85.0
|
(85.0 | ) (b) |
-
|
||||||||||||||||||||
Income (loss) from continuing | ||||||||||||||||||||||||
operations
|
218.9
|
(16.0 | ) |
202.9
|
511.5
|
(85.0 | ) |
629.4
|
||||||||||||||||
Discontinued
operations, net
|
5.7
|
5.7
|
||||||||||||||||||||||
Net
income (loss)
|
$ |
218.9
|
$ | (16.0 | ) | $ |
202.9
|
$ |
517.2
|
$ | (85.0 | ) | $ |
635.1
|
(a)
|
To
eliminate interest on the intergroup notional
debt.
|
(b)
|
To
eliminate the Loews Group’s intergroup interest in the earnings of the
Carolina Group.
|
Adjustments
|
||||||||||||||||||||||||
Nine
Months Ended
|
Carolina
Group
|
Loews
|
and
|
|||||||||||||||||||||
September
30, 2007
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Insurance
premiums
|
$ |
5,616.1
|
$ |
5,616.1
|
||||||||||||||||||||
Net
investment income
|
$ |
86.8
|
$ |
6.6
|
$ |
93.4
|
2,221.5
|
$ | (61.8 | ) (a) |
2,253.1
|
|||||||||||||
Investment
gains (losses)
|
2.9
|
2.9
|
(182.8 | ) | (179.9 | ) | ||||||||||||||||||
Gain on issuance of subsidiary | ||||||||||||||||||||||||
stock
|
138.7
|
138.7
|
||||||||||||||||||||||
Manufactured
products
|
3,012.2
|
3,012.2
|
135.8
|
3,148.0
|
||||||||||||||||||||
Other
|
0.4
|
0.4
|
2,973.9
|
2,974.3
|
||||||||||||||||||||
Total
|
3,102.3
|
6.6
|
3,108.9
|
10,903.2
|
(61.8 | ) |
13,950.3
|
|||||||||||||||||
Expenses:
|
||||||||||||||||||||||||
Insurance claims and | ||||||||||||||||||||||||
policyholders’
benefits
|
4,495.7
|
4,495.7
|
||||||||||||||||||||||
Amortization of deferred | ||||||||||||||||||||||||
acquisition
costs
|
1,137.1
|
1,137.1
|
||||||||||||||||||||||
Cost of manufactured products | ||||||||||||||||||||||||
sold
|
1,771.7
|
1,771.7
|
67.3
|
1,839.0
|
||||||||||||||||||||
Other
operating expenses
|
246.4
|
0.1
|
246.5
|
2,356.9
|
2,603.4
|
|||||||||||||||||||
Interest
|
3.7
|
61.8
|
65.5
|
230.2
|
(61.8 | ) (a) |
233.9
|
|||||||||||||||||
Total
|
2,021.8
|
61.9
|
2,083.7
|
8,287.2
|
(61.8 | ) |
10,309.1
|
|||||||||||||||||
1,080.5
|
(55.3 | ) |
1,025.2
|
2,616.0
|
-
|
3,641.2
|
||||||||||||||||||
Income
tax expense (benefit)
|
396.1
|
(20.3 | ) |
375.8
|
799.4
|
1,175.2
|
||||||||||||||||||
Minority
interest
|
482.0
|
482.0
|
||||||||||||||||||||||
Total
|
396.1
|
(20.3 | ) |
375.8
|
1,281.4
|
-
|
1,657.2
|
|||||||||||||||||
Income
(loss) from operations
|
684.4
|
(35.0 | ) |
649.4
|
1,334.6
|
1,984.0
|
||||||||||||||||||
Equity in earnings of the | ||||||||||||||||||||||||
Carolina
Group
|
244.4
|
(244.4 | ) (b) | |||||||||||||||||||||
Income (loss) from continuing | ||||||||||||||||||||||||
operations
|
684.4
|
(35.0 | ) |
649.4
|
1,579.0
|
(244.4 | ) |
1,984.0
|
||||||||||||||||
Discontinued
operations, net
|
(6.6 | ) | (6.6 | ) | ||||||||||||||||||||
Net
income (loss)
|
$ |
684.4
|
$ | (35.0 | ) | $ |
649.4
|
$ |
1,572.4
|
$ | (244.4 | ) | $ |
1,977.4
|
(a)
|
To
eliminate interest on the intergroup notional
debt.
|
(b)
|
To
eliminate the Loews Group’s intergroup interest in the earnings of the
Carolina Group.
|
Nine
Months Ended
|
Carolina
Group
|
Loews
|
Adjustments
and
|
|||||||||||||||||||||
September
30, 2006
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Insurance
premiums
|
$ |
5,704.0
|
$ |
5,704.0
|
||||||||||||||||||||
Net
investment income
|
$ |
71.6
|
$ |
5.8
|
$ |
77.4
|
2,051.6
|
$ | (89.5 | ) (a) |
2,039.5
|
|||||||||||||
Investment
gains (losses)
|
(0.5 | ) | (0.5 | ) | (62.3 | ) | (62.8 | ) | ||||||||||||||||
Gain on issuance of subsidiary | ||||||||||||||||||||||||
stock
|
9.0
|
9.0
|
||||||||||||||||||||||
Manufactured
products
|
2,818.1
|
2,818.1
|
136.5
|
2,954.6
|
||||||||||||||||||||
Other
|
0.1
|
0.1
|
2,384.6
|
2,384.7
|
||||||||||||||||||||
Total
|
2,889.3
|
5.8
|
2,895.1
|
10,223.4
|
(89.5 | ) |
13,029.0
|
|||||||||||||||||
Expenses:
|
||||||||||||||||||||||||
Insurance claims and | ||||||||||||||||||||||||
policyholders’
benefits
|
4,446.1
|
4,446.1
|
||||||||||||||||||||||
Amortization of deferred | ||||||||||||||||||||||||
acquisition
costs
|
1,132.4
|
1,132.4
|
||||||||||||||||||||||
Cost of manufactured products | ||||||||||||||||||||||||
sold
|
1,638.0
|
1,638.0
|
68.0
|
1,706.0
|
||||||||||||||||||||
Other
operating expenses
|
285.2
|
0.2
|
285.4
|
2,125.2
|
2,410.6
|
|||||||||||||||||||
Restructuring and other related | ||||||||||||||||||||||||
charges
|
(12.9 | ) | (12.9 | ) | ||||||||||||||||||||
Interest
|
0.1
|
89.5
|
89.6
|
223.9
|
(89.5 | ) (a) |
224.0
|
|||||||||||||||||
Total
|
1,923.3
|
89.7
|
2,013.0
|
7,982.7
|
(89.5 | ) |
9,906.2
|
|||||||||||||||||
966.0
|
(83.9 | ) |
882.1
|
2,240.7
|
3,122.8
|
|||||||||||||||||||
Income
tax expense (benefit)
|
374.5
|
(32.6 | ) |
341.9
|
693.1
|
1,035.0
|
||||||||||||||||||
Minority
interest
|
341.3
|
341.3
|
||||||||||||||||||||||
Total
|
374.5
|
(32.6 | ) |
341.9
|
1,034.4
|
1,376.3
|
||||||||||||||||||
Income
(loss) from operations
|
591.5
|
(51.3 | ) |
540.2
|
1,206.3
|
1,746.5
|
||||||||||||||||||
Equity in earnings of the | ||||||||||||||||||||||||
Carolina
Group
|
260.9
|
(260.9 | ) (b) | |||||||||||||||||||||
Income (loss) from continuing | ||||||||||||||||||||||||
operations
|
591.5
|
(51.3 | ) |
540.2
|
1,467.2
|
(260.9 | ) |
1,746.5
|
||||||||||||||||
Discontinued
operations, net
|
(1.7 | ) | (1.7 | ) | ||||||||||||||||||||
Net
income (loss)
|
$ |
591.5
|
$ | (51.3 | ) | $ |
540.2
|
$ |
1,465.5
|
$ | (260.9 | ) | $ |
1,744.8
|
(a)
|
To
eliminate interest on the intergroup notional
debt.
|
(b)
|
To
eliminate the Loews Group’s intergroup interest in the earnings of the
Carolina Group.
|
Nine
Months Ended
|
Carolina
Group
|
Loews
|
Adjustments
and
|
|||||||||||||||||||||
September
30, 2007
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Net cash provided (used) by | ||||||||||||||||||||||||
operating
activities
|
$ |
716.3
|
$ | (37.7 | ) | $ |
678.6
|
$ |
3,785.0
|
$ | (89.4 | ) | $ |
4,374.2
|
||||||||||
Investing
activities:
|
||||||||||||||||||||||||
Purchases of property and | ||||||||||||||||||||||||
equipment
|
(42.3 | ) | (42.3 | ) | (1,353.0 | ) | (1,395.3 | ) | ||||||||||||||||
Change in short-term | ||||||||||||||||||||||||
investments
|
(265.5 | ) | (265.5 | ) |
466.4
|
200.9
|
||||||||||||||||||
Other
investing activities
|
265.0
|
265.0
|
(4,211.9 | ) | (400.6 | ) | (4,347.5 | ) | ||||||||||||||||
(42.8 | ) |
-
|
(42.8 | ) | (5,098.5 | ) | (400.6 | ) | (5,541.9 | ) | ||||||||||||||
Financing
activities:
|
||||||||||||||||||||||||
Dividends
paid
|
(676.0 | ) |
438.6
|
(237.4 | ) | (100.5 | ) |
89.4
|
(248.5 | ) | ||||||||||||||
Reduction of intergroup | ||||||||||||||||||||||||
notional
debt
|
(400.6 | ) | (400.6 | ) |
400.6
|
|||||||||||||||||||
Excess tax benefits from | ||||||||||||||||||||||||
share-based
compensation
|
1.8
|
1.8
|
6.2
|
8.0
|
||||||||||||||||||||
Other
financing activities
|
1,368.3
|
1,368.3
|
||||||||||||||||||||||
(674.2 | ) |
38.0
|
(636.2 | ) |
1,274.0
|
490.0
|
1,127.8
|
|||||||||||||||||
Net
change in cash
|
(0.7 | ) |
0.3
|
(0.4 | ) | (39.5 | ) |
-
|
(39.9 | ) | ||||||||||||||
Net
cash transactions from:
|
||||||||||||||||||||||||
Continuing
operations to
|
||||||||||||||||||||||||
discontinued
operations
|
59.2
|
59.2
|
||||||||||||||||||||||
Discontinued
operations to
|
||||||||||||||||||||||||
continuing
operations
|
(59.2 | ) | (59.2 | ) | ||||||||||||||||||||
Cash,
beginning of period
|
1.2
|
0.3
|
1.5
|
172.5
|
174.0
|
|||||||||||||||||||
Cash,
end of period
|
$ |
0.5
|
$ |
0.6
|
$ |
1.1
|
$ |
133.0
|
$ |
-
|
$ |
134.1
|
Nine
Months Ended
|
Carolina
Group
|
Loews
|
Adjustments
and
|
|||||||||||||||||||||
September
30, 2006
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Net cash (used) provided by | ||||||||||||||||||||||||
operating
activities
|
$ |
635.1
|
$ | (53.7 | ) | $ |
581.4
|
$ |
1,212.0
|
$ | (109.8 | ) | $ |
1,683.6
|
||||||||||
Investing
activities:
|
||||||||||||||||||||||||
Purchases of property and | ||||||||||||||||||||||||
equipment
|
(22.3 | ) | (22.3 | ) | (593.6 | ) | (615.9 | ) | ||||||||||||||||
Change in short-term | ||||||||||||||||||||||||
investments
|
137.6
|
137.6
|
(5,665.4 | ) | (5,527.8 | ) | ||||||||||||||||||
Other
investing activities
|
(189.4 | ) | (189.4 | ) |
3,432.5
|
(273.0 | ) |
2,970.1
|
||||||||||||||||
(74.1 | ) |
-
|
(74.1 | ) | (2,826.5 | ) | (273.0 | ) | (3,173.6 | ) | ||||||||||||||
Financing
activities:
|
||||||||||||||||||||||||
Dividends
paid
|
(564.0 | ) |
326.9
|
(237.1 | ) | (97.1 | ) |
109.8
|
(224.4 | ) | ||||||||||||||
Reduction of intergroup | ||||||||||||||||||||||||
notional
debt
|
(273.0 | ) | (273.0 | ) |
273.0
|
|||||||||||||||||||
Excess tax benefits from | ||||||||||||||||||||||||
share-based
compensation
|
1.0
|
1.0
|
3.9
|
4.9
|
||||||||||||||||||||
Other
financing activities
|
1,720.8
|
1,720.8
|
||||||||||||||||||||||
(563.0 | ) |
53.9
|
(509.1 | ) |
1,627.6
|
382.8
|
1,501.3
|
|||||||||||||||||
Net
change in cash
|
(2.0 | ) |
0.2
|
(1.8 | ) |
13.1
|
-
|
11.3
|
||||||||||||||||
Net
cash transactions from:
|
||||||||||||||||||||||||
Continuing
operations to
|
||||||||||||||||||||||||
discontinued
operations
|
15.3
|
15.3
|
||||||||||||||||||||||
Discontinued
operations to
|
||||||||||||||||||||||||
continuing
operations
|
(15.3 | ) | (15.3 | ) | ||||||||||||||||||||
Cash,
beginning of period
|
2.4
|
0.1
|
2.5
|
179.5
|
182.0
|
|||||||||||||||||||
Cash,
end of period
|
$ |
0.4
|
$ |
0.3
|
$ |
0.7
|
$ |
192.6
|
$ |
-
|
$ |
193.3
|
September
30,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(In
millions)
|
||||||||
Reinsurance
|
$ |
9,356.5
|
$ |
9,947.3
|
||||
Other
insurance
|
2,427.2
|
2,475.8
|
||||||
Security
sales
|
731.3
|
325.9
|
||||||
Accrued
investment income
|
346.3
|
331.4
|
||||||
Other
|
888.0
|
810.8
|
||||||
Total
|
13,749.3
|
13,891.2
|
||||||
Less:allowance
for doubtful accounts on reinsurance receivables
|
464.2
|
469.6
|
||||||
allowance
for other doubtful accounts and cash discounts
|
376.3
|
394.3
|
||||||
Receivables
|
$ |
12,908.8
|
$ |
13,027.3
|
September
30,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(In
millions)
|
||||||||
Land
|
$ |
72.1
|
$ |
71.1
|
||||
Buildings
and building equipment
|
761.0
|
716.2
|
||||||
Offshore
drilling rigs and equipment
|
4,379.5
|
3,896.6
|
||||||
Machinery
and equipment
|
1,835.6
|
1,378.0
|
||||||
Pipeline
equipment
|
1,860.7
|
1,833.3
|
||||||
Natural
gas and oil proved and unproved properties
|
2,707.1
|
|||||||
Construction
in process
|
1,467.3
|
728.3
|
||||||
Leaseholds
and leasehold improvements
|
74.8
|
70.5
|
||||||
Total
|
13,158.1
|
8,694.0
|
||||||
Less
accumulated depreciation, depletion and amortization
|
3,521.4
|
3,192.7
|
||||||
Property,
plant and equipment
|
$ |
9,636.7
|
$ |
5,501.3
|
September
30, 2007
|
December
31, 2006
|
|||||||||||||||
Asbestos
|
Environmental
Pollution
and
Mass
Tort
|
Asbestos
|
Environmental
Pollution
and
Mass
Tort
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Gross
reserves
|
$ |
2,400.0
|
$ |
597.0
|
$ |
2,635.0
|
$ |
647.0
|
||||||||
Ceded
reserves
|
(1,063.0 | ) | (210.0 | ) | (1,183.0 | ) | (231.0 | ) | ||||||||
Net
reserves
|
$ |
1,337.0
|
$ |
387.0
|
$ |
1,452.0
|
$ |
416.0
|
Standard
|
Specialty
|
Other
|
||||||||||||||
Three
Months Ended September 30, 2007
|
Lines
|
Lines
|
Insurance
|
Total
|
||||||||||||
(In
millions)
|
||||||||||||||||
Pretax
unfavorable (favorable) net prior
|
||||||||||||||||
year
claim and allocated claim adjustment
|
||||||||||||||||
expense
reserve development
|
||||||||||||||||
Core
(Non-APMT)
|
$ | (77.0 | ) | $ |
13.0
|
$ |
4.0
|
$ | (60.0 | ) | ||||||
APMT
|
3.0
|
3.0
|
||||||||||||||
Pretax
unfavorable (favorable) net prior year
|
||||||||||||||||
development
before impact of premium
|
||||||||||||||||
development
|
(77.0 | ) |
13.0
|
7.0
|
(57.0 | ) | ||||||||||
Pretax
favorable premium development
|
(7.0 | ) | (1.0 | ) | (2.0 | ) | (10.0 | ) | ||||||||
Total
pretax unfavorable (favorable) net prior year
|
||||||||||||||||
development
|
$ | (84.0 | ) | $ |
12.0
|
$ |
5.0
|
$ | (67.0 | ) | ||||||
Three
Months Ended September 30, 2006
|
||||||||||||||||
(In
millions)
|
||||||||||||||||
Pretax
unfavorable (favorable) net prior year claim
|
||||||||||||||||
and
allocated claim adjustment expense reserve
|
||||||||||||||||
development:
|
||||||||||||||||
Core
(Non-APMT)
|
$ |
6.0
|
$ | (4.0 | ) | $ |
2.0
|
$ |
4.0
|
|||||||
APMT
|
1.0
|
1.0
|
||||||||||||||
Pretax
unfavorable (favorable) net prior year
|
||||||||||||||||
development
before impact of premium
|
||||||||||||||||
development
|
6.0
|
(4.0 | ) |
3.0
|
5.0
|
|||||||||||
Pretax
unfavorable (favorable) premium development
|
(19.0 | ) |
6.0
|
(3.0 | ) | (16.0 | ) | |||||||||
Total
pretax unfavorable (favorable) net prior year
|
||||||||||||||||
development
|
$ | (13.0 | ) | $ |
2.0
|
$ |
-
|
$ | (11.0 | ) |
Standard
|
Specialty
|
Other
|
||||||||||||||
Nine
Months Ended September 30, 2007
|
Lines
|
Lines
|
Insurance
|
Total
|
||||||||||||
(In
millions)
|
||||||||||||||||
Pretax
unfavorable (favorable) net prior
|
||||||||||||||||
year
claim and allocated claim adjustment
|
||||||||||||||||
expense
reserve development
|
||||||||||||||||
Core
(Non-APMT)
|
$ | (97.0 | ) | $ |
19.0
|
$ |
12.0
|
$ | (66.0 | ) | ||||||
APMT
|
7.0
|
7.0
|
||||||||||||||
Pretax
unfavorable (favorable) net prior year
|
||||||||||||||||
development
before impact of premium
|
||||||||||||||||
development
|
(97.0 | ) |
19.0
|
19.0
|
(59.0 | ) | ||||||||||
Pretax
favorable premium development
|
(20.0 | ) | (8.0 | ) | (5.0 | ) | (33.0 | ) | ||||||||
Total
pretax unfavorable (favorable) net prior year
|
||||||||||||||||
development
|
$ | (117.0 | ) | $ |
11.0
|
$ |
14.0
|
$ | (92.0 | ) | ||||||
Nine
Months Ended September 30, 2006
|
||||||||||||||||
Pretax
unfavorable (favorable) net prior
|
||||||||||||||||
year
claim and allocated claim adjustment
|
||||||||||||||||
expense
reserve development
|
||||||||||||||||
Core
(Non-APMT)
|
$ |
70.0
|
$ | (1.0 | ) | $ |
13.0
|
$ |
82.0
|
|||||||
APMT
|
2.0
|
2.0
|
||||||||||||||
Pretax
unfavorable (favorable) net prior year
|
||||||||||||||||
development
before impact of premium development
|
70.0
|
(1.0 | ) |
15.0
|
84.0
|
|||||||||||
Pretax
unfavorable (favorable) premium development
|
(92.0 | ) |
1.0
|
(91.0 | ) | |||||||||||
Total
pretax unfavorable (favorable) net prior year
|
||||||||||||||||
development
|
$ | (22.0 | ) | $ | (1.0 | ) | $ |
16.0
|
$ | (7.0 | ) |
(In
millions)
|
||||
Property,
plant and equipment
|
$ |
3,005.5
|
||
Deferred
income taxes
|
7.3
|
|||
Goodwill
and other intangible assets
|
1,049.1
|
|||
Other
assets
|
16.0
|
|||
Other
liabilities
|
(48.3 | ) | ||
$ |
4,029.6
|
Pension
Benefits
|
||||||||||||||||
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Service
cost
|
$ |
12.0
|
$ |
14.1
|
$ |
38.3
|
$ |
41.8
|
||||||||
Interest
cost
|
54.0
|
53.4
|
162.1
|
159.3
|
||||||||||||
Expected
return on plan assets
|
(64.7 | ) | (61.4 | ) | (194.0 | ) | (182.3 | ) | ||||||||
Amortization
of net loss
|
1.9
|
2.1
|
3.5
|
5.9
|
||||||||||||
Amortization
of prior service cost
|
0.7
|
1.5
|
3.6
|
4.9
|
||||||||||||
Actuarial
loss
|
2.6
|
4.2
|
8.4
|
20.7
|
||||||||||||
Settlement
costs
|
0.4
|
5.6
|
4.2
|
5.6
|
||||||||||||
Regulatory
asset increase
|
(0.5 | ) | (3.0 | ) | (0.5 | ) | (3.0 | ) | ||||||||
Net
periodic benefit cost
|
$ |
6.4
|
$ |
16.5
|
$ |
25.6
|
$ |
52.9
|
Other
Postretirement Benefits
|
||||||||||||||||
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Service
cost
|
$ |
2.4
|
$ |
2.6
|
$ |
6.8
|
$ |
7.3
|
||||||||
Interest
cost
|
6.5
|
7.4
|
19.3
|
20.9
|
||||||||||||
Expected
return on plan assets
|
(1.3 | ) | (1.2 | ) | (3.6 | ) | (3.5 | ) | ||||||||
Amortization
of net loss
|
0.2
|
0.5
|
0.5
|
1.1
|
||||||||||||
Amortization
of prior service benefit
|
(6.8 | ) | (8.2 | ) | (20.5 | ) | (24.4 | ) | ||||||||
Actuarial
loss
|
0.6
|
1.0
|
1.8
|
2.7
|
||||||||||||
Settlement
costs
|
0.9
|
2.2
|
||||||||||||||
Regulatory
asset decrease
|
1.3
|
0.3
|
4.0
|
4.9
|
||||||||||||
Net
periodic benefit cost
|
$ |
2.9
|
$ |
3.3
|
$ |
8.3
|
$ |
11.2
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Revenues
(a):
|
||||||||||||||||
CNA
Financial:
|
||||||||||||||||
Standard
Lines
|
$ |
1,292.8
|
$ |
1,401.2
|
$ |
3,891.6
|
$ |
4,058.1
|
||||||||
Specialty
Lines
|
821.8
|
799.3
|
2,405.2
|
2,309.9
|
||||||||||||
Life
and Group Non-Core
|
308.4
|
336.1
|
971.7
|
973.2
|
||||||||||||
Other
Insurance
|
60.8
|
88.4
|
201.2
|
197.2
|
||||||||||||
Total
CNA Financial
|
2,483.8
|
2,625.0
|
7,469.7
|
7,538.4
|
||||||||||||
Lorillard
|
1,074.6
|
1,013.4
|
3,099.4
|
2,889.8
|
||||||||||||
Diamond
Offshore
|
655.2
|
527.6
|
1,935.1
|
1,505.6
|
||||||||||||
HighMount
|
100.2
|
100.2
|
||||||||||||||
Boardwalk
Pipeline
|
141.0
|
134.9
|
490.4
|
442.4
|
||||||||||||
Loews
Hotels
|
90.0
|
84.9
|
285.1
|
280.2
|
||||||||||||
Corporate
and other
|
108.5
|
121.4
|
570.4
|
372.6
|
||||||||||||
Total
|
$ |
4,653.3
|
$ |
4,507.2
|
$ |
13,950.3
|
$ |
13,029.0
|
||||||||
Pretax
income (loss) (a):
|
||||||||||||||||
CNA
Financial:
|
||||||||||||||||
Standard
Lines
|
$ |
295.3
|
$ |
262.5
|
$ |
740.1
|
$ |
672.9
|
||||||||
Specialty
Lines
|
174.8
|
198.1
|
540.8
|
542.7
|
||||||||||||
Life
and Group Non-Core (b)
|
(223.3 | ) | (43.4 | ) | (280.6 | ) | (105.8 | ) | ||||||||
Other
Insurance
|
2.2
|
40.7
|
18.7
|
56.8
|
||||||||||||
Total
CNA Financial
|
249.0
|
457.9
|
1,019.0
|
1,166.6
|
||||||||||||
Lorillard
|
377.7
|
356.1
|
1,077.5
|
966.5
|
||||||||||||
Diamond
Offshore
|
285.0
|
221.3
|
944.7
|
667.2
|
||||||||||||
HighMount
|
29.6
|
29.6
|
||||||||||||||
Boardwalk
Pipeline
|
40.3
|
31.1
|
156.2
|
132.5
|
||||||||||||
Loews
Hotels
|
6.7
|
6.4
|
47.0
|
39.9
|
||||||||||||
Corporate
and other
|
35.2
|
42.6
|
367.2
|
150.1
|
||||||||||||
Total
|
$ |
1,023.5
|
$ |
1,115.4
|
$ |
3,641.2
|
$ |
3,122.8
|
||||||||
Net
income (loss) (a):
|
||||||||||||||||
CNA
Financial:
|
||||||||||||||||
Standard
Lines
|
$ |
173.7
|
$ |
156.1
|
$ |
441.9
|
$ |
416.3
|
||||||||
Specialty
Lines
|
96.2
|
111.1
|
300.7
|
309.1
|
||||||||||||
Life
and Group Non-Core (b)
|
(121.5 | ) | (19.4 | ) | (141.1 | ) | (45.0 | ) | ||||||||
Other
Insurance
|
7.8
|
33.0
|
21.6
|
41.5
|
||||||||||||
Total
CNA Financial
|
156.2
|
280.8
|
623.1
|
721.9
|
||||||||||||
Lorillard
|
241.9
|
218.8
|
682.5
|
591.8
|
||||||||||||
Diamond
Offshore
|
95.0
|
81.8
|
319.8
|
241.7
|
||||||||||||
HighMount
|
18.7
|
18.7
|
||||||||||||||
Boardwalk
Pipeline
|
18.1
|
15.9
|
73.6
|
68.1
|
||||||||||||
Loews
Hotels
|
4.1
|
5.1
|
28.8
|
25.6
|
||||||||||||
Corporate
and other
|
21.6
|
27.0
|
237.5
|
97.4
|
||||||||||||
Income
from continuing operations
|
555.6
|
629.4
|
1,984.0
|
1,746.5
|
||||||||||||
Discontinued
operations
|
0.1
|
5.7
|
(6.6 | ) | (1.7 | ) | ||||||||||
Total
|
$ |
555.7
|
$ |
635.1
|
$ |
1,977.4
|
$ |
1,744.8
|
(a)
|
Investment
gains (losses) included in Revenues, Pretax income (loss) and Net
income
(loss) are as follows:
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenues
and pretax income (loss):
|
||||||||||||||||
CNA
Financial:
|
||||||||||||||||
Standard
Lines
|
$ | (28.6 | ) | $ |
17.4
|
$ | (125.8 | ) | $ | (6.2 | ) | |||||
Specialty
Lines
|
(12.6 | ) |
6.0
|
(52.1 | ) | (4.1 | ) | |||||||||
Life
and Group Non-Core
|
(8.6 | ) | (10.7 | ) | (25.6 | ) | (56.4 | ) | ||||||||
Other
Insurance
|
(6.7 | ) |
13.9
|
(13.3 | ) |
4.4
|
||||||||||
Total
CNA Financial
|
(56.5 | ) |
26.6
|
(216.8 | ) | (62.3 | ) | |||||||||
Corporate
and other
|
5.7
|
10.9
|
175.6
|
8.5
|
||||||||||||
Total
|
$ | (50.8 | ) | $ |
37.5
|
$ | (41.2 | ) | $ | (53.8 | ) | |||||
Net
income (loss):
|
||||||||||||||||
CNA
Financial:
|
||||||||||||||||
Standard
Lines
|
$ | (17.0 | ) | $ |
9.9
|
$ | (73.6 | ) | $ | (3.7 | ) | |||||
Specialty
Lines
|
(7.3 | ) |
3.6
|
(30.1 | ) | (2.4 | ) | |||||||||
Life
and Group Non-Core
|
(5.0 | ) | (6.3 | ) | (14.8 | ) | (33.4 | ) | ||||||||
Other
Insurance
|
(3.7 | ) |
16.6
|
(7.5 | ) |
5.9
|
||||||||||
Total
CNA Financial
|
(33.0 | ) |
23.8
|
(126.0 | ) | (33.6 | ) | |||||||||
Corporate
and other
|
3.1
|
7.0
|
112.9
|
5.6
|
||||||||||||
Total
|
$ | (29.9 | ) | $ |
30.8
|
$ | (13.1 | ) | $ | (28.0 | ) |
(b)
|
Includes
$167.0 million ($96.4 million after tax and minority interest) of
expense
resulting from the settlement of an arbitration proceeding related
to a
run-off book of business.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Net
investment income
|
$ |
1.9
|
$ |
5.3
|
$ |
10.8
|
$ |
13.1
|
||||||||
Investment
gains (losses) and other
|
1.9
|
0.2
|
5.2
|
(2.4 | ) | |||||||||||
Total
revenues
|
3.8
|
5.5
|
16.0
|
10.7
|
||||||||||||
Insurance
related expenses
|
(3.2 | ) | (7.6 | ) | (23.5 | ) | (21.3 | ) | ||||||||
Income
(loss) before income taxes and minority interest
|
0.6
|
(2.1 | ) | (7.5 | ) | (10.6 | ) | |||||||||
Income
tax (expense) benefit
|
(0.5 | ) |
8.4
|
8.8
|
||||||||||||
Minority
interest
|
(0.6 | ) |
0.9
|
0.1
|
||||||||||||
Income
(loss) from discontinued operations
|
$ |
0.1
|
$ |
5.7
|
$ | (6.6 | ) | $ | (1.7 | ) |
September
30,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(In
millions)
|
||||||||
Assets:
|
||||||||
Investments
|
$ |
184.1
|
$ |
317.1
|
||||
Reinsurance
receivables
|
0.6
|
32.8
|
||||||
Cash
|
7.1
|
40.1
|
||||||
Other
assets
|
3.0
|
2.8
|
||||||
Total
assets
|
194.8
|
392.8
|
||||||
Liabilities:
|
||||||||
Insurance
reserves
|
168.5
|
307.8
|
||||||
Other
liabilities
|
4.9
|
17.2
|
||||||
Total
liabilities
|
173.4
|
325.0
|
||||||
Net
assets of discontinued operations
|
$ |
21.4
|
$ |
67.8
|
September
30, 2007
|
CNA
Financial
|
Lorillard
|
Diamond
Offshore
|
HighMount
|
Boardwalk
Pipeline
|
Loews
Hotels
|
Corporate
and
Other
|
Eliminations
|
Total
|
|||||||||||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||||||
Investments
|
$ |
43,910.9
|
$ |
1,817.7
|
$ |
673.4
|
$ |
42.3
|
$ |
583.7
|
$ |
44.3
|
$ |
3,585.0
|
$ |
50,657.3
|
||||||||||||||||||||
Cash
|
80.1
|
0.5
|
10.2
|
3.0
|
1.4
|
14.7
|
17.1
|
127.0
|
||||||||||||||||||||||||||||
Receivables
|
11,982.8
|
14.0
|
549.9
|
108.7
|
62.2
|
26.7
|
178.6
|
$ | (14.1 | ) |
12,908.8
|
|||||||||||||||||||||||||
Property,
plant and equipment
|
321.9
|
208.0
|
2,884.3
|
3,080.4
|
2,741.9
|
368.3
|
31.9
|
9,636.7
|
||||||||||||||||||||||||||||
Deferred
income taxes
|
1,103.4
|
540.9
|
32.5
|
(831.4 | ) |
845.4
|
||||||||||||||||||||||||||||||
Goodwill
and other intangible assets
|
106.0
|
20.3
|
1,049.1
|
163.5
|
2.6
|
5.0
|
1,346.5
|
|||||||||||||||||||||||||||||
Investments in capital stocks of | ||||||||||||||||||||||||||||||||||||
subsidiaries
|
15,155.1
|
(15,155.1 | ) | |||||||||||||||||||||||||||||||||
Other
assets
|
906.8
|
319.2
|
140.4
|
18.4
|
258.6
|
37.9
|
101.6
|
(0.7 | ) |
1,782.2
|
||||||||||||||||||||||||||
Deferred
acquisition costs of
|
||||||||||||||||||||||||||||||||||||
insurance
subsidiaries
|
1,189.3
|
1,189.3
|
||||||||||||||||||||||||||||||||||
Separate
account business
|
471.7
|
471.7
|
||||||||||||||||||||||||||||||||||
Total
assets
|
$ |
60,072.9
|
$ |
2,900.3
|
$ |
4,278.5
|
$ |
4,301.9
|
$ |
3,811.3
|
$ |
494.5
|
$ |
19,106.8
|
$ | (16,001.3 | ) | $ |
78,964.9
|
|||||||||||||||||
Liabilities
and Shareholders’ Equity:
|
||||||||||||||||||||||||||||||||||||
Insurance
reserves
|
$ |
40,751.3
|
$ | (1.8 | ) | $ |
40,749.5
|
|||||||||||||||||||||||||||||
Payable
for securities purchased
|
3,112.3
|
$ |
11.4
|
$ |
474.8
|
3,598.5
|
||||||||||||||||||||||||||||||
Collateral on loaned securities | ||||||||||||||||||||||||||||||||||||
and
derivatives
|
83.4
|
83.4
|
||||||||||||||||||||||||||||||||||
Short-term
debt
|
150.3
|
$ |
9.4
|
$ |
4.5
|
164.2
|
||||||||||||||||||||||||||||||
Long-term
debt
|
2,006.3
|
503.0
|
1,615.0
|
$ |
1,847.5
|
230.4
|
865.8
|
7,068.0
|
||||||||||||||||||||||||||||
Reinsurance
balances payable
|
482.7
|
482.7
|
||||||||||||||||||||||||||||||||||
Deferred
income taxes
|
382.8
|
4.6
|
77.9
|
45.8
|
320.3
|
(831.4 | ) | |||||||||||||||||||||||||||||
Other
liabilities
|
2,573.4
|
$ |
1,615.7
|
446.4
|
214.6
|
440.1
|
15.4
|
117.8
|
(8.1 | ) |
5,415.3
|
|||||||||||||||||||||||||
Separate
account business
|
471.7
|
471.7
|
||||||||||||||||||||||||||||||||||
Total
liabilities
|
49,631.4
|
1,615.7
|
1,341.6
|
1,845.6
|
2,365.5
|
296.1
|
1,778.7
|
(841.3 | ) |
58,033.3
|
||||||||||||||||||||||||||
Minority
interest
|
1,446.8
|
1,432.8
|
772.7
|
3,652.3
|
||||||||||||||||||||||||||||||||
Shareholders’
equity
|
8,994.7
|
1,284.6
|
1,504.1
|
2,456.3
|
673.1
|
198.4
|
17,328.1
|
(15,160.0 | ) |
17,279.3
|
||||||||||||||||||||||||||
Total
liabilities and shareholders’ equity
|
$ |
60,072.9
|
$ |
2,900.3
|
$ |
4,278.5
|
$ |
4,301.9
|
$ |
3,811.3
|
$ |
494.5
|
$ |
19,106.8
|
$ | (16,001.3 | ) | $ |
78,964.9
|
December
31, 2006
|
CNA
Financial
|
Lorillard
|
Diamond
Offshore
|
Boardwalk
Pipeline
|
Loews
Hotels
|
Corporate
and
Other
|
Eliminations
|
Total
|
||||||||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||
Investments
|
$ |
44,094.2
|
$ |
1,767.5
|
$ |
815.6
|
$ |
397.9
|
$ |
9.7
|
$ |
6,803.9
|
$ |
53,888.8
|
||||||||||||||||||
Cash
|
83.9
|
1.2
|
10.2
|
1.1
|
14.8
|
22.6
|
133.8
|
|||||||||||||||||||||||||
Receivables
|
12,202.4
|
15.6
|
567.5
|
87.7
|
27.6
|
128.6
|
$ | (2.1 | ) |
13,027.3
|
||||||||||||||||||||||
Property,
plant and equipment
|
240.9
|
196.4
|
2,653.8
|
2,024.4
|
362.5
|
23.3
|
5,501.3
|
|||||||||||||||||||||||||
Deferred
income taxes
|
884.6
|
495.7
|
14.8
|
(774.2 | ) |
620.9
|
||||||||||||||||||||||||||
Goodwill
and other intangible assets
|
106.0
|
21.8
|
163.5
|
2.6
|
5.0
|
298.9
|
||||||||||||||||||||||||||
Investments in capital stocks of | ||||||||||||||||||||||||||||||||
subsidiaries
|
12,313.4
|
(12,313.4 | ) | |||||||||||||||||||||||||||||
Other
assets
|
933.3
|
282.8
|
101.5
|
263.5
|
41.9
|
93.5
|
1,716.5
|
|||||||||||||||||||||||||
Deferred acquisition costs of | ||||||||||||||||||||||||||||||||
insurance
subsidiaries
|
1,190.4
|
1,190.4
|
||||||||||||||||||||||||||||||
Separate
account business
|
503.0
|
503.0
|
||||||||||||||||||||||||||||||
Total
assets
|
$ |
60,238.7
|
$ |
2,759.2
|
$ |
4,170.4
|
$ |
2,938.1
|
$ |
459.1
|
$ |
19,405.1
|
$ | (13,089.7 | ) | $ |
76,880.9
|
|||||||||||||||
Liabilities
and Shareholders’ Equity:
|
||||||||||||||||||||||||||||||||
Insurance
reserves
|
$ |
41,079.9
|
$ |
41,079.9
|
||||||||||||||||||||||||||||
Payable
for securities purchased
|
320.0
|
$ |
0.2
|
$ |
726.5
|
1,046.7
|
||||||||||||||||||||||||||
Collateral
on loaned securities and derivatives
|
2,850.9
|
750.6
|
3,601.5
|
|||||||||||||||||||||||||||||
Short-term
debt
|
0.3
|
4.3
|
4.6
|
|||||||||||||||||||||||||||||
Long-term
debt
|
2,155.5
|
$ |
964.3
|
$ |
1,350.9
|
231.7
|
865.4
|
5,567.8
|
||||||||||||||||||||||||
Reinsurance
balances payable
|
539.1
|
539.1
|
||||||||||||||||||||||||||||||
Deferred
income taxes
|
438.6
|
44.4
|
50.0
|
241.2
|
$ | (774.2 | ) | |||||||||||||||||||||||||
Other
liabilities
|
2,734.1
|
$ |
1,463.9
|
400.8
|
345.4
|
4.3
|
206.7
|
(15.0 | ) |
5,140.2
|
||||||||||||||||||||||
Separate
account business
|
503.0
|
503.0
|
||||||||||||||||||||||||||||||
Total
liabilities
|
50,182.8
|
1,463.9
|
1,803.7
|
1,740.7
|
290.5
|
2,790.4
|
(789.2 | ) |
57,482.8
|
|||||||||||||||||||||||
Minority
interest
|
1,349.6
|
1,061.9
|
484.8
|
2,896.3
|
||||||||||||||||||||||||||||
Shareholders’
equity
|
8,706.3
|
1,295.3
|
1,304.8
|
712.6
|
168.6
|
16,614.7
|
(12,300.5 | ) |
16,501.8
|
|||||||||||||||||||||||
Total
liabilities and shareholders’ equity
|
$ |
60,238.7
|
$ |
2,759.2
|
$ |
4,170.4
|
$ |
2,938.1
|
$ |
459.1
|
$ |
19,405.1
|
$ | (13,089.7 | ) | $ |
76,880.9
|
Nine
Months Ended September 30, 2007
|
CNA
Financial
|
Lorillard
|
Diamond
Offshore
|
HighMount
|
Boardwalk
Pipeline
|
Loews
Hotels
|
Corporate
and
Other
|
Eliminations
|
Total
|
|||||||||||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||||||
Insurance
premiums
|
$ |
5,617.2
|
$ | (1.1 | ) | $ |
5,616.1
|
|||||||||||||||||||||||||||||
Net
investment income
|
1,858.5
|
$ |
86.8
|
$ |
26.1
|
$ |
16.3
|
$ |
1.6
|
$ |
263.8
|
2,253.1
|
||||||||||||||||||||||||
Intercompany
interest and dividends
|
1,171.4
|
(1,171.4 | ) | |||||||||||||||||||||||||||||||||
Investment
gains (losses)
|
(216.8 | ) |
2.9
|
1.7
|
$ |
32.3
|
(179.9 | ) | ||||||||||||||||||||||||||||
Gain
on issuance of subsidiary stock
|
(3.0 | ) |
141.7
|
138.7
|
||||||||||||||||||||||||||||||||
Manufactured
products
|
3,012.2
|
135.8
|
3,148.0
|
|||||||||||||||||||||||||||||||||
Other
|
210.8
|
0.4
|
1,909.0
|
100.2
|
474.1
|
283.5
|
2.1
|
(5.8 | ) |
2,974.3
|
||||||||||||||||||||||||||
Total
|
7,469.7
|
3,102.3
|
1,933.8
|
132.5
|
490.4
|
285.1
|
1,714.8
|
(1,178.3 | ) |
13,950.3
|
||||||||||||||||||||||||||
Expenses:
|
||||||||||||||||||||||||||||||||||||
Insurance claims and | ||||||||||||||||||||||||||||||||||||
policyholders’
benefits
|
4,495.7
|
4,495.7
|
||||||||||||||||||||||||||||||||||
Amortization
of deferred acquisition costs
|
1,137.1
|
1,137.1
|
||||||||||||||||||||||||||||||||||
Cost
of manufactured products sold
|
1,771.7
|
67.3
|
1,839.0
|
|||||||||||||||||||||||||||||||||
Other
operating expenses
|
713.4
|
246.4
|
973.4
|
58.4
|
288.1
|
229.5
|
101.1
|
(6.9 | ) |
2,603.4
|
||||||||||||||||||||||||||
Interest
|
104.5
|
3.7
|
17.0
|
12.2
|
46.1
|
8.6
|
41.8
|
233.9
|
||||||||||||||||||||||||||||
Total
|
6,450.7
|
2,021.8
|
990.4
|
70.6
|
334.2
|
238.1
|
210.2
|
(6.9 | ) |
10,309.1
|
||||||||||||||||||||||||||
1,019.0
|
1,080.5
|
943.4
|
61.9
|
156.2
|
47.0
|
1,504.6
|
(1,171.4 | ) |
3,641.2
|
|||||||||||||||||||||||||||
Income
tax expense
|
282.5
|
396.1
|
292.1
|
22.2
|
47.6
|
18.2
|
116.5
|
1,175.2
|
||||||||||||||||||||||||||||
Minority
interest
|
113.4
|
333.6
|
35.0
|
482.0
|
||||||||||||||||||||||||||||||||
Total
|
395.9
|
396.1
|
625.7
|
22.2
|
82.6
|
18.2
|
116.5
|
-
|
1,657.2
|
|||||||||||||||||||||||||||
Income
from continuing operations
|
623.1
|
684.4
|
317.7
|
39.7
|
73.6
|
28.8
|
1,388.1
|
(1,171.4 | ) |
1,984.0
|
||||||||||||||||||||||||||
Discontinued
operations, net
|
(6.6 | ) | (6.6 | ) | ||||||||||||||||||||||||||||||||
Net
income
|
$ |
616.5
|
$ |
684.4
|
$ |
317.7
|
$ |
39.7
|
$ |
73.6
|
$ |
28.8
|
$ |
1,388.1
|
$ | (1,171.4 | ) | $ |
1,977.4
|
Nine
Months Ended September 30, 2006
|
CNA
Financial
|
Lorillard
|
Diamond
Offshore
|
Boardwalk
Pipeline
|
Loews
Hotels
|
Corporate
and
Other
|
Eliminations
|
Total
|
||||||||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Insurance
premiums
|
$ |
5,704.1
|
$ | (0.1 | ) | $ |
5,704.0
|
|||||||||||||||||||||||||
Net
investment income
|
1,721.8
|
$ |
71.6
|
$ |
26.8
|
$ |
1.8
|
$ |
0.7
|
$ |
216.8
|
2,039.5
|
||||||||||||||||||||
Intercompany
interest and dividends
|
1,047.6
|
(1,047.6 | ) | |||||||||||||||||||||||||||||
Investment
gains (losses)
|
(63.8 | ) | (0.5 | ) | (0.1 | ) |
1.6
|
(62.8 | ) | |||||||||||||||||||||||
Gain
on issuance of subsidiary stock
|
1.5
|
7.5
|
9.0
|
|||||||||||||||||||||||||||||
Manufactured
products
|
2,818.1
|
136.5
|
2,954.6
|
|||||||||||||||||||||||||||||
Other
|
174.8
|
0.1
|
1,478.8
|
440.6
|
279.5
|
10.9
|
2,384.7
|
|||||||||||||||||||||||||
Total
|
7,538.4
|
2,889.3
|
1,505.5
|
442.4
|
280.2
|
1,420.9
|
(1,047.7 | ) |
13,029.0
|
|||||||||||||||||||||||
Expenses:
|
||||||||||||||||||||||||||||||||
Insurance
claims and policyholders’
|
||||||||||||||||||||||||||||||||
benefits
|
4,446.1
|
4,446.1
|
||||||||||||||||||||||||||||||
Amortization
of deferred acquisition costs
|
1,132.4
|
1,132.4
|
||||||||||||||||||||||||||||||
Cost
of manufactured products sold
|
1,638.0
|
68.0
|
1,706.0
|
|||||||||||||||||||||||||||||
Other
operating expenses
|
712.8
|
285.2
|
819.7
|
264.1
|
231.3
|
97.6
|
(0.1 | ) |
2,410.6
|
|||||||||||||||||||||||
Restructuring
and other related charges
|
(12.9 | ) | (12.9 | ) | ||||||||||||||||||||||||||||
Interest
|
93.4
|
0.1
|
18.7
|
45.8
|
9.0
|
57.0
|
224.0
|
|||||||||||||||||||||||||
Total
|
6,371.8
|
1,923.3
|
838.4
|
309.9
|
240.3
|
222.6
|
(0.1 | ) |
9,906.2
|
|||||||||||||||||||||||
1,166.6
|
966.0
|
667.1
|
132.5
|
39.9
|
1,198.3
|
(1,047.6 | ) |
3,122.8
|
||||||||||||||||||||||||
Income
tax expense (benefit)
|
344.4
|
374.5
|
203.7
|
45.2
|
14.3
|
52.9
|
1,035.0
|
|||||||||||||||||||||||||
Minority
interest
|
100.3
|
221.8
|
19.2
|
341.3
|
||||||||||||||||||||||||||||
Total
|
444.7
|
374.5
|
425.5
|
64.4
|
14.3
|
52.9
|
1,376.3
|
|||||||||||||||||||||||||
Income
from continuing operations
|
721.9
|
591.5
|
241.6
|
68.1
|
25.6
|
1,145.4
|
(1,047.6 | ) |
1,746.5
|
|||||||||||||||||||||||
Discontinued
operations, net
|
(1.7 | ) | (1.7 | ) | ||||||||||||||||||||||||||||
Net
income
|
$ |
720.2
|
$ |
591.5
|
$ |
241.6
|
$ |
68.1
|
$ |
25.6
|
$ |
1,145.4
|
$ | (1,047.6 | ) | $ |
1,744.8
|
Page
No.
|
|
Overview
|
56
|
Consolidated
Financial
Results
|
57
|
Classes
of Common
Stock
|
58
|
Parent
Company
Structure
|
59
|
Critical
Accounting Estimates
|
59
|
Results
of Operations by Business Segment
|
60
|
CNA
Financial
|
60
|
Standard
Lines
|
61
|
Specialty
Lines
|
63
|
Life
and Group
Non-Core
|
65
|
Other
Insurance
|
65
|
APMT
Reserves
|
66
|
Lorillard
|
72
|
Results
of
Operations
|
72
|
Business
Environment
|
74
|
Diamond
Offshore
|
75
|
Boardwalk
Pipeline
|
77
|
Loews
Hotels
|
79
|
Corporate
and
Other
|
79
|
Liquidity
and Capital Resources
|
80
|
CNA
Financial
|
80
|
Lorillard
|
82
|
Diamond
Offshore
|
83
|
Boardwalk
Pipeline
|
84
|
Loews
Hotels
|
85
|
Corporate
and
Other
|
85
|
Investments
|
86
|
Accounting
Standards
|
92
|
Forward-Looking
Statements
|
92
|
|
·
|
commercial
property and casualty insurance (CNA Financial Corporation (“CNA”), an 89%
owned subsidiary);
|
|
·
|
production
and sale of cigarettes (Lorillard, Inc. (“Lorillard”), a wholly owned
subsidiary);
|
|
·
|
operation
of offshore oil and gas drilling rigs (Diamond Offshore Drilling,
Inc.
(“Diamond Offshore”), a 51% owned
subsidiary);
|
|
·
|
natural
gas and oil exploration and production (HighMount Exploration &
Production LLC (together with its subsidiaries “HighMount”), a wholly
owned subsidiary);
|
|
·
|
operation
of interstate natural gas transmission pipeline systems (Boardwalk
Pipeline Partners, LP (“Boardwalk Pipeline”), a 75% owned
subsidiary);
|
|
·
|
operation
of hotels (Loews Hotels Holding Corporation (“Loews Hotels”), a wholly
owned subsidiary) and
|
|
·
|
distribution
and sale of watches and clocks (Bulova Corporation (“Bulova”), a wholly
owned subsidiary).
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions, except per share data)
|
||||||||||||||||
Net
income attributable to Loews common stock:
|
||||||||||||||||
Income
before net investment gains (losses)
|
$ |
441.0
|
$ |
480.8
|
$ |
1,593.3
|
$ |
1,495.1
|
||||||||
Net
investment gains (losses)
|
(31.1 | ) |
30.7
|
(14.3 | ) | (27.9 | ) | |||||||||
Income
from continuing operations
|
409.9
|
511.5
|
1,579.0
|
1,467.2
|
||||||||||||
Discontinued
operations, net
|
0.1
|
5.7
|
(6.6 | ) | (1.7 | ) | ||||||||||
Net
income attributable to Loews common stock
|
410.0
|
517.2
|
1,572.4
|
1,465.5
|
||||||||||||
Net
income attributable to Carolina Group stock
|
145.7
|
117.9
|
405.0
|
279.3
|
||||||||||||
Consolidated
net income
|
$ |
555.7
|
$ |
635.1
|
$ |
1,977.4
|
$ |
1,744.8
|
Net
income per share:
|
||||||||||||||||
Loews
common stock
|
||||||||||||||||
Income
from continuing operations
|
$ |
0.77
|
$ |
0.93
|
$ |
2.93
|
$ |
2.64
|
||||||||
Discontinued
operations, net
|
0.01
|
(0.01 | ) | |||||||||||||
Loews
common stock
|
$ |
0.77
|
$ |
0.94
|
$ |
2.92
|
$ |
2.64
|
||||||||
Carolina
Group stock
|
$ |
1.34
|
$ |
1.17
|
$ |
3.73
|
$ |
3.16
|
|
·
|
our
100% stock ownership interest in Lorillard,
Inc.;
|
|
·
|
notional,
intergroup debt owed by the Carolina Group to the Loews Group ($829.1
million outstanding at September 30, 2007), bearing interest at the
annual
rate of 8.0% and, subject to optional prepayment, due December 31,
2021;
and
|
|
·
|
any
and all liabilities, costs and expenses arising out of or related
to
tobacco or tobacco-related
businesses.
|
|
·
|
Insurance
Reserves
|
|
·
|
Reinsurance
|
|
·
|
Tobacco
and Other Litigation
|
|
·
|
Valuation
of Investments and Impairment of
Securities
|
|
·
|
Long
Term Care Products
|
|
·
|
Pension
and Postretirement Benefit
Obligations
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions, except %)
|
||||||||||||||||
Net
written premiums
|
$ |
956.0
|
$ |
1,121.0
|
$ |
3,171.0
|
$ |
3,394.0
|
||||||||
Net
earned premiums
|
1,054.0
|
1,128.0
|
3,169.0
|
3,310.0
|
||||||||||||
Net
investment income
|
247.7
|
239.0
|
783.6
|
705.3
|
||||||||||||
Net
operating income
|
190.7
|
146.2
|
515.5
|
420.0
|
||||||||||||
Net
realized investment gains (losses)
|
(17.0 | ) |
9.9
|
(73.6 | ) | (3.7 | ) | |||||||||
Net
income
|
173.7
|
156.1
|
441.9
|
416.3
|
||||||||||||
Ratios:
|
||||||||||||||||
Loss
and loss adjustment expense
|
61.6 | % | 68.7 | % | 66.2 | % | 69.4 | % | ||||||||
Expense
|
30.8
|
30.1
|
30.8
|
30.7
|
||||||||||||
Dividend
|
0.3
|
0.4
|
0.1
|
0.4
|
||||||||||||
Combined
|
92.7 | % | 99.2 | % | 97.1 | % | 100.5 | % |
September
30,
2007
|
December
31,
2006
|
|||||||
(In
millions)
|
||||||||
Gross
Case Reserves
|
$ |
6,868.0
|
$ |
6,746.0
|
||||
Gross
IBNR Reserves
|
7,879.0
|
8,188.0
|
||||||
Total
Gross Carried Claim and Claim Adjustment Expense Reserves
|
$ |
14,747.0
|
$ |
14,934.0
|
||||
Net
Case Reserves
|
$ |
5,407.0
|
$ |
5,234.0
|
||||
Net
IBNR Reserves
|
6,376.0
|
6,632.0
|
||||||
Total
Net Carried Claim and Claim Adjustment Expense Reserves
|
$ |
11,783.0
|
$ |
11,866.0
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions, except %)
|
||||||||||||||||
Net
written premiums
|
$ |
683.0
|
$ |
675.0
|
$ |
1,972.0
|
$ |
1,948.0
|
||||||||
Net
earned premiums
|
672.0
|
654.0
|
1,977.0
|
1,915.0
|
||||||||||||
Net
investment income
|
113.1
|
100.2
|
343.5
|
286.6
|
||||||||||||
Net
operating income
|
103.5
|
107.5
|
330.8
|
311.5
|
||||||||||||
Net
realized investment gains (losses)
|
(7.3 | ) |
3.6
|
(30.1 | ) | (2.4 | ) | |||||||||
Net
income
|
96.2
|
111.1
|
300.7
|
309.1
|
||||||||||||
Ratios:
|
||||||||||||||||
Loss
and loss adjustment expense
|
62.3 | % | 60.7 | % | 61.6 | % | 60.4 | % | ||||||||
Expense
|
27.3
|
25.8
|
26.7
|
26.4
|
||||||||||||
Dividend
|
0.2
|
0.1
|
0.2
|
0.1
|
||||||||||||
Combined
|
89.8 | % | 86.6 | % | 88.5 | % | 86.9 | % |
September
30,
2007
|
December
31,
2006
|
|||||||
(In
millions)
|
||||||||
Gross
Case Reserves
|
$ |
1,705.0
|
$ |
1,715.0
|
||||
Gross
IBNR Reserves
|
4,277.0
|
3,814.0
|
||||||
Total
Gross Carried Claim and Claim Adjustment Expense Reserves
|
$ |
5,982.0
|
$ |
5,529.0
|
||||
Net
Case Reserves
|
$ |
1,370.0
|
$ |
1,350.0
|
||||
Net
IBNR Reserves
|
3,263.0
|
2,921.0
|
||||||
Total
Net Carried Claim and Claim Adjustment Expense Reserves
|
$ |
4,633.0
|
$ |
4,271.0
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Net
earned premiums
|
$ |
156.0
|
$ |
160.0
|
$ |
469.0
|
$ |
482.0
|
||||||||
Net
investment income
|
145.1
|
179.6
|
494.5
|
504.2
|
||||||||||||
Net
operating loss
|
(116.5 | ) | (13.1 | ) | (126.3 | ) | (11.6 | ) | ||||||||
Net
realized investment losses
|
(5.0 | ) | (6.3 | ) | (14.8 | ) | (33.4 | ) | ||||||||
Net
loss
|
(121.5 | ) | (19.4 | ) | (141.1 | ) | (45.0 | ) |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Net
investment income
|
$ |
74.0
|
$ |
81.0
|
$ |
238.0
|
$ |
226.0
|
||||||||
Revenues
|
60.8
|
88.4
|
201.2
|
197.2
|
||||||||||||
Net
operating income
|
11.5
|
16.4
|
29.1
|
35.6
|
||||||||||||
Net
realized investment gains (losses)
|
(3.7 | ) |
16.6
|
(7.5 | ) |
5.9
|
||||||||||
Net
income
|
7.8
|
33.0
|
21.6
|
41.5
|
September
30,
2007
|
December
31,
2006
|
|||||||
(In
millions)
|
||||||||
Gross
Case Reserves
|
$ |
2,247.0
|
$ |
2,511.0
|
||||
Gross
IBNR Reserves
|
2,919.0
|
3,528.0
|
||||||
Total
Gross Carried Claim and Claim Adjustment Expense Reserves
|
$ |
5,166.0
|
$ |
6,039.0
|
||||
Net
Case Reserves
|
$ |
1,388.0
|
$ |
1,453.0
|
||||
Net
IBNR Reserves
|
1,745.0
|
1,999.0
|
||||||
Total
Net Carried Claim and Claim Adjustment Expense Reserves
|
$ |
3,133.0
|
$ |
3,452.0
|
September
30, 2007
|
Number
of
Policyholders
|
Net
Paid
Losses
|
Net
Asbestos
Reserves
|
Percent
of
Asbestos
Net
Reserves
|
||||||||||||
(In
millions of dollars)
|
||||||||||||||||
Policyholders
with settlement agreements
|
||||||||||||||||
Structured
settlements
|
14
|
$ |
27.0
|
$ |
158.0
|
11.8 | % | |||||||||
Wellington
|
3
|
1.0
|
13.0
|
1.0
|
||||||||||||
Coverage
in place
|
36
|
39.0
|
84.0
|
6.3
|
||||||||||||
Total
with settlement agreements
|
53
|
67.0
|
255.0
|
19.1
|
||||||||||||
Other
policyholders with active accounts
|
||||||||||||||||
Large
asbestos accounts
|
228
|
43.0
|
206.0
|
15.4
|
||||||||||||
Small
asbestos accounts
|
1,028
|
4.0
|
84.0
|
6.3
|
||||||||||||
Total
other policyholders
|
1,256
|
47.0
|
290.0
|
21.7
|
||||||||||||
Assumed
reinsurance and pools
|
7.0
|
134.0
|
10.0
|
|||||||||||||
Unassigned
IBNR
|
658.0
|
49.2
|
||||||||||||||
Total
|
1,309
|
$ |
121.0
|
$ |
1,337.0
|
100.0 | % |
December
31, 2006
|
Number
of
Policyholders
|
Net
Paid
(Recovered)
Losses
|
Net
Asbestos
Reserves
|
Percent
of
Asbestos
Net
Reserves
|
||||||||||||
Policyholders
with settlement agreements
|
||||||||||||||||
Structured
settlements
|
15
|
$ |
22.0
|
$ |
171.0
|
11.8 | % | |||||||||
Wellington
|
3
|
(1.0 | ) |
14.0
|
1.0
|
|||||||||||
Coverage
in place
|
38
|
(18.0 | ) |
132.0
|
9.0
|
|||||||||||
Total
with settlement agreements
|
56
|
3.0
|
317.0
|
21.8
|
||||||||||||
Other
policyholders with active accounts
|
||||||||||||||||
Large
asbestos accounts
|
220
|
76.0
|
254.0
|
17.5
|
||||||||||||
Small
asbestos accounts
|
1,080
|
17.0
|
101.0
|
7.0
|
||||||||||||
Total
other policyholders
|
1,300
|
93.0
|
355.0
|
24.5
|
||||||||||||
Assumed
reinsurance and pools
|
6.0
|
141.0
|
9.7
|
|||||||||||||
Unassigned
IBNR
|
639.0
|
44.0
|
||||||||||||||
Total
|
1,356
|
$ |
102.0
|
$ |
1,452.0
|
100.0 | % |
September
30, 2007
|
Number
of
Policyholders
|
Net
Paid
Losses
|
Net
Environmental
Pollution
Reserves
|
Percent
of
Environmental
Pollution
Net
Reserve
|
||||||||||||
(In
millions of dollars)
|
||||||||||||||||
Policyholders
with Settlement Agreements
|
||||||||||||||||
Structured
settlements
|
9
|
$ |
5.0
|
$ |
6.0
|
2.4 | % | |||||||||
Coverage
in place
|
18
|
3.0
|
11.0
|
4.3
|
||||||||||||
Total
with Settlement Agreements
|
27
|
8.0
|
17.0
|
6.7
|
||||||||||||
Other
Policyholders with Active Accounts
|
||||||||||||||||
Large
pollution accounts
|
108
|
16.0
|
55.0
|
21.6
|
||||||||||||
Small
pollution accounts
|
336
|
5.0
|
42.0
|
16.5
|
||||||||||||
Total
Other Policyholders
|
444
|
21.0
|
97.0
|
38.1
|
||||||||||||
Assumed
Reinsurance & Pools
|
1.0
|
31.0
|
12.2
|
|||||||||||||
Unassigned
IBNR
|
110.0
|
43.0
|
||||||||||||||
Total
|
471
|
$ |
30.0
|
$ |
255.0
|
100.0 | % | |||||||||
December
31, 2006
|
||||||||||||||||
Policyholders
with Settlement Agreements
|
||||||||||||||||
Structured
settlements
|
11
|
$ |
16.0
|
$ |
9.0
|
3.2 | % | |||||||||
Coverage
in place
|
18
|
5.0
|
14.0
|
4.9
|
||||||||||||
Total
with Settlement Agreements
|
29
|
21.0
|
23.0
|
8.1
|
||||||||||||
Other
Policyholders with Active Accounts
|
||||||||||||||||
Large
pollution accounts
|
115
|
20.0
|
58.0
|
20.4
|
||||||||||||
Small
pollution accounts
|
346
|
9.0
|
46.0
|
16.1
|
||||||||||||
Total
Other Policyholders
|
461
|
29.0
|
104.0
|
36.5
|
||||||||||||
Assumed
Reinsurance & Pools
|
1.0
|
32.0
|
11.2
|
|||||||||||||
Unassigned
IBNR
|
126.0
|
44.2
|
||||||||||||||
Total
|
490
|
$ |
51.0
|
$ |
285.0
|
100.0 | % |
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Manufactured
products
|
$ |
1,043.8
|
$ |
986.0
|
$ |
3,012.2
|
$ |
2,818.1
|
||||||||
Net
investment income
|
30.8
|
27.4
|
86.8
|
71.6
|
||||||||||||
Investment
gains (losses)
|
2.8
|
0.1
|
2.9
|
(0.5 | ) | |||||||||||
Other
|
0.4
|
0.1
|
||||||||||||||
Total
|
1,077.4
|
1,013.5
|
3,102.3
|
2,889.3
|
||||||||||||
Expenses:
|
||||||||||||||||
Cost
of manufactured products sold
|
613.9
|
573.7
|
1,771.7
|
1,638.0
|
||||||||||||
Other
operating
|
82.9
|
83.6
|
250.1
|
285.3
|
||||||||||||
Total
|
696.8
|
657.3
|
2,021.8
|
1,923.3
|
||||||||||||
380.6
|
356.2
|
1,080.5
|
966.0
|
|||||||||||||
Income
tax expense
|
136.9
|
137.3
|
396.1
|
374.5
|
||||||||||||
Net
income
|
$ |
243.7
|
$ |
218.9
|
$ |
684.4
|
$ |
591.5
|
|
·
|
the
number and types of cases filed and
appealed;
|
|
·
|
the
number of cases tried and appealed;
|
|
·
|
the
development of the law;
|
|
·
|
the
application of new or different theories of liability by plaintiffs
and
their counsel; and
|
|
·
|
litigation
strategy and tactics.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(Units
in billions)
|
||||||||||||||||
Total
domestic Lorillard unit volume (1)
|
9.466
|
9.623
|
27.327
|
27.232
|
||||||||||||
Total
domestic industry unit volume (1)
|
94.900
|
96.417
|
270.711
|
280.033
|
||||||||||||
Lorillard’s
share of the domestic market (1)
|
10.0 | % | 10.0 | % | 10.1 | % | 9.7 | % | ||||||||
Lorillard’s premium segment as a percentage of its | ||||||||||||||||
total
domestic volume (1)
|
94.3 | % | 94.7 | % | 94.6 | % | 94.9 | % | ||||||||
Lorillard’s
share of the premium segment (1)
|
12.9 | % | 13.0 | % | 13.0 | % | 12.7 | % | ||||||||
Newport
share of the domestic market (1)
|
9.1 | % | 9.1 | % | 9.3 | % | 8.8 | % | ||||||||
Newport
share of the premium segment (1)
|
12.5 | % | 12.6 | % | 12.7 | % | 12.3 | % | ||||||||
Total
menthol segment market share for the industry (2)
|
28.4 | % | 27.8 | % | 28.4 | % | 27.7 | % | ||||||||
Total
discount segment market share for the industry (1)
|
27.2 | % | 27.4 | % | 26.8 | % | 27.8 | % | ||||||||
Newport’s
share of the menthol segment (2)
|
33.8 | % | 33.6 | % | 33.7 | % | 33.1 | % | ||||||||
Newport
as a percentage of Lorillard’s (3):
|
||||||||||||||||
Total
volume
|
91.8 | % | 91.8 | % | 92.1 | % | 91.8 | % | ||||||||
Net
sales
|
93.9 | % | 93.4 | % | 93.9 | % | 93.2 | % |
(1)
|
Management
Science Associates, Inc.
|
(2)
|
Lorillard
proprietary data
|
(3)
|
Lorillard
shipment reports
|
|
·
|
A
substantial volume of litigation seeking compensatory and punitive
damages
ranging into the billions of dollars, as well as equitable and injunctive
relief, arising out of allegations of cancer and other health effects
resulting from the use of cigarettes, addiction to smoking or exposure
to
environmental tobacco smoke, including claims for economic damages
relating to alleged misrepresentation concerning the use of descriptors
such as “lights,” as well as other alleged damages. Please read Item 3 –
Legal Proceedings of our 2006 Annual Report on Form 10-K and Note
12 of
the Notes to Consolidated Condensed Financial Statements included
in Item
1 of this Report for information with respect to litigation and the
State
Settlement Agreements.
|
|
·
|
Substantial
annual payments by Lorillard, continuing in perpetuity, and significant
restrictions on marketing and advertising agreed to under the terms
of the
State Settlement Agreements. The State Settlement Agreements impose
a
stream of future payment obligations on Lorillard and the other major
U.S.
cigarette manufacturers and place significant restrictions on their
ability to market and sell
cigarettes.
|
|
·
|
The
continuing contraction of the U.S. cigarette market, in which Lorillard
currently conducts its only significant business. As a result of
price
increases, restrictions on advertising and promotions, increases
in
regulation and excise taxes, health concerns, a decline in the social
acceptability of smoking, increased pressure
|
from
anti-tobacco groups and other factors, U.S. cigarette shipments have
decreased at a compound rate of approximately 2.5% over the 12 months
ending September 1998 through the 12 months ending September 2007,
according to information provided by
MSAI.
|
|
|
·
|
Substantial
federal, state and local excise taxes which are reflected in the
retail
price of cigarettes. In the first nine months of 2007, the federal
excise
tax was $0.39 per pack and combined state and local excise taxes
ranged
from $0.07 to $3.66 per pack. In the first nine months of 2007, excise
tax
increases ranging from $0.20 to $1.00 per pack were implemented in
ten
states. Proposals continue to be made to increase federal, state
and local
excise taxes. One measure passed by Congress in September of 2007
would
have increased the federal excise tax on cigarettes by $0.61 per
pack to
finance health insurance for children. While this bill was vetoed
by the
President, it is possible that similar bills or other proposals containing
a federal excise tax increase may be considered by Congress in the
future.
Lorillard believes that increases in excise and similar taxes have
had an
adverse impact on sales of cigarettes and that future increases,
the
extent of which cannot be predicted, could result in further volume
declines for the cigarette industry, including Lorillard, and an
increased
sales shift toward lower priced discount cigarettes rather than premium
brands. In addition, Lorillard, other cigarette manufacturers and
importers are required to pay an assessment under a federal law designed
to fund payments to tobacco quota holders and
growers.
|
|
·
|
Substantial
and increasing regulation of the tobacco industry and governmental
restrictions on smoking. Bills have been introduced in the U.S. Congress
to grant the Food and Drug Administration (“FDA”) authority to regulate
tobacco products. Lorillard believes that FDA regulations, if enacted,
could among other things result in new restrictions on the manner
in which
cigarettes can be advertised and marketed, and may alter the way
cigarette
products are developed and manufactured. Lorillard also believes
that any
such proposals, if enacted, would provide Philip Morris, as the largest
tobacco company in the country, with a competitive
advantage.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Operating
|
$ |
646.5
|
$ |
517.6
|
$ |
1,909.0
|
$ |
1,478.8
|
||||||||
Net
investment income
|
8.7
|
10.0
|
26.1
|
26.8
|
||||||||||||
Investment
gains (losses)
|
1.7
|
0.1
|
(1.3 | ) | (0.1 | ) | ||||||||||
Total
|
656.9
|
527.7
|
1,933.8
|
1,505.5
|
||||||||||||
Expenses:
|
||||||||||||||||
Operating
|
367.8
|
300.1
|
973.4
|
819.7
|
||||||||||||
Interest
|
2.4
|
6.2
|
17.0
|
18.7
|
||||||||||||
Total
|
370.2
|
306.3
|
990.4
|
838.4
|
||||||||||||
286.7
|
221.4
|
943.4
|
667.1
|
|||||||||||||
Income
tax expense
|
89.6
|
64.5
|
292.1
|
203.7
|
||||||||||||
Minority
interest
|
101.7
|
75.1
|
333.6
|
221.8
|
||||||||||||
Net
income
|
$ |
95.4
|
$ |
81.8
|
$ |
317.7
|
$ |
241.6
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Operating
|
$ |
135.2
|
$ |
134.3
|
$ |
474.1
|
$ |
440.6
|
||||||||
Net
investment income
|
5.8
|
0.6
|
16.3
|
1.8
|
||||||||||||
Total
|
141.0
|
134.9
|
490.4
|
442.4
|
||||||||||||
Expenses:
|
||||||||||||||||
Operating
|
85.9
|
88.8
|
288.1
|
264.1
|
||||||||||||
Interest
|
14.8
|
15.0
|
46.1
|
45.8
|
||||||||||||
Total
|
100.7
|
103.8
|
334.2
|
309.9
|
||||||||||||
40.3
|
31.1
|
156.2
|
132.5
|
|||||||||||||
Income
tax expense
|
12.3
|
10.7
|
47.6
|
45.2
|
||||||||||||
Minority
interest
|
9.9
|
4.5
|
35.0
|
19.2
|
||||||||||||
Net
income
|
$ |
18.1
|
$ |
15.9
|
$ |
73.6
|
$ |
68.1
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Operating
|
$ |
89.3
|
$ |
84.6
|
$ |
283.5
|
$ |
279.5
|
||||||||
Net
investment income
|
0.7
|
0.3
|
1.6
|
0.7
|
||||||||||||
Total
|
90.0
|
84.9
|
285.1
|
280.2
|
||||||||||||
Expenses:
|
||||||||||||||||
Operating
|
80.4
|
75.3
|
229.5
|
231.3
|
||||||||||||
Interest
|
2.9
|
3.2
|
8.6
|
9.0
|
||||||||||||
Total
|
83.3
|
78.5
|
238.1
|
240.3
|
||||||||||||
6.7
|
6.4
|
47.0
|
39.9
|
|||||||||||||
Income
tax expense
|
2.6
|
1.3
|
18.2
|
14.3
|
||||||||||||
Net
income
|
$ |
4.1
|
$ |
5.1
|
$ |
28.8
|
$ |
25.6
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Manufactured
products
|
$ |
49.6
|
$ |
49.5
|
$ |
135.8
|
$ |
136.5
|
||||||||
Net
investment income
|
53.3
|
56.6
|
263.8
|
216.8
|
||||||||||||
Investment
gains
|
0.2
|
10.7
|
141.7
|
9.1
|
||||||||||||
Other
|
6.1
|
4.4
|
2.1
|
10.8
|
||||||||||||
Total
|
109.2
|
121.2
|
543.4
|
373.2
|
||||||||||||
Expenses:
|
||||||||||||||||
Cost
of sales
|
24.3
|
24.3
|
67.3
|
68.0
|
||||||||||||
Operating
|
41.5
|
35.7
|
101.1
|
97.5
|
||||||||||||
Interest
|
13.8
|
18.8
|
41.8
|
57.0
|
||||||||||||
Total
|
79.6
|
78.8
|
210.2
|
222.5
|
||||||||||||
29.6
|
42.4
|
333.2
|
150.7
|
|||||||||||||
Income
tax expense
|
10.8
|
15.5
|
116.5
|
52.9
|
||||||||||||
Net
income
|
$ |
18.8
|
$ |
26.9
|
$ |
216.7
|
$ |
97.8
|
Insurance
Financial Strength Ratings
|
Debt
Ratings
|
|||
Property
& Casualty
|
Life
|
CNA
|
Continental
|
|
CCC
|
Senior
|
Senior
|
||
Group
|
CAC
|
Debt
|
Debt
|
|
A.M.
Best
|
A
|
A-
|
bbb
|
Not
rated
|
Fitch
|
A
|
Not
rated
|
BBB
|
BBB
|
Moody’s
|
A3
|
Not
rated
|
Baa3
|
Baa3
|
S&P
|
A-
|
BBB+
|
BBB-
|
BBB-
|
|
·
|
inflation;
|
|
·
|
aggregate
volume of domestic cigarette
shipments;
|
|
·
|
market
share; and
|
|
·
|
industry
operating income.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Fixed
maturity securities
|
$ |
501.4
|
$ |
476.4
|
$ |
1,523.0
|
$ |
1,371.4
|
||||||||
Short-term
investments
|
57.1
|
61.2
|
145.8
|
184.2
|
||||||||||||
Limited
partnerships
|
19.1
|
46.0
|
141.8
|
172.8
|
||||||||||||
Equity
securities
|
7.4
|
3.4
|
18.5
|
17.7
|
||||||||||||
Income
(loss) from trading portfolio (a)
|
(2.8 | ) |
30.4
|
40.6
|
62.9
|
|||||||||||
Interest
on funds withheld and other deposits
|
(10.8 | ) | (0.8 | ) | (65.4 | ) | ||||||||||
Other
|
8.8
|
2.7
|
31.7
|
10.8
|
||||||||||||
Total
investment income
|
591.0
|
609.3
|
1,900.6
|
1,754.4
|
||||||||||||
Investment
expense
|
(11.4 | ) | (9.7 | ) | (42.1 | ) | (32.6 | ) | ||||||||
Net
investment income
|
$ |
579.6
|
$ |
599.6
|
$ |
1,858.5
|
$ |
1,721.8
|
(a)
|
The
change in net unrealized gains on trading securities, included in
net
investment income, was $(12.0) million, $3.0 million, $(9.0) million
and
$(1.0) million for the three and nine months ended September 30,
2007 and
2006.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Realized
investment gains (losses):
|
||||||||||||||||
Fixed
maturity securities:
|
||||||||||||||||
U.S.
Government bonds
|
$ |
131.2
|
$ |
18.6
|
$ |
37.4
|
$ |
22.0
|
||||||||
Corporate
and other taxable bonds
|
(88.5 | ) | (17.9 | ) | (113.4 | ) | (114.2 | ) | ||||||||
Tax-exempt
bonds
|
10.1
|
40.2
|
(43.2 | ) |
51.5
|
|||||||||||
Asset-backed
bonds
|
(80.6 | ) | (1.5 | ) | (190.7 | ) | (15.2 | ) | ||||||||
Redeemable
preferred stock
|
(11.8 | ) | (2.1 | ) | (12.3 | ) | (3.0 | ) | ||||||||
Total
fixed maturity securities
|
(39.6 | ) |
37.3
|
(322.2 | ) | (58.9 | ) | |||||||||
Equity
securities
|
16.3
|
(2.9 | ) |
30.3
|
3.0
|
|||||||||||
Derivative
securities
|
(45.2 | ) | (13.0 | ) |
61.8
|
(7.5 | ) | |||||||||
Short-term
investments
|
5.2
|
(1.6 | ) |
5.2
|
(5.6 | ) | ||||||||||
Other
invested assets, including dispositions
|
7.6
|
6.5
|
8.5
|
4.7
|
||||||||||||
Allocated
to participating policyholders’ and
|
||||||||||||||||
minority
interests
|
(0.8 | ) |
0.3
|
(0.4 | ) |
2.0
|
||||||||||
Total
realized investment gains (losses)
|
(56.5 | ) |
26.6
|
(216.8 | ) | (62.3 | ) | |||||||||
Income
tax (expense) benefit
|
19.3
|
(0.6 | ) |
75.0
|
25.5
|
|||||||||||
Minority
interest
|
4.2
|
(2.2 | ) |
15.8
|
3.2
|
|||||||||||
Net
realized investment gains (losses)
|
$ | (33.0 | ) | $ |
23.8
|
$ | (126.0 | ) | $ | (33.6 | ) |
September
30, 2007
|
December
31, 2006
|
|||||||||||||||
Effective
Duration
|
Effective
Duration
|
|||||||||||||||
Fair
Value
|
(In
years)
|
Fair
Value
|
(In
years)
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Segregated
investments
|
$ |
8,899.0
|
10.5
|
$ |
8,524.0
|
9.8
|
||||||||||
Other
interest sensitive investments
|
29,740.0
|
3.5
|
30,178.0
|
3.2
|
||||||||||||
Total
|
$ |
38,639.0
|
5.1
|
$ |
38,702.0
|
4.7
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Net realized gains (losses) on fixed maturity | ||||||||||||||||
and
equity securities:
|
||||||||||||||||
Fixed
maturity securities:
|
||||||||||||||||
Gross
realized gains
|
$ |
181.0
|
$ |
114.0
|
$ |
324.0
|
$ |
216.0
|
||||||||
Gross
realized losses
|
(220.0 | ) | (77.0 | ) | (646.0 | ) | (275.0 | ) | ||||||||
Net
realized gains (losses) on fixed maturity securities
|
(39.0 | ) |
37.0
|
(322.0 | ) | (59.0 | ) | |||||||||
Equity
securities:
|
||||||||||||||||
Gross
realized gains
|
30.0
|
1.0
|
50.0
|
9.0
|
||||||||||||
Gross
realized losses
|
(14.0 | ) | (4.0 | ) | (20.0 | ) | (6.0 | ) | ||||||||
Net
realized gains (losses) on equity securities
|
16.0
|
(3.0 | ) |
30.0
|
3.0
|
|||||||||||
Net realized gains (losses) on fixed maturity | ||||||||||||||||
and
equity securities
|
$ | (23.0 | ) | $ |
34.0
|
$ | (292.0 | ) | $ | (56.0 | ) |
Months
in
|
||||||||||||
Fair
Value
|
Unrealized
|
|||||||||||
Date
of
|
Loss
|
Loss
Prior
|
||||||||||
Issuer
Description and Discussion
|
Sale
|
On
Sale
|
To
Sale (a)
|
|||||||||
(In
millions)
|
||||||||||||
Various notes and bonds issued by the United States Treasury. | ||||||||||||
Securities
sold due to outlook on interest rates.
|
$ |
10,674.0
|
$ |
83.0
|
0-6
|
|||||||
Mortgage-backed pass-through securities sold based on view of | ||||||||||||
interest
rate changes.
|
394.0
|
9.0
|
0-6
|
|||||||||
Bank and financial issuer that came under pressure due to the | ||||||||||||
mortgage
market disruption.
|
35.0
|
5.0
|
0-6
|
|||||||||
State specific general obligation municipal bonds sold to reduce | ||||||||||||
exposure
due to a change in outlook.
|
513.0
|
5.0
|
0-6
|
|||||||||
Total
|
$ |
11,616.0
|
$ |
102.0
|
(a)
|
Represents
the range of consecutive months the various positions were in an
unrealized loss prior to sale. 0-12+ means certain positions were
less
than 12 months, while others were greater than 12
months.
|
September
30, 2007
|
December
31, 2006
|
|||||||||||||||
(In
millions of dollars)
|
||||||||||||||||
General
account investments:
|
||||||||||||||||
Fixed
maturity securities available-for-sale:
|
||||||||||||||||
U.S.
Treasury securities and obligations of
|
||||||||||||||||
government
agencies
|
$ |
3,135.0
|
7.1 | % | $ |
5,138.0
|
11.6 | % | ||||||||
Asset-backed
securities
|
11,245.0
|
25.6
|
13,677.0
|
31.0
|
||||||||||||
States,
municipalities and political subdivisions-
|
||||||||||||||||
tax-exempt
|
6,694.0
|
15.2
|
5,146.0
|
11.7
|
||||||||||||
Corporate
securities
|
7,820.0
|
17.8
|
7,132.0
|
16.2
|
||||||||||||
Other
debt securities
|
3,989.0
|
9.1
|
3,642.0
|
8.2
|
||||||||||||
Redeemable
preferred stock
|
1,140.0
|
2.6
|
912.0
|
2.1
|
||||||||||||
Total
fixed maturity securities available-for-sale
|
34,023.0
|
77.4
|
35,647.0
|
80.8
|
||||||||||||
Fixed
maturity securities trading:
|
||||||||||||||||
U.S.
Treasury securities and obligations of
|
||||||||||||||||
government
agencies
|
3.0
|
2.0
|
||||||||||||||
Asset-backed
securities
|
35.0
|
0.1
|
55.0
|
0.1
|
||||||||||||
Corporate
securities
|
119.0
|
0.3
|
133.0
|
0.3
|
||||||||||||
Other
debt securities
|
16.0
|
14.0
|
||||||||||||||
Total
fixed maturity securities trading
|
173.0
|
0.4
|
204.0
|
0.4
|
||||||||||||
Equity
securities available-for-sale:
|
||||||||||||||||
Common
stock
|
475.0
|
1.1
|
452.0
|
1.0
|
||||||||||||
Preferred
stock
|
133.0
|
0.3
|
145.0
|
0.4
|
||||||||||||
Total
equity securities available-for-sale
|
608.0
|
1.4
|
597.0
|
1.4
|
||||||||||||
Equity
securities trading
|
60.0
|
0.1
|
||||||||||||||
Short-term
investments available-for-sale
|
6,748.0
|
15.4
|
5,538.0
|
12.6
|
||||||||||||
Short-term
investments trading
|
224.0
|
0.5
|
172.0
|
0.4
|
||||||||||||
Limited
partnerships
|
2,093.0
|
4.8
|
1,852.0
|
4.2
|
||||||||||||
Other
investments
|
43.0
|
0.1
|
26.0
|
0.1
|
||||||||||||
Total
general account investments
|
$ |
43,912.0
|
100.0 | % | $ |
44,096.0
|
100.0 | % |
Percent
of
|
Percent
of
|
|||||||
Market
|
Unrealized
|
|||||||
Value
|
Loss
|
|||||||
Due
in one year or less
|
6.0 | % | 2.0 | % | ||||
Due
after one year through five years
|
33.0
|
29.0
|
||||||
Due
after five years through ten years
|
31.0
|
31.0
|
||||||
Due
after ten years
|
30.0
|
38.0
|
||||||
Total
|
100.0 | % | 100.0 | % |
Gross
|
||||||||||||||||||||||||
Estimated
|
Fair
Value as a Percentage of Amortized Cost
|
Unrealized
|
||||||||||||||||||||||
September
30, 2007
|
Fair
Value
|
90-99 | % | 80-89 | % | 70-79 | % |
<70%
|
Loss
|
|||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Fixed
maturity securities:
|
||||||||||||||||||||||||
Non-investment
grade:
|
||||||||||||||||||||||||
0-6
months
|
$ |
1,889.0
|
$ |
36.0
|
$ |
1.0
|
$ |
37.0
|
||||||||||||||||
7-12
months
|
4.0
|
|||||||||||||||||||||||
13-24
months
|
28.0
|
1.0
|
1.0
|
2.0
|
||||||||||||||||||||
Greater
than 24 months
|
2.0
|
|||||||||||||||||||||||
Total
non-investment grade
|
$ |
1,923.0
|
$ |
37.0
|
$ |
2.0
|
$ |
-
|
$ |
-
|
$ |
39.0
|
||||||||||||
December
31, 2006
|
||||||||||||||||||||||||
Fixed
maturity securities:
|
||||||||||||||||||||||||
Non-
investment grade:
|
||||||||||||||||||||||||
0-6
months
|
$ |
509.0
|
$ |
2.0
|
$ |
2.0
|
||||||||||||||||||
7-12
months
|
87.0
|
1.0
|
$ |
1.0
|
2.0
|
|||||||||||||||||||
13-24
months
|
24.0
|
|||||||||||||||||||||||
Greater
than 24 months
|
2.0
|
|||||||||||||||||||||||
Total
non-investment grade
|
$ |
622.0
|
$ |
3.0
|
$ |
1.0
|
$ |
-
|
$ |
-
|
$ |
4.0
|
September
30, 2007
|
December
31, 2006
|
|||||||||||||||
(In
millions of dollars)
|
||||||||||||||||
U.S.
Government and affiliated agency securities
|
$ |
3,216.0
|
9.7 | % | $ |
5,285.0
|
15.1 | % | ||||||||
Other
AAA rated
|
15,758.0
|
47.7
|
16,311.0
|
46.7
|
||||||||||||
AA
and A rated
|
5,463.0
|
16.5
|
5,222.0
|
15.0
|
||||||||||||
BBB
rated
|
5,124.0
|
15.5
|
4,933.0
|
14.1
|
||||||||||||
Non
investment-grade
|
3,495.0
|
10.6
|
3,188.0
|
9.1
|
||||||||||||
Total
|
$ |
33,056.0
|
100.0 | % | $ |
34,939.0
|
100.0 | % |
September
30,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(In
millions)
|
||||||||
Short-term
investments available-for-sale:
|
||||||||
Commercial
paper
|
$ |
4,493.0
|
$ |
923.0
|
||||
U.S.
Treasury securities
|
590.0
|
1,093.0
|
||||||
Money
market funds
|
412.0
|
196.0
|
||||||
Other,
including collateral held related to securities lending
|
1,253.0
|
3,326.0
|
||||||
Total
short-term investments available-for-sale
|
6,748.0
|
5,538.0
|
||||||
Short-term
investments trading:
|
||||||||
Commercial
paper
|
35.0
|
43.0
|
||||||
U.S.
Treasury securities
|
1.0
|
2.0
|
||||||
Money
market funds
|
171.0
|
127.0
|
||||||
Other
|
17.0
|
|||||||
Total
short-term investments trading
|
224.0
|
172.0
|
||||||
Total
short-term investments
|
$ |
6,972.0
|
$ |
5,710.0
|
|
·
|
the
impact of competitive products, policies and pricing and the competitive
environment in which CNA operates, including changes in CNA’s book of
business;
|
|
·
|
product
and policy availability and demand and market responses, including
the
level of CNA’s ability to obtain rate increases and decline or non-renew
under priced accounts, to achieve premium targets and profitability
and to
realize growth and retention
estimates;
|
|
·
|
development
of claims and the impact on loss reserves, including changes in claim
settlement policies;
|
|
·
|
the
performance of reinsurance companies under reinsurance contracts
with
CNA;
|
|
·
|
the
effects upon insurance markets and upon industry business practices
and
relationships of current litigation, investigations and regulatory
activity by the New York State Attorney General’s office and other
authorities concerning contingent commission arrangements with brokers
and
bid solicitation activities;
|
|
·
|
legal
and regulatory activities with respect to certain non-traditional
and
finite-risk insurance products, and possible resulting changes in
accounting and financial reporting in relation to such products,
including
our restatement of financial results in May of 2005 and CNA’s relationship
with an affiliate, Accord Re Ltd., as disclosed in connection with
that
restatement;
|
|
·
|
regulatory
limitations, impositions and restrictions upon CNA, including the
effects
of assessments and other surcharges for guaranty funds and second-injury
funds and other mandatory pooling
arrangements;
|
|
·
|
weather
and other natural physical events, including the severity and frequency
of
storms, hail, snowfall and other winter conditions, as well as of
natural
disasters such as hurricanes and earthquakes, as well as climate
change,
including effects on weather patterns, greenhouse gases, sea, land
and air
temperatures, sea levels, rain and
snow;
|
|
·
|
man-made
disasters, including the possible occurrence of terrorist attacks
and the
effect of the absence or insufficiency of applicable terrorism legislation
on coverages;
|
|
·
|
the
unpredictability of the nature, targets, severity or frequency of
potential terrorist events, as well as the uncertainty as to CNA’s ability
to contain its terrorism exposure effectively, notwithstanding the
extension until 2007 of the Terrorism Risk Insurance Act of
2002;
|
|
·
|
the
occurrence of epidemics;
|
|
·
|
exposure
to liabilities due to claims made by insureds and others relating
to
asbestos remediation and health-based asbestos impairments, as well
as
exposure to liabilities for environmental pollution, mass tort and
construction defect claims and exposure to liabilities due to claims
made
by insureds and others relating to lead-based
paint;
|
|
·
|
whether
a national privately financed trust to replace litigation of asbestos
claims with payments to claimants from the trust will be established
or
approved through federal legislation, or, if established and approved,
whether it will contain funding requirements in excess of CNA’s
established loss reserves or carried loss
reserves;
|
|
·
|
the
sufficiency of CNA’s loss reserves and the possibility of future increases
in reserves;
|
|
·
|
regulatory
limitations and restrictions, including limitations upon CNA’s ability to
receive dividends from its insurance subsidiaries imposed by state
regulatory agencies and minimum risk-based capital standards established
by the National Association of Insurance
Commissioners;
|
|
·
|
the
risks and uncertainties associated with CNA’s loss reserves as outlined
under “Critical Accounting Estimates, Reserves – Estimates and
Uncertainties” in the MD&A portion of this
Report;
|
|
·
|
the
possibility of further changes in CNA’s ratings by ratings agencies,
including the inability to access certain markets or distribution
channels, and the required collateralization of future payment obligations
as a result of such changes, and changes in rating agency policies
and
practices;
|
|
·
|
the
effects of corporate bankruptcies and accounting errors, such as
Enron and
WorldCom, on capital markets and on the markets for directors and
officers
and errors and omissions coverages;
|
|
·
|
general
economic and business conditions, including inflationary pressures
on
medical care costs, construction costs and other economic sectors
that
increase the severity of claims;
|
|
·
|
the
effectiveness of current initiatives by claims management to reduce
the
loss and expense ratios through more efficacious claims handling
techniques; and
|
|
·
|
changes
in the composition of CNA’s operating
segments.
|
|
·
|
health
concerns, claims and regulations relating to the use of tobacco products
and exposure to environmental tobacco
smoke;
|
|
·
|
legislation,
including actual and potential excise tax increases, and the effects
of
tobacco litigation settlements on pricing and consumption
rates;
|
|
·
|
continued
intense competition from other cigarette manufacturers, including
significant levels of promotional activities and the presence of
a sizable
deep-discount category;
|
|
·
|
the
continuing decline in volume in the domestic cigarette
industry;
|
|
·
|
increasing
marketing and regulatory restrictions, governmental regulation and
privately imposed smoking
restrictions;
|
|
·
|
litigation,
including risks associated with adverse jury and judicial determinations,
courts reaching conclusions at variance with the general understandings
of
applicable law, bonding requirements and the absence of adequate
appellate
remedies to get timely relief from any of the foregoing;
and
|
|
·
|
the
impact of each of the factors described under “Results of
Operations—Lorillard” in the MD&A portion of this
Report.
|
|
·
|
the
impact of changes in demand for oil and natural gas and oil and gas
price
fluctuations on E&P activity;
|
|
·
|
costs
and timing of rig upgrades;
|
|
·
|
utilization
levels and dayrates for offshore oil and gas drilling
rigs;
|
|
·
|
the
availability and cost of insurance, and the risks associated with
self-insurance, covering drilling
rigs;
|
|
·
|
regulatory
issues affecting natural gas transmission, including ratemaking and
other
proceedings particularly affecting our gas transmission
subsidiaries;
|
|
·
|
the
ability of Boardwalk Pipeline to renegotiate, extend or replace existing
customer contracts on favorable
terms;
|
|
·
|
the
successful development and projected cost of planned expansion projects
and investments; and
|
|
·
|
the
development of additional natural gas reserves and changes in reserve
estimates.
|
|
·
|
general
economic and business conditions;
|
|
·
|
changes
in financial markets (such as interest rate, credit, currency, commodities
and equities markets) or in the value of specific investments including
the short and long-term effects of losses produced or threatened
in
relation to sub-prime residential mortgage-backed
securities;
|
|
·
|
changes
in domestic and foreign political, social and economic conditions,
including the impact of the global war on terrorism, the war in Iraq,
the
future outbreak of hostilities and future acts of
terrorism;
|
|
·
|
potential
changes in accounting policies by the Financial Accounting Standards
Board, the SEC or regulatory agencies for any of our subsidiaries’
industries which may cause us or our subsidiaries to revise their
financial accounting and/or disclosures in the future, and which
may
change the way analysts measure our and our subsidiaries’ business or
financial performance;
|
|
·
|
the
impact of regulatory initiatives and compliance with governmental
regulations, judicial rulings and jury
verdicts;
|
|
·
|
the
results of financing efforts;
|
|
·
|
the
closing of any contemplated transactions and
agreements;
|
|
·
|
the
successful integration, transition and management of acquired businesses;
and
|
|
·
|
the
outcome of pending litigation.
|
Category
of risk exposure:
|
Fair
Value Asset (Liability)
|
Market
Risk
|
||||||||||||||
September
30,
|
December
31,
|
September
30,
|
December
31,
|
|||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Equity
markets
(1):
|
||||||||||||||||
Equity
securities (a)
|
$ |
711.7
|
$ |
685.5
|
$ | (178.0 | ) | $ | (171.0 | ) | ||||||
Futures
- short
|
96.0
|
|||||||||||||||
Options
- purchased
|
30.6
|
25.9
|
16.0
|
(1.0 | ) | |||||||||||
-
written
|
(11.5 | ) | (13.0 | ) | (1.0 | ) |
9.0
|
|||||||||
Warrants
|
0.8
|
0.4
|
||||||||||||||
Short
sales
|
(68.2 | ) | (61.9 | ) |
17.0
|
15.0
|
||||||||||
Limited
partnership investments
|
438.7
|
343.2
|
(31.0 | ) | (27.0 | ) | ||||||||||
Interest
rate (2):
|
||||||||||||||||
Futures
– long
|
(16.0 | ) | (29.0 | ) | ||||||||||||
Futures
– short
|
12.0
|
21.0
|
||||||||||||||
Interest
rate swaps – long
|
(0.5 | ) | (4.0 | ) | ||||||||||||
Fixed
maturities – long
|
870.3
|
1,921.7
|
(13.0 | ) | (38.0 | ) | ||||||||||
Fixed
maturities – short
|
(14.9 | ) | ||||||||||||||
Short-term
investments
|
2,138.9
|
4,385.5
|
||||||||||||||
Other
derivatives
|
0.4
|
2.2
|
3.0
|
9.0
|
||||||||||||
Commodities
(3):
|
||||||||||||||||
Options
- purchased
|
0.5
|
(1.0 | ) | |||||||||||||
-
written
|
(0.1 | ) |
1.0
|
Note:
|
The
calculation of estimated market risk exposure is based on assumed
adverse
changes in the underlying reference price or index of (1) a decrease
in
equity prices of 25%, (2) an increase in interest rates of 100 basis
points and (3) an increase in commodity prices of 20%. Adverse changes
on
options which differ from those presented above would not necessarily
result in a proportionate change to the estimated market risk
exposure.
|
(a)
|
A
decrease in equity prices of 25% would result in market risk amounting
to
$(177.0) and $(162.0) at September 30, 2007 and December 31, 2006,
respectively. This market risk would be offset by decreases in liabilities
to customers under variable insurance
contracts.
|
Category
of risk exposure:
|
Fair
Value Asset (Liability)
|
Market
Risk
|
||||||||||||||
September
30,
|
December
31,
|
September
30,
|
December
31,
|
|||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Equity
markets (1):
|
||||||||||||||||
Equity
securities:
|
||||||||||||||||
General
accounts (a)
|
$ |
607.8
|
$ |
597.0
|
$ | (152.0 | ) | $ | (149.0 | ) | ||||||
Separate
accounts
|
45.6
|
41.4
|
(11.0 | ) | (10.0 | ) | ||||||||||
Limited
partnership investments
|
2,007.8
|
1,817.3
|
(160.0 | ) | (143.0 | ) | ||||||||||
Interest
rate (2):
|
||||||||||||||||
Fixed
maturities (a)(b)
|
34,024.6
|
35,648.0
|
(1,963.0 | ) | (1,959.0 | ) | ||||||||||
Short-term
investments (a)
|
9,741.7
|
8,436.9
|
(4.0 | ) | (5.0 | ) | ||||||||||
Other
invested assets
|
15.3
|
21.3
|
||||||||||||||
Interest
rate swaps
(c)
|
(33.5 | ) |
71.0
|
|||||||||||||
Other
derivative securities
|
26.2
|
4.6
|
31.0
|
190.0
|
||||||||||||
Separate
accounts (a):
|
||||||||||||||||
Fixed
maturities
|
417.7
|
433.5
|
(20.0 | ) | (21.0 | ) | ||||||||||
Short-term
investments
|
2.3
|
21.4
|
||||||||||||||
Debt
|
(7,179.0 | ) | (5,443.0 | ) | ||||||||||||
Commodities
(3):
|
||||||||||||||||
Forwards
–
short
(c)
|
35.6
|
(102.0 | ) |
Note:
|
The
calculation of estimated market risk exposure is based on assumed
adverse
changes in the underlying reference price or index of (1) a decrease
in
equity prices of 25%, (2) an increase in interest rates of 100 basis
points and (3) an increase in commodity prices of
20%.
|
(a)
|
Certain
securities are denominated in foreign currencies. An assumed 20%
decline
in the underlying exchange rates would result in an aggregate foreign
currency exchange rate risk of $(276.0) and $(283.0) at September
30, 2007
and December 31, 2006,
respectively.
|
(b)
|
Certain
fixed maturities positions include options embedded in convertible
debt
securities. A decrease in underlying equity prices of 25% would result
in
market risk amounting to $(114.0) and $(227.0) at September 30, 2007
and
December 31, 2006, respectively.
|
(c)
|
The
market risk at September 30, 2007 will generally be offset by recognition
of the underlying hedged
transaction.
|
|
·
|
variations
from assumptions about the amount of recoverable reserves, production
volumes, revenues and costs and the future price of natural gas,
oil and
natural gas liquids (“NGLs”);
|
|
·
|
an
inability to successfully integrate the
business;
|
|
·
|
difficulty
in hiring, training or retaining qualified personnel to manage and
operate
the business;
|
|
·
|
an
inability to coordinate organizations, systems and facilities needed
to
operate HighMount as a stand-alone business, independent from Dominion,
including reliance on transition services to be provided by
Dominion;
|
|
·
|
the
assumption of unknown liabilities and limitations on our rights to
indemnity from Dominion;
|
|
·
|
the
diversion of management’s and employees’ attention from other business
concerns; and
|
|
·
|
unforeseen
difficulties operating in a new
industry.
|
|
·
|
the
quality and quantity of available
data;
|
|
·
|
the
interpretation of that data;
|
|
·
|
the
accuracy of various mandated economic assumptions;
and
|
|
·
|
the
judgment of the persons preparing the
estimate.
|
|
·
|
lack
of acceptable prospective acreage;
|
|
·
|
inadequate
capital resources;
|
|
·
|
unexpected
drilling conditions; pressure or irregularities in formations; equipment
failures or accidents;
|
|
·
|
adverse
weather conditions;
|
|
·
|
unavailability
or high cost of drilling rigs, equipment or
labor;
|
|
·
|
reductions
in commodity prices;
|
|
·
|
limitations
in the market for natural gas, oil and
NGLs;
|
|
·
|
title
problems;
|
|
·
|
compliance
with governmental regulations; and
|
|
·
|
mechanical
difficulties.
|
|
·
|
environmental
hazards, such as uncontrollable flows of natural gas, brine, well
fluids,
toxic gas or other pollution into the environment, including groundwater
contamination;
|
|
·
|
abnormally
pressured formations;
|
|
·
|
mechanical
difficulties, such as stuck drilling and service tools and casing
collapse;
|
|
·
|
fires
and explosions;
|
|
·
|
personal
injuries and death; and
|
|
·
|
natural
disasters.
|
|
·
|
the
impact of weather on the demand for these
commodities;
|
|
·
|
the
level of domestic production and imports of these
commodities;
|
|
·
|
natural
gas storage levels;
|
|
·
|
actions
taken by foreign producing nations;
|
|
·
|
the
availability of local, intrastate and interstate transportation
systems;
|
|
·
|
the
availability and marketing of competitive
fuels;
|
|
·
|
the
impact of energy conservation efforts;
and
|
|
·
|
the
extent of governmental regulation and
taxation.
|
|
·
|
Development,
production and sale of natural gas, oil and NGLs in the United States
are
subject to extensive laws and regulations, including environmental
laws
and regulations, including those related to discharge of materials
into
the environment and environmental protection, permits for drilling
operations, bonds for ownership, development and production of gas
properties and reports concerning operations, which could result
in
liabilities for personal injuries, property damage, spills, discharge
of
hazardous materials, remediation and clean-up costs and other
environmental damages, suspension or termination of HighMount’s operations
and administrative, civil and criminal
penalties.
|
|
·
|
HighMount.
The impact that future terrorist attacks or regional hostilities
(particularly in the Middle East) may have on the energy industry
in
general, and on HighMount in particular, is unknown and may affect
HighMount’s operations in unpredictable ways, including disruptions of
fuel supplies and markets and the possibility that infrastructure
facilities could be direct targets of, or indirect casualties of,
an act
of terror or war. Moreover, HighMount may be required to incur significant
additional costs, including insurance costs, to safeguard its assets
in
the event of any future such
activities.
|
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, 2007 -
|
||||
July
31, 2007
|
2,436,800
|
$50.02
|
N/A
|
N/A
|
August
1, 2007 -
|
|
|||
August
31, 2007
|
2,838,300
|
$45.22
|
N/A
|
N/A
|
September
1, 2007 -
|
|
|
||
September
30, 2007
|
816,300
|
$45.72
|
N/A
|
N/A
|
Exhibit
|
|
Description
of Exhibit
|
Number
|
By-Laws
of the Company as amended through October 9, 2007
|
3.1*
|
Amendment
Number 2 to Alabama/Michigan/Permian Package Purchase Agreement Between
Dominion Exploration & Production, Inc., Dominion Energy, Inc.,
Dominion Oklahoma Texas Exploration & Production, Inc., Dominion
Reserves, Inc., LDNG Texas Holdings, LLC and DEPI Texas Holdings,
LLC as
Sellers and LO&G Acquisition Corp. as Purchaser, dated June 1,
2007
|
10.3*
|
Amendment
Number 3 to Alabama/Michigan/Permian Package Purchase Agreement Between
Dominion Exploration & Production, Inc., Dominion Energy, Inc.,
Dominion Oklahoma Texas Exploration & Production, Inc., Dominion
Reserves, Inc., LDNG Texas Holdings, LLC and DEPI Texas Holdings,
LLC as
Sellers and LO&G Acquisition Corp. as Purchaser, dated June 1,
2007
|
10.4*
|
Amendment
Number 4 to Alabama/Michigan/Permian Package Purchase Agreement Between
Dominion Exploration & Production, Inc., Dominion Energy, Inc.,
Dominion Oklahoma Texas Exploration & Production, Inc., Dominion
Reserves, Inc., LDNG Texas Holdings, LLC and DEPI Texas Holdings,
LLC as
Sellers and LO&G Acquisition Corp. as Purchaser, dated June 1,
2007
|
10.5*
|
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*
|
Pending
Tobacco Litigation, incorporated by reference to Exhibit 99.01 to
Registrant’s Report on Form 10-K for the year ended December 31,
2006
|
99.1
|
|
LOEWS
CORPORATION
|
|
|
(Registrant)
|
|
|
||
|
||
|
||
Dated: October
31, 2007
|
By:
|
/s/
Peter W. Keegan
|
|
PETER
W. KEEGAN
|
|
|
Senior
Vice President and
|
|
Chief
Financial Officer
|
||
(Duly
authorized officer
|
||
and
principal financial
|
||
officer)
|
AS
AMENDED THROUGH
|
|
October
9, 2007
|
2.4.1
|
The
record date for determining Stockholders entitled to notice of or
to vote
at a meeting of Stockholders shall be at the close of business on
the day
next preceding the day on which notice is given, or, if notice is
waived,
at the close of business on the day next preceding the day on which
the
meeting is held;
|
2.4.2
|
The
record date for determining Stockholders entitled to express consent
to
corporate action in writing without a meeting, when no prior action
by the
Board is necessary, shall be the day on which the first written consent
is
expressed;
|
2.4.3
|
The
record date for determining Stockholders for any purpose other than
specified in Sections 2.4.1 and 2.4.2 shall be at the close of business
on
the day on which the Board adopts the resolution relating
thereto.
|
SELLER:
|
DOMINION
EXPLORATION & PRODUCTION,
|
|
INC.
|
Name:
|
/s/ G. Scott Hetzer | ||
Title:
|
Senior Vice President and Treasurer |
SELLER:
|
DOMINION
ENERGY, INC.
|
Name:
|
/s/ G. Scott Hetzer | ||
Title:
|
Senior Vice President and Treasurer |
SELLER:
|
DOMINION
OKLAHOMA TEXAS
|
|
EXPLORATION
& PRODUCTION, INC.
|
Name:
|
/s/ G. Scott Hetzer | ||
Title:
|
Senior Vice President and Treasurer |
SELLER:
|
DOMINION
RESERVES, INC.
|
Name:
|
/s/ G. Scott Hetzer | ||
Title:
|
Senior Vice President and Treasurer |
SELLER:
|
LDNG
TEXAS HOLDINGS, LLC
|
Name:
|
/s/ G. Scott Hetzer | ||
Title:
|
Senior Vice President and Treasurer |
SELLER:
|
DEPI
TEXAS HOLDINGS, LLC
|
Name:
|
/s/ G. Scott Hetzer | ||
Title:
|
Senior Vice President and Treasurer |
PURCHASER:
|
HIGHMOUNT
EXPLORATION &
PRODUCTION
HOLDING CORP
|
Name:
|
|||
Title:
|
a.
|
The
first four lines of Section 2.3(h)(i) are hereby replaced in their
entirety with the following (but, for the
|
|
avoidance
of doubt, Sections 2.3(h)(A)-(B) remain as set forth in the
Agreement):
|
Decreased
by an amount equal to the aggregate amount of the following proceeds
received by any Seller or Company or
Wholly-Owned
|
Subsidiary,
or any of their Affiliates (other than Subsidiaries that are not
Wholly-Owned Subsidiaries), on or prior to the Closing Date, or by
any
Seller or any remaining Affiliate of Sellers after the Closing
Date:
|
b.
|
Section
2.3(h)(ii)(A) is hereby replaced in its entirety with the
following:
|
(A)
paid by or on behalf of any Seller or Company or Wholly-Owned Subsidiary,
or any of their Affiliates (other than Subsidiaries that are not
Wholly-Owned Subsidiaries), through and including the Closing Date,
or by
any Seller or any remaining Affiliate of Sellers after the Closing
Date
but prior to the Cut-Off Date, or
|
c.
|
The
second sentence of Section 4.2(f) is hereby replaced in its entirety
with
the following:
|
In
each case, all the Shares of the Companies that are not Survivor
LPs are,
and the Shares of the Survivor LPs at Closing will be, duly authorized
and
validly issued and outstanding, fully paid, non-assessable (except,
in the
case of each Survivor LP, as expressly authorized by the terms of
its
partnership agreement and except for any obligation to return
distributions under the Texas Business Organizations Code) and not
issued
in violation of any preemptive
rights.
|
d.
|
Section
6.14(f) is hereby replaced in its entirety with the
following:
|
Notwithstanding
Section 6.14(c), the Sellers may in their sole discretion cause the
Survivor LPs to sell their respective assets directly to one or more
directly or indirectly wholly-owned Affiliates of Purchaser in lieu
of
consummating the transactions described in Section
6.14(c).
|
e.
|
The
second sentence of Section 6.19(a) is hereby replaced in its entirety
with
the following:
|
Sellers
were not able to complete the entries necessary to include the Carlsbad
Royalties on Exhibit D-1 prior to the date hereof, so Sellers agree
to
deliver to Purchaser, at least six (6) Business Days prior to the
Closing
Date, a supplement to Exhibit D-1 listing all Carlsbad Royalties
not
already on Exhibit D-1.
|
f.
|
In
Section 8.2, “Wholly-Owned Affiliates” is replaced with “wholly-owned
Affiliates.”
|
g.
|
Section
9.1(g) is hereby replaced in its entirety with the
following:
|
Sellers
agree to indemnify, defend and hold harmless Purchaser and its Affiliates
(including following Closing, the Companies and Subsidiaries) from
and
against any and all Taxes, claims, liabilities, losses, costs, fees,
and
expenses (i) arising from any breach of the representation or warranty
|
set
forth in Section 4.5(e) or (ii) resulting from the failure of the
Purchaser Holdco immediately following the merger of the Purchaser
Subs
into Purchaser Holdco to have a Tax basis in the assets held by the
Survivor LPs for all applicable Tax purposes equal to the Tax basis
that
Purchaser Holdco would have obtained if Sellers had elected to effect
the
transaction pursuant to Section 6.14(f) unless such lower Tax basis
arises
from any act or omission of Purchaser, Purchaser Holdco, or its
Affiliates, including the failure of Purchaser to cause the Purchaser
Subs
to timely merge with and into Purchaser Holdco as contemplated by
Section
6.14(e).
|
h.
|
The
first sentence of Section 9.7(a) is hereby replaced in its entirety
with
the following:
|
Purchaser
agrees to pay to DEPI any refund received (whether by payment, credit,
offset or otherwise, and together with any interest thereon) after
the
Closing by Purchaser or its Affiliates, including the Companies and
Wholly-Owned Subsidiaries, net of any Taxes imposed thereon, in respect
of
any Taxes for which DEPI is liable or required to indemnify Purchaser
under Section 9.1.
|
i.
|
Section
10.1(c) is hereby replaced in its entirety with the
following:
|
“Selected
Employees”
are no fewer than 270 individuals (i) who, as of the Closing Date
are (x)
employed by DEPI, DOTEPI, Reserves or the Companies and are rendering
services with respect to the Assets or (y) employed by Dominion Resources
Services, Inc. and are rendering services with respect to the Assets,
(ii)
who are not U.S. Temporary Employees and (iii) who are selected by
the
Leadership Team acting as agents for Purchaser and its Affiliates
from a
list provided to Purchaser and its Affiliates (“Sellers’
List”)
in accordance with the remainder of this Section 10.1(c) as individuals
to
whom Purchaser or its Designated Affiliates must offer employment
or
continued employment in accordance with Section 10.2(a). The Leadership
Team shall, on July 16, 2007, provide Sellers an “initial list”
(“Purchaser’s
Initial List”)
of Selected Employees that will receive offers in accordance with
Section
10.2(a). During the period beginning July 16, 2007, and ending December
31, 2007, Purchaser and its Designated Affiliates may, subject to
prior
written approval of DEPI, offer to employ individuals employed by
Sellers
or their Affiliates who were identified on Sellers’ List but were not
identified on the Purchaser’s Initial List; provided, however, that the
offer of employment of such individuals shall be counted towards
the
requirement to offer employment to 270 individuals under this Section
10.1(c) only if (A) such offer is on the same terms and conditions
applicable pursuant to Section 10.2(a), whether or not the individual
accepts the offer, or (B) such offer of employment is accepted by
the
individual and is on the same terms and conditions as would be applicable
pursuant to Section 10.2(a), except that the requirement that the
employment be at a work
|
location
no more than 50 miles from an individual’s work location as of the Closing
Date shall be inapplicable. In addition, during the period beginning
on
July 16, 2007 and ending December 31, 2007, Purchaser and its Designated
Affiliates may, subject to the prior written approval of DEPI, again
offer
to employ individuals employed by Seller or their Affiliates who
were on
Purchaser’s Initial List but who do not accept an offer of employment that
complies with Section 10.2(a); provided, however, that such a subsequent
offer of employment of such individuals shall not be counted towards
the
requirement to offer employment to 270 individuals under this Section
10.1(c) and provided further that the offer is on the same terms
and
conditions as would be applicable pursuant to Section 10.2(a), except
that
the requirement that the employment be at a work location no more
than 50
miles from an individual’s work location as of the Closing Date shall be
inapplicable. In the event that the Purchaser or its Designated Affiliates
fail to provide offers to 270 individuals in accordance with this
Section
10.1(c) (including any individuals who accept offers pursuant to
the terms
of Section 10.15(d)) by December 31, 2007, Purchaser or its Designated
Affiliates shall make a payment to DEPI on behalf of Sellers in the
amount
equal to the difference between 270 and the actual number of individuals
(without duplication) receiving offers made in accordance with this
Section or accepting offers in accordance with Section 10.15(d),
multiplied by the average cash severance and other severance related
compensation and benefits cost associated with all the employees
that have
been severed or are designated to be severed as of December 31, 2007
by
Sellers and that were included on Sellers’
List.
|
j.
|
A
new Section 10.15 is hereby added to the Agreement as set forth
below:
|
(a)
|
From
time to time, until December 31, 2007, Sellers may provide to Purchaser
and its Designated Affiliates, in addition to Sellers’ List provided
pursuant to Section 10.1(c), a list of one or more individuals employed
by
Sellers or their Affiliates but who are not Designated Employees
or
individuals on Sellers’ List (collectively “Other
Employees”)
that Purchaser or its Designated Affiliates may offer to employ.
Purchaser
or its Designated Affiliate must request and receive written permission
from Sellers prior to extending an employment offer to an individual
on
this list.
|
(b)
|
An
offer of employment to an Other Employee by Purchaser or its Designated
Affiliates must be on the same terms and conditions as would be applicable
had the individual been a Selected Employee, except that the requirement
that the offer of employment be at a work location no more than 50
miles
from an individual’s work location as of the Closing Date shall be
inapplicable. Otherwise, an offer of employment by Purchaser
or
|
|
its
Designated Affiliates to an Other Employee must meet the comparability
and
other requirements of Section 10.2.
|
(c)
|
An
Other Employee employed by Purchaser or its Designated Affiliates
shall be
treated as a Selected Employee for purposes of the provisions of
Article
10, including the requirements of Section 10.2(d) related to payment
by
Purchaser or its Designated Affiliates to Sellers cash severance
or other
severance related compensation and benefits provided by Sellers and
their
Affiliates to an individual who is subsequently employed by Purchaser
or
its Designated Affiliates, but, except as provided in Section 10.15(d),
in
no event shall an offer to, or the employment of, an Other Employee
be
counted towards the requirement in Section 10.1(c) that Purchaser
or its
Designated Affiliates hire 270
individuals.
|
(d)
|
Sellers
shall specifically identify any Other Employee who is an expatriate.
Other
Employees who are expatriates and who accept an offer that complies
with
the requirements of Section 10.15(b) shall be counted towards the
requirement in Section 10.1(c) that Purchaser or its Designated Affiliates
hire 270 individuals. Notwithstanding any provision to the contrary
herein, for purposes of Section 10.2(d) the cash severance and other
severance related compensation with respect to an Other Employee
who is an
expatriate shall be equal to the amount determined under such individual’s
“Separation Agreement, Waiver and Release” with Sellers or their
Affiliates.
|
SELLER:
|
DOMINION
EXPLORATION & PRODUCTION,
|
|
INC.
|
Name:
|
/s/ G. Scott Hetzer | ||
Title:
|
Senior Vice President and Treasurer |
SELLER:
|
DOMINION
ENERGY, INC.
|
Name:
|
/s/ G. Scott Hetzer | ||
Title:
|
Senior Vice President and Treasurer |
SELLER:
|
DOMINION
OKLAHOMA TEXAS
|
|
EXPLORATION
& PRODUCTION, INC.
|
Name:
|
/s/ G. Scott Hetzer | ||
Title:
|
Senior Vice President and Treasurer |
SELLER:
|
DOMINION
RESERVES, INC.
|
Name:
|
/s/ G. Scott Hetzer | ||
Title:
|
Senior Vice President and Treasurer |
SELLER:
|
LDNG
TEXAS HOLDINGS, LLC
|
Name:
|
/s/ G. Scott Hetzer | ||
Title:
|
Senior Vice President and Treasurer |
SELLER:
|
DEPI
TEXAS HOLDINGS, LLC
|
Name:
|
/s/ G. Scott Hetzer | ||
Title:
|
Senior Vice President and Treasurer |
PURCHASER:
|
HIGHMOUNT
EXPLORATION &
|
|
PRODUCTION
HOLDING CORP.
|
Name:
|
|||
Title:
|
SELLER:
|
DOMINION
EXPLORATION & PRODUCTION,
|
|
INC.
|
Name:
|
|||
Title:
|
SELLER:
|
DOMINION
ENERGY, INC.
|
Name:
|
|||
Title:
|
SELLER:
|
DOMINION
OKLAHOMA TEXAS
|
|
EXPLORATION
& PRODUCTION, INC.
|
Name:
|
|||
Title:
|
SELLER:
|
DOMINION
RESERVES, INC.
|
Name:
|
|||
Title:
|
SELLER:
|
LDNG
TEXAS HOLDINGS, LLC
|
Name:
|
|||
Title:
|
SELLER:
|
DEPI
TEXAS HOLDINGS, LLC
|
Name:
|
|||
Title:
|
PURCHASER:
|
HIGHMOUNT
EXPLORATION &
|
|
PRODUCTION
HOLDING CORP.
|
Name:
|
/s/ Peter W. Keegan | ||
Title:
|
Peter W. Keegan SVP |
SELLER:
|
DOMINION
EXPLORATION & PRODUCTION,
|
|
INC.
|
By:
|
/s/
Christine
M. Schwab
|
||
Name:
|
Christine
M. Schwab
|
||
Title:
|
Authorized
Signatory
|
SELLER:
|
DOMINION
ENERGY, INC.
|
By:
|
/s/
Christine
M. Schwab
|
||
Name:
|
Christine
M. Schwab
|
||
Title:
|
Authorized
Signatory
|
SELLER:
|
DOMINION
OKLAHOMA TEXAS
|
|
EXPLORATION
& PRODUCTION, INC.
|
By:
|
/s/
Christine
M. Schwab
|
||
Name:
|
Christine
M. Schwab
|
||
Title:
|
Authorized
Signatory
|
SELLER:
|
DOMINION
RESERVES, INC.
|
By:
|
/s/
Christine
M. Schwab
|
||
Name:
|
Christine
M. Schwab
|
||
Title:
|
Authorized
Signatory
|
SELLER:
|
LDNG
TEXAS HOLDINGS, LLC
|
By:
|
/s/
Christine
M. Schwab
|
||
Name:
|
Christine
M. Schwab
|
||
Title:
|
Authorized
Signatory
|
SELLER:
|
DEPI
TEXAS HOLDINGS, LLC
|
By:
|
/s/
Christine
M. Schwab
|
||
Name:
|
Christine
M. Schwab
|
||
Title:
|
Authorized
Signatory
|
PURCHASER:
|
HIGHMOUNT
EXPLORATION &
|
|
PRODUCTION
HOLDING CORP.
|
By:
|
/s/
Kenneth
J. Zinghini
|
||
Name:
|
Kenneth
J. Zinghini
|
||
Title:
|
Assistant
Secretary
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including
its
consolidated subsidiaries, is made known to us by others within
those
entities, particularly during the period in which this report is
being
prepared;
|
(b)
|
Designed
such internal controls over financial reporting, or caused such
internal
controls over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
(a)
|
All
significant deficiencies and material weaknesses in the design
or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Dated: October
31, 2007
|
By:
|
/s/
James S. Tisch
|
JAMES
S. TISCH
|
||
Chief
Executive Officer
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
(b)
|
Designed
such internal controls over financial reporting, or caused such internal
controls over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Dated: October
31, 2007
|
By:
|
/s/Peter
W. Keegan
|
PETER
W. KEEGAN
|
||
Chief
Financial Officer
|
Dated: October
31, 2007
|
By:
|
/s/
James S. Tisch
|
JAMES
S. TISCH
|
||
Chief
Executive Officer
|
Dated: October
31, 2007
|
By:
|
/s/
Peter W. Keegan
|
PETER
W. KEEGAN
|
||
Chief
Financial Officer
|