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.)
|
|
Yes
|
X
|
|
No
|
|
Large
accelerated filer
|
X
|
Accelerated
filer
|
Non-accelerated
filer
|
Smaller
reporting company
|
|
Yes
|
|
No
|
X
|
|
Class
|
Outstanding
at April 18, 2008
|
|
Common
stock, $0.01 par value
|
529,714,354
shares
|
|
Carolina
Group stock, $0.01 par value
|
108,478,429
shares
|
Page
|
||
No.
|
||
Part
I. Financial Information
|
||
Item 1. Financial
Statements (unaudited)
|
||
Consolidated Condensed Balance
Sheets
|
3
|
|
March 31, 2008 and December 31,
2007
|
||
Consolidated Condensed
Statements of Income
|
4
|
|
Three months ended March 31,
2008 and 2007
|
||
Consolidated Condensed
Statements of Shareholders’ Equity
|
6
|
|
March 31, 2008 and
2007
|
||
Consolidated Condensed
Statements of Cash Flows
|
7
|
|
Three months ended March 31,
2008 and 2007
|
||
Notes to Consolidated Condensed
Financial Statements
|
9
|
|
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
49
|
|
Item 3. Quantitative
and Qualitative Disclosures about Market Risk
|
83
|
|
Item 4. Controls and
Procedures
|
85
|
|
Part
II. Other Information
|
||
Item 1. Legal
Proceedings
|
86
|
|
Item 1A. Risk
Factors
|
86
|
|
Item
6. Exhibits
|
88
|
March
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
(In
millions)
|
||||||||
Assets:
|
||||||||
Investments:
|
||||||||
Fixed maturities, amortized
cost of $34,374 and $34,816
|
$ | 32,907 | $ | 34,663 | ||||
Equity securities, cost of
$1,124 and $1,143
|
1,272 | 1,347 | ||||||
Limited partnership
investments
|
2,347 | 2,370 | ||||||
Other
investments
|
10 | 72 | ||||||
Short term
investments
|
10,893 | 9,471 | ||||||
Total
investments
|
47,429 | 47,923 | ||||||
Cash
|
207 | 141 | ||||||
Receivables
|
11,959 | 11,677 | ||||||
Property,
plant and equipment
|
11,086 | 10,425 | ||||||
Deferred
income taxes
|
1,445 | 999 | ||||||
Goodwill
and other intangible assets
|
1,354 | 1,353 | ||||||
Other
assets
|
1,789 | 1,924 | ||||||
Deferred
acquisition costs of insurance subsidiaries
|
1,158 | 1,161 | ||||||
Separate
account business
|
465 | 476 | ||||||
Total
assets
|
$ | 76,892 | $ | 76,079 | ||||
Liabilities
and Shareholders’ Equity:
|
||||||||
Insurance
reserves:
|
||||||||
Claim and claim adjustment
expense
|
$ | 28,502 | $ | 28,588 | ||||
Future policy
benefits
|
7,209 | 7,106 | ||||||
Unearned
premiums
|
3,577 | 3,597 | ||||||
Policyholders’
funds
|
859 | 930 | ||||||
Total insurance
reserves
|
40,147 | 40,221 | ||||||
Payable
to brokers
|
881 | 544 | ||||||
Collateral
on loaned securities
|
878 | 63 | ||||||
Short
term debt
|
262 | 358 | ||||||
Long
term debt
|
7,093 | 6,900 | ||||||
Reinsurance
balances payable
|
396 | 401 | ||||||
Other
liabilities
|
5,725 | 5,627 | ||||||
Separate
account business
|
465 | 476 | ||||||
Total
liabilities
|
55,847 | 54,590 | ||||||
Minority
interest
|
3,788 | 3,898 | ||||||
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 and outstanding –
529,702,152 and 529,683,628 shares
|
5 | 5 | ||||||
Carolina Group stock, $0.01 par
value:
|
||||||||
Authorized – 600,000,000
shares
|
||||||||
Issued – 108,816,929 and
108,799,141 shares
|
1 | 1 | ||||||
Additional
paid-in capital
|
3,973 | 3,967 | ||||||
Earnings
retained in the business
|
14,269 | 13,691 | ||||||
Accumulated
other comprehensive income (loss)
|
(983 | ) | (65 | ) | ||||
17,265 | 17,599 | |||||||
Less
treasury stock, at cost (340,000 shares of Carolina Group stock as of
March 31, 2008
|
||||||||
and December 31,
2007)
|
8 | 8 | ||||||
Total shareholders’
equity
|
17,257 | 17,591 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 76,892 | $ | 76,079 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions, except per share data)
|
||||||||
Revenues:
|
||||||||
Insurance
premiums
|
$ | 1,812 | $ | 1,862 | ||||
Net investment
income
|
489 | 765 | ||||||
Investment gains
(losses)
|
(51 | ) | (21 | ) | ||||
Gain on issuance of subsidiary
stock
|
135 | |||||||
Manufactured products
(including excise taxes of $163 and $162)
|
921 | 913 | ||||||
Contract drilling
revenues
|
770 | 590 | ||||||
Other
|
602 | 369 | ||||||
Total
|
4,543 | 4,613 | ||||||
Expenses:
|
||||||||
Insurance claims and
policyholders’ benefits
|
1,389 | 1,448 | ||||||
Amortization of deferred
acquisition costs
|
368 | 381 | ||||||
Cost of manufactured products
sold
|
555 | 544 | ||||||
Contract drilling
expenses
|
287 | 216 | ||||||
Other operating
expenses
|
720 | 564 | ||||||
Interest
|
90 | 78 | ||||||
Total
|
3,409 | 3,231 | ||||||
1,134 | 1,382 | |||||||
Income tax
expense
|
353 | 453 | ||||||
Minority
interest
|
200 | 166 | ||||||
Total
|
553 | 619 | ||||||
Income
from continuing operations
|
581 | 763 | ||||||
Discontinued
operations, net
|
81 | 5 | ||||||
Net
income
|
$ | 662 | $ | 768 | ||||
Net
income attributable to:
|
||||||||
Loews common
stock:
|
||||||||
Income
from continuing operations
|
$ | 474 | $ | 645 | ||||
Discontinued
operations, net
|
81 | 5 | ||||||
Loews common
stock
|
555 | 650 | ||||||
Carolina Group
stock
|
107 | 118 | ||||||
Total
|
$ | 662 | $ | 768 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions, except per share data)
|
||||||||
Basic
and diluted net income per Loews common share:
|
||||||||
Income from continuing
operations
|
$ | 0.90 | $ | 1.19 | ||||
Discontinued operations,
net
|
0.15 | 0.01 | ||||||
Net income
|
$ | 1.05 | $ | 1.20 | ||||
Basic
net income per Carolina Group share
|
$ | 0.98 | $ | 1.09 | ||||
Diluted
net income per Carolina Group share
|
$ | 0.98 | $ | 1.08 | ||||
Basic
weighted average number of shares outstanding:
|
||||||||
Loews common
stock
|
529.70 | 541.52 | ||||||
Carolina Group
stock
|
108.47 | 108.38 | ||||||
Diluted
weighted average number of shares outstanding:
|
||||||||
Loews common
stock
|
530.90 | 542.56 | ||||||
Carolina Group
stock
|
108.61 | 108.51 |
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
(Loss)
|
Treasury
|
||||||||||||||||||||||
(In
millions, except per share data)
|
||||||||||||||||||||||||||||
Balance,
January 1, 2007
|
$ | 5 | $ | 1 | $ | 4,018 | $ | 12,099 | $ | 387 | $ | (8 | ) | |||||||||||||||
Adjustment
to initially apply:
|
||||||||||||||||||||||||||||
FIN No. 48
|
(37 | ) | ||||||||||||||||||||||||||
FSP FTB 85-4-1
|
34 | |||||||||||||||||||||||||||
Balance,
January 1, 2007 as adjusted
|
5 | 1 | 4,018 | 12,096 | 387 | (8 | ) | |||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net income
|
$ | 768 | 768 | |||||||||||||||||||||||||
Other comprehensive
income
|
7 | 7 | ||||||||||||||||||||||||||
Comprehensive
income
|
$ | 775 | ||||||||||||||||||||||||||
Dividends
paid:
|
||||||||||||||||||||||||||||
Loews common stock,
$0.063
|
||||||||||||||||||||||||||||
per share
|
(34 | ) | ||||||||||||||||||||||||||
Carolina Group stock,
$0.455
|
||||||||||||||||||||||||||||
per share
|
(49 | ) | ||||||||||||||||||||||||||
Purchase
of Loews treasury stock
|
(314 | ) | ||||||||||||||||||||||||||
Issuance
of Loews common stock
|
2 | |||||||||||||||||||||||||||
Issuance
of Carolina Group stock
|
3 | |||||||||||||||||||||||||||
Stock-based
compensation
|
8 | |||||||||||||||||||||||||||
Other
|
2 | |||||||||||||||||||||||||||
Deferred
tax benefit related to
|
||||||||||||||||||||||||||||
interest expense imputed
on
|
||||||||||||||||||||||||||||
Diamond Offshore’s
1.5%
|
||||||||||||||||||||||||||||
debentures (Note
11)
|
26 | |||||||||||||||||||||||||||
Balance,
March 31, 2007
|
$ | 5 | $ | 1 | $ | 4,059 | $ | 12,781 | $ | 394 | $ | (322 | ) | |||||||||||||||
Balance,
January 1, 2008
|
$ | 5 | $ | 1 | $ | 3,967 | $ | 13,691 | $ | (65 | ) | $ | (8 | ) | ||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net income
|
$ | 662 | 662 | |||||||||||||||||||||||||
Other comprehensive
loss
|
(918 | ) | (918 | ) | ||||||||||||||||||||||||
Comprehensive
loss
|
$ | (256 | ) | |||||||||||||||||||||||||
Dividends
paid:
|
||||||||||||||||||||||||||||
Loews common stock,
$0.063
|
||||||||||||||||||||||||||||
per share
|
(33 | ) | ||||||||||||||||||||||||||
Carolina Group stock,
$0.455
|
||||||||||||||||||||||||||||
per share
|
(49 | ) | ||||||||||||||||||||||||||
Issuance
of Loews common stock
|
1 | |||||||||||||||||||||||||||
Stock-based
compensation
|
5 | |||||||||||||||||||||||||||
Other
|
(2 | ) | ||||||||||||||||||||||||||
Balance,
March 31, 2008
|
$ | 5 | $ | 1 | $ | 3,973 | $ | 14,269 | $ | (983 | ) | $ | (8 | ) |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Operating
Activities:
|
||||||||
Net
income
|
$ | 662 | $ | 768 | ||||
Adjustments
to reconcile net income to net cash
|
||||||||
provided
(used) by operating activities, net
|
504 | 100 | ||||||
Changes
in operating assets and liabilities, net:
|
||||||||
Reinsurance
receivables
|
140 | 105 | ||||||
Other
receivables
|
(119 | ) | (41 | ) | ||||
Federal income
tax
|
168 | 273 | ||||||
Prepaid reinsurance
premiums
|
(22 | ) | (31 | ) | ||||
Deferred acquisition
costs
|
3 | 1 | ||||||
Insurance reserves and
claims
|
(41 | ) | 32 | |||||
Reinsurance balances
payable
|
(5 | ) | 38 | |||||
Other
liabilities
|
(77 | ) | (566 | ) | ||||
Trading
securities
|
421 | (640 | ) | |||||
Other, net
|
(150 | ) | (36 | ) | ||||
Net
cash flow operating activities - continuing operations
|
1,484 | 3 | ||||||
Net
cash flow operating activities - discontinued operations
|
3 | (9 | ) | |||||
Net
cash flow operating activities - total
|
1,487 | (6 | ) | |||||
Investing
Activities:
|
||||||||
Purchases
of fixed maturities
|
(11,231 | ) | (15,552 | ) | ||||
Proceeds
from sales of fixed maturities
|
10,262 | 16,435 | ||||||
Proceeds
from maturities of fixed maturities
|
1,038 | 1,016 | ||||||
Purchases
of equity securities
|
(56 | ) | (71 | ) | ||||
Proceeds
from sales of equity securities
|
224 | 69 | ||||||
Purchases
of property and equipment
|
(846 | ) | (324 | ) | ||||
Proceeds
from sales of property and equipment
|
1 | |||||||
Change
in collateral on loaned securities
|
815 | (687 | ) | |||||
Change
in short term investments
|
(1,568 | ) | (421 | ) | ||||
Change
in other investments
|
(128 | ) | (34 | ) | ||||
Other,
net
|
8 | (35 | ) | |||||
Net
cash flow investing activities - continuing operations
|
(1,482 | ) | 397 | |||||
Net
cash flow investing activities - discontinued operations,
|
||||||||
including
proceeds from dispositions
|
252 | 1 | ||||||
Net
cash flow investing activities - total
|
(1,230 | ) | 398 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Financing
Activities:
|
||||||||
Dividends
paid
|
$ | (82 | ) | $ | (83 | ) | ||
Dividends
paid to minority interest
|
(118 | ) | (291 | ) | ||||
Purchases
of treasury shares
|
(314 | ) | ||||||
Purchases
of treasury shares by subsidiary
|
(70 | ) | ||||||
Issuance
of common stock
|
1 | 4 | ||||||
Proceeds
from subsidiaries’ equity issuances
|
308 | |||||||
Principal
payments on debt
|
(304 | ) | (1 | ) | ||||
Issuance
of debt
|
385 | |||||||
Receipts
of investment contract account balances
|
1 | 1 | ||||||
Return
of investment contract account balances
|
(14 | ) | (46 | ) | ||||
Excess
tax benefits from share-based payment arrangements
|
1 | 4 | ||||||
Other
|
4 | |||||||
Net
cash flow financing activities - continuing operations
|
(200 | ) | (414 | ) | ||||
Effect
of foreign exchange rate on cash - continuing operations
|
(1 | ) | ||||||
Net
change in cash
|
56 | (22 | ) | |||||
Net
cash transactions from:
|
||||||||
Continuing operations to
discontinued operations
|
265 | 20 | ||||||
Discontinued operations to
continuing operations
|
(265 | ) | (20 | ) | ||||
Cash,
beginning of period
|
160 | 174 | ||||||
Cash,
end of period
|
$ | 216 | $ | 152 | ||||
Cash,
end of period:
|
||||||||
Continuing
operations
|
$ | 207 | $ | 124 | ||||
Discontinued
operations
|
9 | 28 | ||||||
Total
|
$ | 216 | $ | 152 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Net
investment income consisted of:
|
||||||||
Fixed
maturity securities
|
$ | 518 | $ | 496 | ||||
Short
term investments
|
55 | 96 | ||||||
Limited
partnerships
|
(39 | ) | 63 | |||||
Equity
securities
|
5 | 5 | ||||||
Income
(loss) from trading portfolio
|
(51 | ) | 92 | |||||
Interest
on funds withheld and other deposits
|
(1 | ) | ||||||
Other
|
19 | 22 | ||||||
Total
investment income
|
507 | 773 | ||||||
Investment
expenses
|
(18 | ) | (8 | ) | ||||
Net
investment income
|
$ | 489 | $ | 765 |
Investment
gains (losses) are as follows:
|
||||||||
Fixed
maturities
|
$ | (2 | ) | $ | (17 | ) | ||
Equity
securities, including short positions
|
(15 | ) | 4 | |||||
Derivative
instruments
|
(44 | ) | (8 | ) | ||||
Short
term investments
|
2 | |||||||
Other,
including guaranteed separate account business
|
8 | |||||||
Investment
losses
|
(51 | ) | (21 | ) | ||||
Gain
on issuance of subsidiary stock (Note 11)
|
135 | |||||||
(51 | ) | 114 | ||||||
Income
tax (expense) benefit
|
18 | (41 | ) | |||||
Minority
interest
|
4 | 2 | ||||||
Investment
gains (losses), net
|
$ | (29 | ) | $ | 75 |
Gross
Unrealized Losses
|
||||||||||||||||||||
Greater
|
||||||||||||||||||||
Amortized
|
Unrealized
|
Less
Than
|
Than
|
|||||||||||||||||
March
31, 2008
|
Cost
|
Gains
|
12
Months
|
12
Months
|
Fair
Value
|
|||||||||||||||
(In
millions)
|
||||||||||||||||||||
Fixed
maturity securities:
|
||||||||||||||||||||
U.S. government and
obligations
|
||||||||||||||||||||
of government
agencies
|
$ | 1,347 | $ | 121 | $ | 1,468 | ||||||||||||||
Asset-backed
securities
|
11,116 | 77 | $ | 543 | $ | 318 | 10,332 | |||||||||||||
States, municipalities and
political
|
||||||||||||||||||||
subdivisions-tax
exempt
|
7,232 | 51 | 315 | 11 | 6,957 | |||||||||||||||
Corporate
|
8,932 | 189 | 484 | 13 | 8,624 | |||||||||||||||
Other debt
|
3,924 | 170 | 157 | 3 | 3,934 | |||||||||||||||
Redeemable preferred
stocks
|
1,249 | 4 | 228 | 1,025 | ||||||||||||||||
Fixed
maturities available-for-sale
|
33,800 | 612 | 1,727 | 345 | 32,340 | |||||||||||||||
Fixed
maturities, trading
|
574 | 13 | 5 | 15 | 567 | |||||||||||||||
Total
fixed maturities
|
34,374 | 625 | 1,732 | 360 | 32,907 | |||||||||||||||
Equity
securities:
|
||||||||||||||||||||
Equity securities
available-for-sale
|
290 | 192 | 5 | 477 | ||||||||||||||||
Equity securities,
trading
|
834 | 91 | 85 | 45 | 795 | |||||||||||||||
Total
equity securities
|
1,124 | 283 | 90 | 45 | 1,272 | |||||||||||||||
Short
term investments:
|
||||||||||||||||||||
Short term investments
available-for-
|
||||||||||||||||||||
sale
|
7,620 | 1 | 1 | 7,620 | ||||||||||||||||
Short term investments,
trading
|
3,273 | 3,273 | ||||||||||||||||||
Total
short term investments
|
10,893 | 1 | 1 | 10,893 | ||||||||||||||||
Total
|
$ | 46,391 | $ | 909 | $ | 1,823 | $ | 405 | $ | 45,072 |
December
31, 2007
|
||||||||||||||||||||
Fixed
maturity securities:
|
||||||||||||||||||||
U.S. government and obligations
of
|
||||||||||||||||||||
government agencies
|
$ | 594 | $ | 93 | $ | 687 | ||||||||||||||
Asset-backed
securities
|
11,777 | 39 | $ | 223 | $ | 183 | 11,410 | |||||||||||||
States, municipalities and
political
|
||||||||||||||||||||
subdivisions-tax exempt
|
7,615 | 144 | 82 | 2 | 7,675 | |||||||||||||||
Corporate
|
8,867 | 246 | 149 | 12 | 8,952 | |||||||||||||||
Other debt
|
4,143 | 208 | 48 | 4 | 4,299 | |||||||||||||||
Redeemable preferred
stocks
|
1,216 | 2 | 160 | 1,058 | ||||||||||||||||
Fixed
maturities available-for-sale
|
34,212 | 732 | 662 | 201 | 34,081 | |||||||||||||||
Fixed
maturities, trading
|
604 | 6 | 19 | 9 | 582 | |||||||||||||||
Total
fixed maturities
|
34,816 | 738 | 681 | 210 | 34,663 | |||||||||||||||
Equity
securities:
|
||||||||||||||||||||
Equity securities
available-for-sale
|
366 | 214 | 12 | 568 | ||||||||||||||||
Equity securities,
trading
|
777 | 99 | 69 | 28 | 779 | |||||||||||||||
Total
equity securities
|
1,143 | 313 | 81 | 28 | 1,347 | |||||||||||||||
Short
term investments:
|
||||||||||||||||||||
Short term investments
available-for-
|
||||||||||||||||||||
sale
|
6,841 | 3 | 1 | 6,843 | ||||||||||||||||
Short term investments,
trading
|
2,628 | 2,628 | ||||||||||||||||||
Total
short term investments
|
9,469 | 3 | 1 | - | 9,471 | |||||||||||||||
Total
|
$ | 45,428 | $ | 1,054 | $ | 763 | $ | 238 | $ | 45,481 |
March
31, 2008
|
December
31, 2007
|
|||||||||||||||
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
|
$ | 10,657 | $ | 756 | $ | 5,578 | $ | 357 | ||||||||
7-12
months
|
2,581 | 643 | 1,689 | 221 | ||||||||||||
13-24
months
|
613 | 110 | 690 | 57 | ||||||||||||
Greater
than 24 months
|
2,137 | 228 | 3,869 | 138 | ||||||||||||
Total investment grade
available-for-sale
|
15,988 | 1,737 | 11,826 | 773 | ||||||||||||
Non-investment
grade:
|
||||||||||||||||
0-6
months
|
1,688 | 159 | 1,549 | 76 | ||||||||||||
7-12
months
|
814 | 169 | 125 | 8 | ||||||||||||
13-24
months
|
27 | 7 | 26 | 4 | ||||||||||||
Greater
than 24 months
|
2 | 8 | 2 | |||||||||||||
Total non-investment grade
available-for-sale
|
2,531 | 335 | 1,708 | 90 | ||||||||||||
Total
fixed maturity securities available-for-sale
|
18,519 | 2,072 | 13,534 | 863 | ||||||||||||
Available-for-sale
equity securities:
|
||||||||||||||||
0-6
months
|
56 | 4 | 98 | 12 | ||||||||||||
7-12
months
|
13 | 1 | 1 | |||||||||||||
13-24
months
|
||||||||||||||||
Greater
than 24 months
|
3 | 3 | ||||||||||||||
Total
available-for-sale equity securities
|
72 | 5 | 102 | 12 | ||||||||||||
Total
available-for-sale fixed maturity and equity
|
||||||||||||||||
securities
|
$ | 18,591 | $ | 2,077 | $ | 13,636 | $ | 875 |
|
·
|
Level
1 – Quoted prices for identical instruments in active
markets.
|
|
·
|
Level
2 – Quoted prices for similar instruments in active markets; quoted prices
for identical or similar instruments in markets that are not active; and
model-derived valuations in which all significant inputs are observable in
active markets.
|
|
·
|
Level
3 – Valuations derived from valuation techniques in which one or more
significant inputs are
unobservable.
|
March
31, 2008
|
Level
1
|
Level
2
|
Level
3
|
Total
|
||||||||||||
(In
millions)
|
||||||||||||||||
Assets:
|
||||||||||||||||
Fixed maturity
securities
|
$ | 2,441 | $ | 27,995 | $ | 2,471 | $ | 32,907 | ||||||||
Equity
securities
|
1,034 | 42 | 196 | 1,272 | ||||||||||||
Other
investments
|
1 | 2 | 3 | |||||||||||||
Short term
investments
|
7,814 | 2,994 | 85 | 10,893 | ||||||||||||
Receivables
|
38 | 38 | ||||||||||||||
Other assets
|
52 | 101 | 159 | 312 | ||||||||||||
Separate account
business
|
41 | 371 | 47 | 459 | ||||||||||||
Total
|
$ | 11,383 | $ | 31,541 | $ | 2,960 | $ | 45,884 | ||||||||
Liabilities:
|
||||||||||||||||
Payable to
brokers
|
$ | 109 | $ | 256 | $ | 92 | $ | 457 | ||||||||
Total
|
$ | 109 | $ | 256 | $ | 92 | $ | 457 |
Fixed
|
Separate
|
|||||||||||||||||||||||||||
Maturity
|
Equity
|
Other
|
Short
Term
|
Other
|
Account
|
Payable
|
||||||||||||||||||||||
Securities
|
Securities
|
Investments
|
Investments
|
Assets
|
Business
|
to
Brokers
|
||||||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||||||
Balance,
January 1, 2008
|
$ | 2,909 | $ | 199 | $ | 38 | $ | 85 | $ | 157 | $ | 30 | $ | (57 | ) | |||||||||||||
Total
net realized gains (losses)
|
||||||||||||||||||||||||||||
and
net change in Unrealized
|
||||||||||||||||||||||||||||
gains
(losses) on investments:
|
||||||||||||||||||||||||||||
Included in Net
income
|
(43 | ) | (2 | ) | 24 | 18 | (55 | ) | ||||||||||||||||||||
Included in Accumulated
other
|
||||||||||||||||||||||||||||
comprehensive income
(loss)
|
(215 | ) | (1 | ) | 12 | |||||||||||||||||||||||
Purchases,
sales, issuances and
|
||||||||||||||||||||||||||||
settlements
|
1 | (60 | ) | (16 | ) | (3 | ) | 8 | ||||||||||||||||||||
Net
transfers in (out) of Level 3
|
(181 | ) | 20 | |||||||||||||||||||||||||
Balance,
March 31, 2008
|
$ | 2,471 | $ | 196 | $ | 2 | $ | 85 | $ | 159 | $ | 47 | $ | (92 | ) |
Fixed
|
||||||||||||||||||||||||
Maturity
|
Equity
|
Other
|
Other
|
Payable
|
||||||||||||||||||||
Three
Months Ended March 31, 2008
|
Securities
|
Securities
|
Investments
|
Assets
|
to
Brokers
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Net
investment income (loss)
|
$ | (2 | ) | $ | (2 | ) | ||||||||||||||||||
Investment
gains (losses)
|
(41 | ) | $ | (2 | ) | $ | 24 | $ | (46 | ) | (65 | ) | ||||||||||||
Other
revenues
|
$ | 18 | (9 | ) | 9 | |||||||||||||||||||
Total
|
$ | (43 | ) | $ | (2 | ) | $ | 24 | $ | 18 | $ | (55 | ) | $ | (58 | ) |
Fixed
|
||||||||||||||||||||||||
Maturity
|
Equity
|
Other
|
Other
|
Payable
|
||||||||||||||||||||
Three
Months Ended March 31, 2008
|
Securities
|
Securities
|
Investments
|
Assets
|
to
Brokers
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Net
investment income (loss)
|
$ | (4 | ) | $ | (4 | ) | ||||||||||||||||||
Investment
losses
|
(43 | ) | $ | (2 | ) | $ | (36 | ) | $ | (48 | ) | (129 | ) | |||||||||||
Other
revenues
|
$ | 4 | 4 | |||||||||||||||||||||
Total
|
$ | (47 | ) | $ | (2 | ) | $ | (36 | ) | $ | 4 | $ | (48 | ) | $ | (129 | ) |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions, except %)
|
||||||||
Loews
common stock:
|
||||||||
Consolidated net
income
|
$ | 662 | $ | 768 | ||||
Less income attributable to
Carolina Group stock
|
107 | 118 | ||||||
Income attributable to Loews
common stock
|
$ | 555 | $ | 650 | ||||
Carolina
Group stock:
|
||||||||
Income available to Carolina
Group stock
|
$ | 171 | $ | 189 | ||||
Weighted average economic
interest of the Carolina Group
|
62.4 | % | 62.4 | % | ||||
Income attributable to Carolina
Group stock
|
$ | 107 | $ | 118 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Loews
common stock:
|
||||||||
Weighted
average shares outstanding-basic
|
529.70 | 541.52 | ||||||
Stock
options and stock appreciation rights
|
1.20 | 1.04 | ||||||
Weighted
average shares outstanding-diluted
|
530.90 | 542.56 | ||||||
Carolina
Group stock:
|
||||||||
Weighted
average shares outstanding-basic
|
108.47 | 108.38 | ||||||
Stock
options and stock appreciation rights
|
0.14 | 0.13 | ||||||
Weighted
average shares outstanding-diluted
|
108.61 | 108.51 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
Loews
common stock
|
1,173,372 | 2,779 | ||||||
Carolina
Group stock
|
201,841 | 556 |
Adjustments
|
||||||||||||||||||||||||
Carolina
Group
|
Loews
|
and
|
||||||||||||||||||||||
March
31, 2008
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Investments
|
$ | 1,639 | $ | 100 | $ | 1,739 | $ | 45,690 | $ | 47,429 | ||||||||||||||
Cash
|
1 | 1 | 206 | 207 | ||||||||||||||||||||
Receivables
|
63 | 63 | 11,899 | $ | (3 | )(a) | 11,959 | |||||||||||||||||
Property,
plant and
|
||||||||||||||||||||||||
equipment
|
205 | 205 | 10,881 | 11,086 | ||||||||||||||||||||
Deferred
income taxes
|
469 | 469 | 976 | 1,445 | ||||||||||||||||||||
Goodwill
and other intangible
|
||||||||||||||||||||||||
assets
|
1,354 | 1,354 | ||||||||||||||||||||||
Other
assets
|
374 | 374 | 1,415 | 1,789 | ||||||||||||||||||||
Investment
in combined
|
||||||||||||||||||||||||
attributed net assets of
the
|
||||||||||||||||||||||||
Carolina Group
|
511 | (218 | ) (a) | |||||||||||||||||||||
(293 | ) (b) | |||||||||||||||||||||||
Deferred
acquisition costs of
|
||||||||||||||||||||||||
insurance
subsidiaries
|
1,158 | 1,158 | ||||||||||||||||||||||
Separate
account business
|
465 | 465 | ||||||||||||||||||||||
Total
assets
|
$ | 2,750 | $ | 101 | $ | 2,851 | $ | 74,555 | $ | (514 | ) | $ | 76,892 | |||||||||||
Insurance
reserves
|
$ | 40,147 | $ | 40,147 | ||||||||||||||||||||
Payable
to brokers
|
881 | 881 | ||||||||||||||||||||||
Collateral
on loaned securities
|
878 | 878 | ||||||||||||||||||||||
Short
term debt
|
262 | 262 | ||||||||||||||||||||||
Long
term debt
|
$ | 218 | $ | 218 | 7,093 | $ | (218 | ) (a) | 7,093 | |||||||||||||||
Reinsurance
balances payable
|
396 | 396 | ||||||||||||||||||||||
Other
liabilities
|
$ | 1,852 | 3 | 1,855 | 3,873 | (3 | ) (a) | 5,725 | ||||||||||||||||
Separate
account business
|
465 | 465 | ||||||||||||||||||||||
Total
liabilities
|
1,852 | 221 | 2,073 | 53,995 | (221 | ) | 55,847 | |||||||||||||||||
Minority
interest
|
3,788 | 3,788 | ||||||||||||||||||||||
Shareholders’
equity
|
898 | (120 | ) | 778 | 16,772 | (293 | ) (b) | 17,257 | ||||||||||||||||
Total
liabilities and
|
||||||||||||||||||||||||
shareholders’
equity
|
$ | 2,750 | $ | 101 | $ | 2,851 | $ | 74,555 | $ | (514 | ) | $ | 76,892 |
(a)
|
To
eliminate the notional intergroup 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.
|
Adjustments
|
||||||||||||||||||||||||
Carolina
Group
|
Loews
|
and
|
||||||||||||||||||||||
December
31, 2007
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Investments
|
$ | 1,290 | $ | 101 | $ | 1,391 | $ | 46,532 | $ | 47,923 | ||||||||||||||
Cash
|
1 | 1 | 2 | 139 | 141 | |||||||||||||||||||
Receivables
|
208 | 208 | 11,476 | $ | (7 | ) (a) | 11,677 | |||||||||||||||||
Property,
plant and
|
||||||||||||||||||||||||
equipment
|
207 | 207 | 10,218 | 10,425 | ||||||||||||||||||||
Deferred
income taxes
|
558 | 558 | 441 | 999 | ||||||||||||||||||||
Goodwill
and other intangible
|
||||||||||||||||||||||||
assets
|
1,353 | 1,353 | ||||||||||||||||||||||
Other
assets
|
336 | 336 | 1,588 | 1,924 | ||||||||||||||||||||
Investment
in combined
|
||||||||||||||||||||||||
attributed net assets of
the
|
||||||||||||||||||||||||
Carolina Group
|
681 | (424 | ) (a) | |||||||||||||||||||||
(257 | ) (b) | |||||||||||||||||||||||
Deferred
acquisition costs of
|
||||||||||||||||||||||||
insurance
subsidiaries
|
1,161 | 1,161 | ||||||||||||||||||||||
Separate
account business
|
476 | 476 | ||||||||||||||||||||||
Total
assets
|
$ | 2,600 | $ | 102 | $ | 2,702 | $ | 74,065 | $ | (688 | ) | $ | 76,079 | |||||||||||
Liabilities
and Shareholders’ Equity:
|
||||||||||||||||||||||||
Insurance
reserves
|
$ | 40,221 | $ | 40,221 | ||||||||||||||||||||
Payable
to brokers
|
544 | 544 | ||||||||||||||||||||||
Collateral
on loaned securities
|
63 | 63 | ||||||||||||||||||||||
Short
term debt
|
358 | 358 | ||||||||||||||||||||||
Long
term debt
|
$ | 424 | $ | 424 | 6,900 | $ | (424 | ) (a) | 6,900 | |||||||||||||||
Reinsurance
balances payable
|
401 | 401 | ||||||||||||||||||||||
Other
liabilities
|
$ | 1,587 | 6 | 1,593 | 4,041 | (7 | ) (a) | 5,627 | ||||||||||||||||
Separate
account business
|
476 | 476 | ||||||||||||||||||||||
Total
liabilities
|
1,587 | 430 | 2,017 | 53,004 | (431 | ) | 54,590 | |||||||||||||||||
Minority
interest
|
3,898 | 3,898 | ||||||||||||||||||||||
Shareholders’
equity
|
1,013 | (328 | ) | 685 | 17,163 | (257 | ) (b) | 17,591 | ||||||||||||||||
Total
liabilities and
|
||||||||||||||||||||||||
shareholders’
equity
|
$ | 2,600 | $ | 102 | $ | 2,702 | $ | 74,065 | $ | (688 | ) | $ | 76,079 |
(a)
|
To
eliminate the notional intergroup 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.
|
Adjustments
|
||||||||||||||||||||||||
Three
Months Ended
|
Carolina
Group
|
Loews
|
and
|
|||||||||||||||||||||
March
31, 2008
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Insurance
premiums
|
$ | 1,812 | $ | 1,812 | ||||||||||||||||||||
Net
investment income
|
$ | 10 | $ | 1 | $ | 11 | 484 | $ | (6 | ) (a) | 489 | |||||||||||||
Investment
losses
|
(51 | ) | (51 | ) | ||||||||||||||||||||
Manufactured
products
|
921 | 921 | 921 | |||||||||||||||||||||
Contract
drilling revenues
|
770 | 770 | ||||||||||||||||||||||
Other
|
602 | 602 | ||||||||||||||||||||||
Total
|
931 | 1 | 932 | 3,617 | (6 | ) | 4,543 | |||||||||||||||||
Expenses:
|
||||||||||||||||||||||||
Insurance
claims and
|
||||||||||||||||||||||||
policyholders’
benefits
|
1,389 | 1,389 | ||||||||||||||||||||||
Amortization
of deferred
|
||||||||||||||||||||||||
acquisition
costs
|
368 | 368 | ||||||||||||||||||||||
Cost
of manufactured products
|
||||||||||||||||||||||||
sold
|
555 | 555 | 555 | |||||||||||||||||||||
Contract
drilling expenses
|
287 | 287 | ||||||||||||||||||||||
Other
operating expenses
|
100 | 100 | 620 | 720 | ||||||||||||||||||||
Interest
|
1 | 6 | 7 | 89 | (6 | ) (a) | 90 | |||||||||||||||||
Total
|
656 | 6 | 662 | 2,753 | (6 | ) | 3,409 | |||||||||||||||||
275 | (5 | ) | 270 | 864 | - | 1,134 | ||||||||||||||||||
Income
tax expense (benefit)
|
101 | (2 | ) | 99 | 254 | 353 | ||||||||||||||||||
Minority
interest
|
200 | 200 | ||||||||||||||||||||||
Total
|
101 | (2 | ) | 99 | 454 | - | 553 | |||||||||||||||||
Income
(loss) from operations
|
174 | (3 | ) | 171 | 410 | 581 | ||||||||||||||||||
Equity
in earnings of the
|
||||||||||||||||||||||||
Carolina Group
|
64 | (64 | ) (b) | |||||||||||||||||||||
Income
(loss) from continuing
|
||||||||||||||||||||||||
operations
|
174 | (3 | ) | 171 | 474 | (64 | ) | 581 | ||||||||||||||||
Discontinued
operations, net
|
81 | 81 | ||||||||||||||||||||||
Net
income (loss)
|
$ | 174 | $ | (3 | ) | $ | 171 | $ | 555 | $ | (64 | ) | $ | 662 |
(a)
|
To
eliminate interest on the notional intergroup debt.
|
(b)
|
To
eliminate the Loews Group’s intergroup interest in the earnings of the
Carolina Group.
|
Adjustments
|
||||||||||||||||||||||||
Three
Months Ended
|
Carolina
Group
|
Loews
|
And
|
|||||||||||||||||||||
March
31, 2007
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Insurance
premiums
|
$ | 1,862 | $ | 1,862 | ||||||||||||||||||||
Net
investment income
|
$ | 32 | $ | 2 | $ | 34 | 754 | $ | (23 | ) (a) | 765 | |||||||||||||
Investment
losses
|
(21 | ) | (21 | ) | ||||||||||||||||||||
Gain
on issuance of subsidiary
|
||||||||||||||||||||||||
stock
|
135 | 135 | ||||||||||||||||||||||
Manufactured
products
|
913 | 913 | 913 | |||||||||||||||||||||
Contract
drilling revenues
|
590 | 590 | ||||||||||||||||||||||
Other
|
369 | 369 | ||||||||||||||||||||||
Total
|
945 | 2 | 947 | 3,689 | (23 | ) | 4,613 | |||||||||||||||||
Expenses:
|
||||||||||||||||||||||||
Insurance
claims and
|
||||||||||||||||||||||||
policyholders’
benefits
|
1,448 | 1,448 | ||||||||||||||||||||||
Amortization
of deferred
|
||||||||||||||||||||||||
acquisition
costs
|
381 | 381 | ||||||||||||||||||||||
Cost
of manufactured products
|
||||||||||||||||||||||||
sold
|
544 | 544 | 544 | |||||||||||||||||||||
Contract
drilling expenses
|
216 | 216 | ||||||||||||||||||||||
Other
operating expenses
|
82 | 82 | 482 | 564 | ||||||||||||||||||||
Interest
|
23 | 23 | 78 | (23 | ) (a) | 78 | ||||||||||||||||||
Total
|
626 | 23 | 649 | 2,605 | (23 | ) | 3,231 | |||||||||||||||||
319 | (21 | ) | 298 | 1,084 | - | 1,382 | ||||||||||||||||||
Income
tax expense (benefit)
|
117 | (8 | ) | 109 | 344 | 453 | ||||||||||||||||||
Minority
interest
|
166 | 166 | ||||||||||||||||||||||
Total
|
117 | (8 | ) | 109 | 510 | - | 619 | |||||||||||||||||
Income
(loss) from operations
|
202 | (13 | ) | 189 | 574 | - | 763 | |||||||||||||||||
Equity
in earnings of the
|
||||||||||||||||||||||||
Carolina Group
|
71 | (71 | ) (b) | |||||||||||||||||||||
Income
(loss) from continuing
|
||||||||||||||||||||||||
operations
|
202 | (13 | ) | 189 | 645 | (71 | ) | 763 | ||||||||||||||||
Discontinued
operations, net
|
5 | 5 | ||||||||||||||||||||||
Net
income (loss)
|
$ | 202 | $ | (13 | ) | $ | 189 | $ | 650 | $ | (71 | ) | $ | 768 |
(a)
|
To
eliminate interest on the notional intergroup debt.
|
(b)
|
To
eliminate the Loews Group’s intergroup interest in the earnings of the
Carolina Group.
|
Adjustments
|
||||||||||||||||||||||||
Three
Months Ended
|
Carolina
Group
|
Loews
|
and
|
|||||||||||||||||||||
March
31, 2008
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Net
cash provided (used) by
|
||||||||||||||||||||||||
operating
activities
|
$ | 499 | $ | (7 | ) | $ | 492 | $ | 1,025 | $ | (30 | ) | $ | 1,487 | ||||||||||
Investing
activities:
|
||||||||||||||||||||||||
Purchases
of property and
|
||||||||||||||||||||||||
equipment
|
(7 | ) | (7 | ) | (839 | ) | (846 | ) | ||||||||||||||||
Change
in short term
|
||||||||||||||||||||||||
investments
|
402 | 1 | 403 | (1,971 | ) | (1,568 | ) | |||||||||||||||||
Other
investing activities
|
(604 | ) | (604 | ) | 1,994 | (206 | ) | 1,184 | ||||||||||||||||
(209 | ) | 1 | (208 | ) | (816 | ) | (206 | ) | (1,230 | ) | ||||||||||||||
Financing
activities:
|
||||||||||||||||||||||||
Dividends
paid
|
(291 | ) | 212 | (79 | ) | (33 | ) | 30 | (82 | ) | ||||||||||||||
Reduction
of intergroup
|
||||||||||||||||||||||||
notional debt
|
(206 | ) | (206 | ) | 206 | |||||||||||||||||||
Excess
tax benefits from share-
|
||||||||||||||||||||||||
based payment
arrangements
|
1 | 1 | ||||||||||||||||||||||
Other
financing activities
|
(119 | ) | (119 | ) | ||||||||||||||||||||
(291 | ) | 6 | (285 | ) | (151 | ) | 236 | (200 | ) | |||||||||||||||
Effect
of foreign exchange rate
|
||||||||||||||||||||||||
changes on cash
|
(1 | ) | (1 | ) | ||||||||||||||||||||
Net
change in cash
|
(1 | ) | - | (1 | ) | 57 | - | 56 | ||||||||||||||||
Net
cash transactions from:
|
||||||||||||||||||||||||
Continuing operations
to
|
||||||||||||||||||||||||
discontinued
operations
|
265 | 265 | ||||||||||||||||||||||
Discontinued operations
to
|
||||||||||||||||||||||||
continuing
operations
|
(265 | ) | (265 | ) | ||||||||||||||||||||
Cash,
beginning of period
|
1 | 1 | 2 | 158 | 160 | |||||||||||||||||||
Cash,
end of period
|
$ | - | $ | 1 | $ | 1 | $ | 215 | $ | - | $ | 216 |
Adjustments
|
||||||||||||||||||||||||
Three
Months Ended
|
Carolina
Group
|
Loews
|
and
|
|||||||||||||||||||||
March
31, 2007
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Net
cash (used) provided by
|
||||||||||||||||||||||||
operating
activities
|
$ | (93 | ) | $ | (14 | ) | $ | (107 | ) | $ | 131 | $ | (30 | ) | $ | (6 | ) | |||||||
Investing
activities:
|
||||||||||||||||||||||||
Purchases
of property and
|
||||||||||||||||||||||||
equipment
|
(14 | ) | (14 | ) | (310 | ) | (324 | ) | ||||||||||||||||
Change
in short term
|
||||||||||||||||||||||||
investments
|
608 | 608 | (1,029 | ) | (421 | ) | ||||||||||||||||||
Other
investing activities
|
(267 | ) | (267 | ) | 1,552 | (142 | ) | 1,143 | ||||||||||||||||
327 | - | 327 | 213 | (142 | ) | 398 | ||||||||||||||||||
Financing
activities:
|
||||||||||||||||||||||||
Dividends
paid
|
(235 | ) | 156 | (79 | ) | (34 | ) | 30 | (83 | ) | ||||||||||||||
Reduction
of intergroup
|
||||||||||||||||||||||||
notional debt
|
(142 | ) | (142 | ) | 142 | |||||||||||||||||||
Excess
tax benefits from share-
|
||||||||||||||||||||||||
based payment
arrangements
|
1 | 1 | 3 | 4 | ||||||||||||||||||||
Other
financing activities
|
(335 | ) | (335 | ) | ||||||||||||||||||||
(234 | ) | 14 | (220 | ) | (366 | ) | 172 | (414 | ) | |||||||||||||||
Net
change in cash
|
- | - | - | (22 | ) | - | (22 | ) | ||||||||||||||||
Net
cash transactions from:
|
||||||||||||||||||||||||
Continuing operations
to
|
||||||||||||||||||||||||
discontinued
operations
|
20 | 20 | ||||||||||||||||||||||
Discontinued operations
to
|
||||||||||||||||||||||||
continuing
operations
|
(20 | ) | (20 | ) | ||||||||||||||||||||
Cash,
beginning of period
|
1 | 1 | 2 | 172 | 174 | |||||||||||||||||||
Cash,
end of period
|
$ | 1 | $ | 1 | $ | 2 | $ | 150 | - | $ | 152 |
March
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
(In
millions)
|
||||||||
Reinsurance
|
$ | 8,549 | $ | 8,689 | ||||
Other
insurance
|
2,250 | 2,284 | ||||||
Security
sales
|
695 | 361 | ||||||
Accrued
investment income
|
365 | 341 | ||||||
Other
|
898 | 802 | ||||||
Total
|
12,757 | 12,477 | ||||||
Less: allowance
for doubtful accounts on reinsurance receivables
|
453 | 461 | ||||||
allowance for other doubtful
accounts and cash discounts
|
345 | 339 | ||||||
Receivables
|
$ | 11,959 | $ | 11,677 |
March
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
(In
millions)
|
||||||||
Land
|
$ | 73 | $ | 73 | ||||
Buildings
and building equipment
|
723 | 755 | ||||||
Offshore
drilling equipment
|
4,638 | 4,540 | ||||||
Machinery
and equipment
|
1,920 | 1,868 | ||||||
Pipeline
equipment
|
2,833 | 2,445 | ||||||
Natural
gas and NGL proved and unproved properties
|
2,986 | 2,869 | ||||||
Construction
in process
|
1,627 | 1,433 | ||||||
Leaseholds
and leasehold improvements
|
77 | 79 | ||||||
Total
|
14,877 | 14,062 | ||||||
Less
accumulated depreciation and amortization
|
3,791 | 3,637 | ||||||
Property,
plant and equipment
|
$ | 11,086 | $ | 10,425 |
March
31, 2008
|
December
31, 2007
|
|||||||||||||||
Environmental
|
Environmental
|
|||||||||||||||
Asbestos
|
Pollution
|
Asbestos
|
Pollution
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Gross
reserves
|
$ | 2,269 | $ | 346 | $ | 2,352 | $ | 367 | ||||||||
Ceded
reserves
|
(994 | ) | (123 | ) | (1,030 | ) | (125 | ) | ||||||||
Net
reserves
|
$ | 1,275 | $ | 223 | $ | 1,322 | $ | 242 |
Standard
|
Specialty
|
Other
|
||||||||||||||
Three
Months Ended March 31, 2008
|
Lines
|
Lines
|
Insurance
|
Total
|
||||||||||||
(In
millions)
|
||||||||||||||||
Pretax
unfavorable (favorable) net prior
|
||||||||||||||||
year claim and allocated claim
adjustment
|
||||||||||||||||
expense reserve
development:
|
||||||||||||||||
Core
(Non-A&E)
|
$ | (35 | ) | $ | 17 | $ | 3 | $ | (15 | ) | ||||||
A&E
|
2 | 2 | ||||||||||||||
Pretax
unfavorable (favorable) net prior year
|
||||||||||||||||
development before impact of
premium
|
||||||||||||||||
development
|
(35 | ) | 17 | 5 | (13 | ) | ||||||||||
Pretax
unfavorable (favorable) premium
|
||||||||||||||||
development
|
9 | (19 | ) | (1 | ) | (11 | ) | |||||||||
Total
pretax unfavorable (favorable) net prior year
|
||||||||||||||||
development
|
$ | (26 | ) | $ | (2 | ) | $ | 4 | $ | (24 | ) |
Three
Months Ended March 31, 2007
|
||||||||||||||||
Pretax
unfavorable (favorable) net prior
|
||||||||||||||||
year claim and allocated claim
adjustment
|
||||||||||||||||
expense reserve
development:
|
||||||||||||||||
Core
(Non-A&E)
|
$ | 13 | $ | 7 | $ | 20 | ||||||||||
A&E
|
||||||||||||||||
Pretax
unfavorable (favorable) net prior year
|
||||||||||||||||
development before impact of
premium
|
||||||||||||||||
development
|
13 | 7 | $ | - | 20 | |||||||||||
Pretax
unfavorable (favorable) premium
|
||||||||||||||||
development
|
(26 | ) | (10 | ) | 2 | (34 | ) | |||||||||
Total
pretax unfavorable (favorable) net prior year
|
||||||||||||||||
development
|
$ | (13 | ) | $ | (3 | ) | $ | 2 | $ | (14 | ) |
Accumulated
|
||||||||||||||||
Unrealized
|
Other
|
|||||||||||||||
Gains
(Losses)
|
Foreign
|
Pension
|
Comprehensive
|
|||||||||||||
on
Investments
|
Currency
|
Liability
|
Income
(Loss)
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Balance,
January 1, 2007
|
$ | 584 | $ | 86 | $ | (283 | ) | $ | 387 | |||||||
Unrealized
holding gains, net of tax of $27
|
46 | 46 | ||||||||||||||
Adjustment
for items included in net income,
|
||||||||||||||||
net of tax of
$21
|
(38 | ) | (38 | ) | ||||||||||||
Foreign
currency translation adjustment, net of
|
||||||||||||||||
tax
|
(7 | ) | (7 | ) | ||||||||||||
Pension
liability adjustment, net of tax
|
||||||||||||||||
of $3
|
6 | 6 | ||||||||||||||
Balance,
March 31, 2007
|
$ | 592 | $ | 79 | $ | (277 | ) | $ | 394 | |||||||
Balance,
January 1, 2008
|
$ | 12 | $ | 117 | $ | (194 | ) | $ | (65 | ) | ||||||
Unrealized
holding losses, net of tax of $536
|
(876 | ) | (876 | ) | ||||||||||||
Adjustment
for items included in net income,
|
||||||||||||||||
net of tax of
$11
|
(20 | ) | (20 | ) | ||||||||||||
Foreign
currency translation adjustment, net of
|
||||||||||||||||
tax
|
(16 | ) | (16 | ) | ||||||||||||
Minimum
pension liability adjustment, net of tax
|
||||||||||||||||
of $2
|
(6 | ) | (6 | ) | ||||||||||||
Balance,
March 31, 2008
|
$ | (884 | ) | $ | 101 | $ | (200 | ) | $ | (983 | ) |
Other
|
||||||||||||||||
Pension
Benefits
|
Postretirement
Benefits
|
|||||||||||||||
Three
Months Ended March 31
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
(In
millions)
|
||||||||||||||||
Service
cost
|
$ | 12 | $ | 16 | $ | 2 | $ | 2 | ||||||||
Interest
cost
|
54 | 58 | 6 | 7 | ||||||||||||
Expected
return on plan assets
|
(65 | ) | (68 | ) | (1 | ) | (1 | ) | ||||||||
Amortization
of net loss
|
1 | 1 | ||||||||||||||
Amortization
of prior service cost
|
1 | 2 | (5 | ) | (7 | ) | ||||||||||
Actuarial
loss
|
1 | 4 | 1 | |||||||||||||
Settlement
costs
|
3 | |||||||||||||||
Regulatory
asset increase
|
1 | 1 | ||||||||||||||
Net
periodic benefit cost
|
$ | 4 | $ | 16 | $ | 3 | $ | 3 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Revenues
(a):
|
||||||||
CNA
Financial:
|
||||||||
Standard Lines
|
$ | 945 | $ | 1,070 | ||||
Specialty Lines
|
1,049 | 1,022 | ||||||
Life and Group
Non-Core
|
237 | 330 | ||||||
Other Insurance
|
51 | 95 | ||||||
Total
CNA Financial
|
2,282 | 2,517 | ||||||
Lorillard
|
931 | 945 | ||||||
Diamond
Offshore
|
792 | 619 | ||||||
HighMount
|
189 | |||||||
Boardwalk
Pipeline
|
213 | 190 | ||||||
Loews
Hotels
|
97 | 95 | ||||||
Corporate
and other
|
39 | 247 | ||||||
Total
|
$ | 4,543 | $ | 4,613 | ||||
Pretax
income (loss) (a):
|
||||||||
CNA
Financial:
|
||||||||
Standard Lines
|
$ | 114 | $ | 205 | ||||
Specialty Lines
|
191 | 211 | ||||||
Life and Group
Non-Core
|
(36 | ) | (7 | ) | ||||
Other Insurance
|
(3 | ) | 29 | |||||
Total
CNA Financial
|
266 | 438 | ||||||
Lorillard
|
275 | 319 | ||||||
Diamond
Offshore
|
405 | 309 | ||||||
HighMount
|
75 | |||||||
Boardwalk
Pipeline
|
89 | 80 | ||||||
Loews
Hotels
|
18 | 18 | ||||||
Corporate
and other
|
6 | 218 | ||||||
Total
|
$ | 1,134 | $ | 1,382 | ||||
Net
income (loss) (a):
|
||||||||
CNA
Financial:
|
||||||||
Standard Lines
|
$ | 76 | $ | 123 | ||||
Specialty Lines
|
107 | 118 | ||||||
Life and Group
Non-Core
|
(12 | ) | 3 | |||||
Other Insurance
|
19 | |||||||
Total
CNA Financial
|
171 | 263 | ||||||
Lorillard
|
174 | 202 | ||||||
Diamond
Offshore
|
136 | 107 | ||||||
HighMount
|
47 | |||||||
Boardwalk
Pipeline
|
39 | 39 | ||||||
Loews
Hotels
|
11 | 11 | ||||||
Corporate
and other
|
3 | 141 | ||||||
Income
from continuing operations
|
581 | 763 | ||||||
Discontinued
operations
|
81 | 5 | ||||||
Total
|
$ | 662 | $ | 768 |
(a)
|
Investment
gains (losses) included in Revenues, Pretax income (loss) and Net income
(loss) are as follows:
|
Three Months Ended March 31 |
2008
|
2007
|
||||||
Revenues
and pretax income (loss):
|
||||||||
CNA
Financial:
|
||||||||
Standard Lines
|
$ | (16 | ) | $ | (25 | ) | ||
Specialty Lines
|
(9 | ) | (14 | ) | ||||
Life and Group
Non-Core
|
(17 | ) | 1 | |||||
Other Insurance
|
(9 | ) | 17 | |||||
Total
CNA Financial
|
(51 | ) | (21 | ) | ||||
Corporate
and other
|
135 | |||||||
Total
|
$ | (51 | ) | $ | 114 | |||
Net
income (loss):
|
||||||||
CNA
Financial:
|
||||||||
Standard Lines
|
$ | (10 | ) | $ | (14 | ) | ||
Specialty Lines
|
(5 | ) | (8 | ) | ||||
Life and Group
Non-Core
|
(10 | ) | ||||||
Other Insurance
|
(4 | ) | 10 | |||||
Total
CNA Financial
|
(29 | ) | (12 | ) | ||||
Corporate
and other
|
87 | |||||||
Total
|
$ | (29 | ) | $ | 75 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Revenues:
|
||||||||
Net investment
income
|
$ | 2 | $ | 6 | ||||
Manufactured
products
|
46 | |||||||
Investment gains
(losses)
|
1 | (1 | ) | |||||
Total
|
3 | 51 | ||||||
Expenses:
|
||||||||
Insurance related
expenses
|
4 | 1 | ||||||
Cost of manufactured products
sold
|
23 | |||||||
Other operating
expenses
|
19 | |||||||
Total
|
4 | 43 | ||||||
Income
(loss) before income taxes and minority interest
|
(1 | ) | 8 | |||||
Income
tax expense
|
(3 | ) | ||||||
Income
(loss) from operations
|
(1 | ) | 5 | |||||
Gain
on sale of business (net of taxes of $44)
|
82 | |||||||
Income
from discontinued operations, net
|
$ | 81 | $ | 5 |
March
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
(In
millions)
|
||||||||
Assets:
|
||||||||
Investments
|
$ | 188 | $ | 205 | ||||
Cash
|
9 | 18 | ||||||
Receivables
|
1 | 85 | ||||||
Reinsurance
receivables
|
1 | |||||||
Property, plant and
equipment
|
11 | |||||||
Deferred income
taxes
|
17 | |||||||
Goodwill and other intangible
assets
|
5 | |||||||
Other assets
|
1 | 73 | ||||||
Total
assets
|
199 | 415 | ||||||
Liabilities:
|
||||||||
Insurance
reserves
|
171 | 172 | ||||||
Other
liabilities
|
6 | 52 | ||||||
Total
liabilities
|
$ | 177 | $ | 224 |
March
31, 2008
|
CNA Financial |
Lorillard
|
Diamond Offshore |
HighMount
|
Boardwalk Pipeline |
Loews Hotels |
Corporate and
Other |
Eliminations
|
Total
|
|||||||||||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||||||
Investments
|
$ | 40,571 | $ | 1,639 | $ | 611 | $ | 34 | $ | 28 | $ | 4,546 | $ | 47,429 | ||||||||||||||||||||||
Cash
|
132 | 12 | $ | 42 | 2 | 15 | 4 | 207 | ||||||||||||||||||||||||||||
Receivables
|
10,975 | 63 | 600 | 99 | 67 | 33 | 142 | $ | (20 | ) | 11,959 | |||||||||||||||||||||||||
Property,
plant and equipment
|
330 | 205 | 3,162 | 3,206 | 3,799 | 361 | 23 | 11,086 | ||||||||||||||||||||||||||||
Deferred
income taxes
|
1,732 | 469 | 47 | 54 | (857 | ) | 1,445 | |||||||||||||||||||||||||||||
Goodwill
and other intangible assets
|
106 | 20 | 1,062 | 163 | 3 | 1,354 | ||||||||||||||||||||||||||||||
Investments
in capital stocks of
|
||||||||||||||||||||||||||||||||||||
subsidiaries
|
13,989 | (13,989 | ) | |||||||||||||||||||||||||||||||||
Other
assets
|
892 | 374 | 126 | 43 | 250 | 44 | 61 | (1 | ) | 1,789 | ||||||||||||||||||||||||||
Deferred
acquisition costs of
|
||||||||||||||||||||||||||||||||||||
insurance
subsidiaries
|
1,158 | 1,158 | ||||||||||||||||||||||||||||||||||
Separate
account business
|
465 | 465 | ||||||||||||||||||||||||||||||||||
Total
assets
|
$ | 56,361 | $ | 2,750 | $ | 4,531 | $ | 4,499 | $ | 4,315 | $ | 484 | $ | 18,819 | $ | (14,867 | ) | $ | 76,892 | |||||||||||||||||
Liabilities
and Shareholders’ Equity:
|
||||||||||||||||||||||||||||||||||||
Insurance
reserves
|
$ | 40,147 | $ | 40,147 | ||||||||||||||||||||||||||||||||
Payable
to brokers
|
378 | $ | 2 | $ | 265 | $ | 17 | $ | 219 | 881 | ||||||||||||||||||||||||||
Collateral
on loaned securities
|
878 | 878 | ||||||||||||||||||||||||||||||||||
Short
term debt
|
200 | 3 | $ | 59 | 262 | |||||||||||||||||||||||||||||||
Long
term debt
|
1,807 | 503 | 1,647 | 2,096 | 174 | 866 | 7,093 | |||||||||||||||||||||||||||||
Reinsurance
balances payable
|
396 | 396 | ||||||||||||||||||||||||||||||||||
Deferred
income taxes
|
401 | 77 | 45 | 334 | $ | (857 | ) | |||||||||||||||||||||||||||||
Other
liabilities
|
2,397 | $ | 1,852 | 606 | 201 | 466 | 26 | 193 | (16 | ) | 5,725 | |||||||||||||||||||||||||
Separate
account business
|
465 | 465 | ||||||||||||||||||||||||||||||||||
Total
liabilities
|
46,668 | 1,852 | 1,515 | 2,113 | 2,656 | 304 | 1,612 | (873 | ) | 55,847 | ||||||||||||||||||||||||||
Minority
interest
|
1,307 | 1,475 | 1,006 | 3,788 | ||||||||||||||||||||||||||||||||
Shareholders’
equity
|
8,386 | 898 | 1,541 | 2,386 | 653 | 180 | 17,207 | (13,994 | ) | 17,257 | ||||||||||||||||||||||||||
Total
liabilities and shareholders’ equity
|
$ | 56,361 | $ | 2,750 | $ | 4,531 | $ | 4,499 | $ | 4,315 | $ | 484 | $ | 18,819 | $ | (14,867 | ) | $ | 76,892 |
December
31, 2007
|
CNA Financial |
Lorillard
|
Diamond Offshore |
HighMount
|
Boardwalk Pipeline |
Loews Hotels |
Corporate and
Other |
Eliminations
|
Total
|
|||||||||||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||||||
Investments
|
$ | 41,762 | $ | 1,290 | $ | 633 | $ | 25 | $ | 316 | $ | 58 | $ | 3,839 | $ | 47,923 | ||||||||||||||||||||
Cash
|
94 | 1 | 7 | 19 | 1 | 15 | 4 | 141 | ||||||||||||||||||||||||||||
Receivables
|
10,672 | 208 | 523 | 136 | 87 | 22 | 32 | $ | (3 | ) | 11,677 | |||||||||||||||||||||||||
Property,
plant and equipment
|
350 | 207 | 3,058 | 3,121 | 3,303 | 365 | 21 | 10,425 | ||||||||||||||||||||||||||||
Deferred
income taxes
|
1,224 | 558 | 3 | (786 | ) | 999 | ||||||||||||||||||||||||||||||
Goodwill
and other intangible assets
|
106 | 20 | 1,061 | 163 | 3 | 1,353 | ||||||||||||||||||||||||||||||
Investments
in capital stocks of
|
||||||||||||||||||||||||||||||||||||
subsidiaries
|
14,967 | (14,967 | ) | |||||||||||||||||||||||||||||||||
Other
assets
|
847 | 336 | 130 | 47 | 272 | 36 | 257 | (1 | ) | 1,924 | ||||||||||||||||||||||||||
Deferred
acquisition costs of
|
||||||||||||||||||||||||||||||||||||
insurance
subsidiaries
|
1,161 | 1,161 | ||||||||||||||||||||||||||||||||||
Separate
account business
|
476 | 476 | ||||||||||||||||||||||||||||||||||
Total
assets
|
$ | 56,692 | $ | 2,600 | $ | 4,371 | $ | 4,412 | $ | 4,142 | $ | 499 | $ | 19,120 | $ | (15,757 | ) | $ | 76,079 | |||||||||||||||||
Liabilities
and Shareholders’ Equity:
|
||||||||||||||||||||||||||||||||||||
Insurance
reserves
|
$ | 40,222 | $ | (1 | ) | $ | 40,221 | |||||||||||||||||||||||||||||
Payable
to brokers
|
414 | $ | 29 | $ | 101 | 544 | ||||||||||||||||||||||||||||||
Collateral
on loaned securities
|
63 | 63 | ||||||||||||||||||||||||||||||||||
Short
term debt
|
350 | $ | 3 | $ | 5 | 358 | ||||||||||||||||||||||||||||||
Long
term debt
|
1,807 | 503 | 1,647 | $ | 1,848 | 229 | 866 | 6,900 | ||||||||||||||||||||||||||||
Reinsurance
balances payable
|
401 | 401 | ||||||||||||||||||||||||||||||||||
Deferred
income taxes
|
362 | 60 | 45 | 319 | (786 | ) | ||||||||||||||||||||||||||||||
Other
liabilities
|
2,463 | $ | 1,587 | 587 | 280 | 561 | 16 | 141 | (8 | ) | 5,627 | |||||||||||||||||||||||||
Separate
account business
|
476 | 476 | ||||||||||||||||||||||||||||||||||
Total
liabilities
|
46,196 | 1,587 | 1,455 | 1,956 | 2,469 | 295 | 1,427 | (795 | ) | 54,590 | ||||||||||||||||||||||||||
Minority
interest
|
1,467 | 1,425 | 1,006 | 3,898 | ||||||||||||||||||||||||||||||||
Shareholders’
equity
|
9,029 | 1,013 | 1,491 | 2,456 | 667 | 204 | 17,693 | (14,962 | ) | 17,591 | ||||||||||||||||||||||||||
Total
liabilities and shareholders’ equity
|
$ | 56,692 | $ | 2,600 | $ | 4,371 | $ | 4,412 | $ | 4,142 | $ | 499 | $ | 19,120 | $ | (15,757 | ) | $ | 76,079 |
Three
Months Ended March 31, 2008
|
CNA Financial |
Lorillard
|
Diamond Offshore |
HighMount
|
Boardwalk Pipeline |
Loews Hotels |
Corporate and
Other |
Eliminations
|
Total
|
|||||||||||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||||||
Insurance
premiums
|
$ | 1,813 | $ | (1 | ) | $ | 1,812 | |||||||||||||||||||||||||||||
Net
investment income
|
434 | $ | 10 | $ | 4 | $ | 1 | $ | 40 | 489 | ||||||||||||||||||||||||||
Intercompany
interest and dividends
|
501 | (501 | ) | |||||||||||||||||||||||||||||||||
Investment
losses
|
(51 | ) | (51 | ) | ||||||||||||||||||||||||||||||||
Manufactured
products
|
921 | 921 | ||||||||||||||||||||||||||||||||||
Contract
drilling revenues
|
770 | 770 | ||||||||||||||||||||||||||||||||||
Other
|
86 | 18 | $ | 189 | 212 | $ | 97 | 602 | ||||||||||||||||||||||||||||
Total
|
2,282 | 931 | 792 | 189 | 213 | 97 | 541 | (502 | ) | 4,543 | ||||||||||||||||||||||||||
Expenses:
|
||||||||||||||||||||||||||||||||||||
Insurance
claims and policyholders’ benefits
|
1,389 | 1,389 | ||||||||||||||||||||||||||||||||||
Amortization
of deferred acquisition costs
|
368 | 368 | ||||||||||||||||||||||||||||||||||
Cost
of manufactured products sold
|
555 | 555 | ||||||||||||||||||||||||||||||||||
Contract
drilling expenses
|
287 | 287 | ||||||||||||||||||||||||||||||||||
Other
operating expenses
|
225 | 100 | 99 | 96 | 105 | 76 | 20 | (1 | ) | 720 | ||||||||||||||||||||||||||
Interest
|
34 | 1 | 1 | 18 | 19 | 3 | 14 | 90 | ||||||||||||||||||||||||||||
Total
|
2,016 | 656 | 387 | 114 | 124 | 79 | 34 | (1 | ) | 3,409 | ||||||||||||||||||||||||||
266 | 275 | 405 | 75 | 89 | 18 | 507 | (501 | ) | 1,134 | |||||||||||||||||||||||||||
Income
tax expense
|
64 | 101 | 125 | 28 | 25 | 7 | 3 | 353 | ||||||||||||||||||||||||||||
Minority
interest
|
31 | 144 | 25 | 200 | ||||||||||||||||||||||||||||||||
Total
|
95 | 101 | 269 | 28 | 50 | 7 | 3 | - | 553 | |||||||||||||||||||||||||||
Income
from continuing operations
|
171 | 174 | 136 | 47 | 39 | 11 | 504 | (501 | ) | 581 | ||||||||||||||||||||||||||
Discontinued
operations, net
|
(1 | ) | 82 | 81 | ||||||||||||||||||||||||||||||||
Net
income
|
$ | 170 | $ | 174 | $ | 136 | $ | 47 | $ | 39 | $ | 11 | $ | 586 | $ | (501 | ) | $ | 662 |
Three
Months Ended March 31, 2007
|
CNA Financial |
Lorillard
|
Diamond Offshore |
Boardwalk Pipeline |
Loews Hotels |
Corporate and
Other |
Eliminations
|
Total
|
||||||||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Insurance
premiums
|
$ | 1,863 |
$ (1
|
) | $ | 1,862 | ||||||||||||||||||||||||||
Net
investment income
|
608 | $ | 32 | $ | 10 | $ | 4 | $ | 111 | 765 | ||||||||||||||||||||||
Intercompany
interest and dividends
|
581 | (581 | ) | |||||||||||||||||||||||||||||
Investment
losses
|
(21 | ) | (21 | ) | ||||||||||||||||||||||||||||
Gain
on issuance of subsidiary stock
|
(3 | ) | 138 | 135 | ||||||||||||||||||||||||||||
Manufactured
products
|
913 | 913 | ||||||||||||||||||||||||||||||
Contract
drilling revenues
|
590 | 590 | ||||||||||||||||||||||||||||||
Other
|
67 | 19 | 186 | $ | 95 | 2 | 369 | |||||||||||||||||||||||||
Total
|
2,517 | 945 | 616 | 190 | 95 | 832 | (582 | ) | 4,613 | |||||||||||||||||||||||
Expenses:
|
||||||||||||||||||||||||||||||||
Insurance
claims and policyholders’
|
||||||||||||||||||||||||||||||||
benefits
|
1,448 | 1,448 | ||||||||||||||||||||||||||||||
Amortization
of deferred acquisition costs
|
381 | 381 | ||||||||||||||||||||||||||||||
Cost
of manufactured products sold
|
544 | 544 | ||||||||||||||||||||||||||||||
Contract
drilling expenses
|
216 | 216 | ||||||||||||||||||||||||||||||
Other
operating expenses
|
216 | 82 | 83 | 93 | 74 | 17 | (1 | ) | 564 | |||||||||||||||||||||||
Interest
|
34 | 11 | 17 | 3 | 13 | 78 | ||||||||||||||||||||||||||
Total
|
2,079 | 626 | 310 | 110 | 77 | 30 | (1 | ) | 3,231 | |||||||||||||||||||||||
438 | 319 | 306 | 80 | 18 | 802 | (581 | ) | 1,382 | ||||||||||||||||||||||||
Income
tax expense
|
133 | 117 | 93 | 25 | 7 | 78 | 453 | |||||||||||||||||||||||||
Minority
interest
|
42 | 108 | 16 | 166 | ||||||||||||||||||||||||||||
Total
|
175 | 117 | 201 | 41 | 7 | 78 | - | 619 | ||||||||||||||||||||||||
Income
from continuing operations
|
263 | 202 | 105 | 39 | 11 | 724 | (581 | ) | 763 | |||||||||||||||||||||||
Discontinued
operations, net
|
2 | 3 | 5 | |||||||||||||||||||||||||||||
Net
income
|
$ | 265 | $ | 202 | $ | 105 | $ | 39 | $ | 11 | $ | 727 | $ | (581 | ) | $ | 768 |
Page
|
||
No.
|
||
Overview
|
||
Consolidated Financial
Results
|
50
|
|
Proposed Separation of
Lorillard
|
50
|
|
Classes of Common
Stock
|
51
|
|
Parent Company
Structure
|
51
|
|
Critical
Accounting Estimates
|
52
|
|
Results
of Operations by Business Segment
|
52
|
|
CNA Financial
|
52
|
|
Standard Lines
|
53
|
|
Specialty Lines
|
54
|
|
Life and Group
Non-Core
|
55
|
|
Other Insurance
|
56
|
|
A&E
Reserves
|
56
|
|
Lorillard
|
59
|
|
Results of
Operations
|
59
|
|
Business
Environment
|
61
|
|
Diamond Offshore
|
63
|
|
HighMount
|
64
|
|
Boardwalk
Pipeline
|
65
|
|
Loews Hotels
|
66
|
|
Corporate and
Other
|
66
|
|
Liquidity
and Capital Resources
|
67
|
|
CNA Financial
|
67
|
|
Lorillard
|
68
|
|
Diamond Offshore
|
69
|
|
HighMount
|
70
|
|
Boardwalk
Pipeline
|
71
|
|
Loews Hotels
|
72
|
|
Corporate and
Other
|
72
|
|
Investments
|
73
|
|
Accounting
Standards
|
79
|
|
Forward-Looking
Statements
|
80
|
|
·
|
commercial
property and casualty insurance (CNA Financial Corporation (“CNA”), a 90%
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 50.5% owned
subsidiary);
|
|
·
|
exploration,
production and marketing of natural gas, natural gas liquids and, to a
lesser extent, oil (HighMount Exploration & Production LLC
(“HighMount”), a wholly owned
subsidiary);
|
|
·
|
operation
of interstate natural gas transmission pipeline systems (Boardwalk
Pipeline Partners, LP (“Boardwalk Pipeline”), a 70% owned subsidiary);
and
|
|
·
|
operation
of hotels (Loews Hotels Holding Corporation (“Loews Hotels”), a wholly
owned subsidiary).
|
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions, except per share data)
|
||||||||
Net
income attributable to Loews common stock:
|
||||||||
Income before net investment
gains (losses)
|
$ | 503 | $ | 570 | ||||
Net investment gains
(losses)
|
(29 | ) | 75 | |||||
Income
from continuing operations
|
474 | 645 | ||||||
Discontinued
operations, net
|
81 | 5 | ||||||
Net
income attributable to Loews common stock
|
555 | 650 | ||||||
Net
income attributable to Carolina Group stock
|
107 | 118 | ||||||
Consolidated
net income
|
$ | 662 | $ | 768 | ||||
Net
income per share:
|
||||||||
Loews common
stock
|
||||||||
Income from continuing
operations
|
$ | 0.90 | $ | 1.19 | ||||
Discontinued
operations, net
|
0.15 | 0.01 | ||||||
Loews
common stock
|
$ | 1.05 | $ | 1.20 | ||||
Carolina
Group stock
|
$ | 0.98 | $ | 1.08 |
|
·
|
A
decline in results at CNA.
|
|
·
|
Improved
results at Diamond Offshore.
|
|
·
|
The
operations of HighMount.
|
|
·
|
Reduced
net investment income.
|
|
·
|
Net
investment losses of $29 million (after tax and minority interest) in the
first quarter of 2008 compared to net investment gains of $75 million
(after tax and minority interest) in the first quarter of 2007. The
results for the first quarter of 2007 included a gain of $89 million
(after tax) related to a reduction in the Company’s ownership interest in
Diamond Offshore from the conversion of Diamond Offshore’s 1.5%
convertible debt into Diamond Offshore common
stock.
|
|
·
|
Discontinued
operations primarily consisting of an $82 million gain from the sale of
Bulova in the first quarter of
2008.
|
|
·
|
our
100% stock ownership interest in
Lorillard;
|
|
·
|
notional
intergroup debt owed by the Carolina Group to the Loews Group ($218
million outstanding at March 31, 2008), 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
|
|
·
|
Valuation
of HighMount’s Proved Reserves
|
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions, except %)
|
||||||||
Net
written premiums
|
$ | 771 | $ | 867 | ||||
Net
earned premiums
|
783 | 863 | ||||||
Net
investment income
|
164 | 220 | ||||||
Net
operating income
|
86 | 137 | ||||||
Net
realized investment losses
|
(10 | ) | (14 | ) | ||||
Net
income
|
76 | 123 | ||||||
Ratios:
|
||||||||
Loss and loss adjustment
expense
|
73.7 | % | 68.7 | % | ||||
Expense
|
30.2 | 30.0 | ||||||
Dividend
|
0.5 | 0.4 | ||||||
Combined
|
104.4 | % | 99.1 | % |
March
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
(In
millions)
|
||||||||
Gross
Case Reserves
|
$ | 6,075 | $ | 5,988 | ||||
Gross
IBNR Reserves
|
5,912 | 6,060 | ||||||
Total
Gross Carried Claim and Claim Adjustment Expense Reserves
|
$ | 11,987 | $ | 12,048 | ||||
Net
Case Reserves
|
$ | 4,844 | $ | 4,750 | ||||
Net
IBNR Reserves
|
5,036 | 5,170 | ||||||
Total
Net Carried Claim and Claim Adjustment Expense Reserves
|
$ | 9,880 | $ | 9,920 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions, except %)
|
||||||||
Net
written premiums
|
$ | 848 | $ | 864 | ||||
Net
earned premiums
|
873 | 845 | ||||||
Net
investment income
|
132 | 149 | ||||||
Net
operating income
|
112 | 126 | ||||||
Net
realized investment losses
|
(5 | ) | (8 | ) | ||||
Net
income
|
107 | 118 | ||||||
Ratios:
|
||||||||
Loss and loss adjustment
expense
|
64.8 | % | 64.2 | % | ||||
Expense
|
26.8 | 26.5 | ||||||
Dividend
|
0.8 | 0.3 | ||||||
Combined
|
92.4 | % | 91.0 | % |
March
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
(In
millions)
|
||||||||
Gross
Case Reserves
|
$ | 2,688 | $ | 2,585 | ||||
Gross
IBNR Reserves
|
5,914 | 5,818 | ||||||
Total
Gross Carried Claim and Claim Adjustment Expense Reserves
|
$ | 8,602 | $ | 8,403 | ||||
Net
Case Reserves
|
$ | 2,199 | $ | 2,090 | ||||
Net
IBNR Reserves
|
4,608 | 4,527 | ||||||
Total
Net Carried Claim and Claim Adjustment Expense Reserves
|
$ | 6,807 | $ | 6,617 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Net
earned premiums
|
$ | 157 | $ | 156 | ||||
Net
investment income
|
84 | 161 | ||||||
Net
operating income (loss)
|
(2 | ) | 3 | |||||
Net
realized investment losses
|
(10 | ) | ||||||
Net
income (loss)
|
(12 | ) | 3 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Net
investment income
|
$ | 54 | $ | 78 | ||||
Revenues
|
51 | 95 | ||||||
Net
operating income
|
4 | 9 | ||||||
Net
realized investment gains (losses)
|
(4 | ) | 10 | |||||
Net
income
|
19 |
March
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
(In
millions)
|
||||||||
Gross
Case Reserves
|
$ | 2,046 | $ | 2,159 | ||||
Gross
IBNR Reserves
|
2,861 | 2,951 | ||||||
Total
Gross Carried Claim and Claim Adjustment Expense Reserves
|
$ | 4,907 | $ | 5,110 | ||||
Net
Case Reserves
|
$ | 1,250 | $ | 1,328 | ||||
Net
IBNR Reserves
|
1,742 | 1,787 | ||||||
Total
Net Carried Claim and Claim Adjustment Expense Reserves
|
$ | 2,992 | $ | 3,115 |
Percent
of
|
||||||||||||||||
Number
of
|
Net
Paid
|
Net
Asbestos
|
Asbestos
Net
|
|||||||||||||
March
31, 2008
|
Policyholders
|
Losses
|
Reserves
|
Reserves
|
||||||||||||
(In
millions of dollars)
|
||||||||||||||||
Policyholders
with settlement agreements
|
||||||||||||||||
Structured
settlements
|
13 | $ | 8 | $ | 145 | 11.4 | % | |||||||||
Wellington
|
3 | 12 | 1.0 | |||||||||||||
Coverage in
place
|
37 | 12 | 93 | 7.3 | ||||||||||||
Total
with settlement agreements
|
53 | 20 | 250 | 19.7 | ||||||||||||
Other
policyholders with active accounts
|
||||||||||||||||
Large asbestos
accounts
|
232 | 22 | 211 | 16.5 | ||||||||||||
Small asbestos
accounts
|
960 | 5 | 88 | 6.9 | ||||||||||||
Total
other policyholders
|
1,192 | 27 | 299 | 23.4 | ||||||||||||
Assumed
reinsurance and pools
|
2 | 131 | 10.3 | |||||||||||||
Unassigned
IBNR
|
595 | 46.6 | ||||||||||||||
Total
|
1,245 | $ | 49 | $ | 1,275 | 100.0 | % |
December
31, 2007
|
||||||||||||||||
Policyholders
with settlement agreements
|
||||||||||||||||
Structured
settlements
|
14 | $ | 29 | $ | 151 | 11.4 | % | |||||||||
Wellington
|
3 | 1 | 12 | 1.0 | ||||||||||||
Coverage in
place
|
34 | 38 | 100 | 7.6 | ||||||||||||
Total
with settlement agreements
|
51 | 68 | 263 | 20.0 | ||||||||||||
Other
policyholders with active accounts
|
||||||||||||||||
Large asbestos
accounts
|
233 | 45 | 237 | 17.9 | ||||||||||||
Small asbestos
accounts
|
1,005 | 15 | 93 | 7.0 | ||||||||||||
Total
other policyholders
|
1,238 | 60 | 330 | 24.9 | ||||||||||||
Assumed
reinsurance and pools
|
8 | 133 | 10.0 | |||||||||||||
Unassigned
IBNR
|
596 | 45.1 | ||||||||||||||
Total
|
1,289 | $ | 136 | $ | 1,322 | 100.0 | % |
Net
|
Percent
of
|
|||||||||||||||
Environmental
|
Environmental
|
|||||||||||||||
Number
of
|
Net
|
Pollution
|
Pollution
Net
|
|||||||||||||
March
31, 2008
|
Policyholders
|
Paid
Losses
|
Reserves
|
Reserve
|
||||||||||||
(In
millions of dollars)
|
||||||||||||||||
Policyholders
with settlement agreements
|
||||||||||||||||
Structured
settlements
|
9 | $ | 2 | $ | 6 | 2.7 | % | |||||||||
Coverage in
place
|
18 | 15 | 6.7 | |||||||||||||
Total
with settlement agreements
|
27 | 2 | 21 | 9.4 | ||||||||||||
Other
policyholders with active accounts
|
||||||||||||||||
Large pollution
accounts
|
104 | 12 | 47 | 21.1 | ||||||||||||
Small pollution
accounts
|
267 | 4 | 38 | 17.0 | ||||||||||||
Total
other policyholders
|
371 | 16 | 85 | 38.1 | ||||||||||||
Assumed
reinsurance and pools
|
1 | 31 | 13.9 | |||||||||||||
Unassigned
IBNR
|
86 | 38.6 | ||||||||||||||
Total
|
398 | $ | 19 | $ | 223 | 100.0 | % |
Net
|
Percent
of
|
|||||||||||||||
Environmental
|
Environmental
|
|||||||||||||||
Number
of
|
Net
|
Pollution
|
Pollution
Net
|
|||||||||||||
December
31, 2007
|
Policyholders
|
Paid
Losses
|
Reserves
|
Reserve
|
||||||||||||
(In
millions of dollars)
|
||||||||||||||||
Policyholders
with settlement agreements
|
||||||||||||||||
Structured
settlements
|
10 | $ | 9 | $ | 6 | 2.5 | % | |||||||||
Coverage in
place
|
18 | 8 | 14 | 5.8 | ||||||||||||
Total
with settlement agreements
|
28 | 17 | 20 | 8.3 | ||||||||||||
Other
policyholders with active accounts
|
||||||||||||||||
Large pollution
accounts
|
112 | 17 | 53 | 21.9 | ||||||||||||
Small pollution
accounts
|
298 | 9 | 42 | 17.4 | ||||||||||||
Total
other policyholders
|
410 | 26 | 95 | 39.3 | ||||||||||||
Assumed
reinsurance and pools
|
1 | 31 | 12.7 | |||||||||||||
Unassigned
IBNR
|
96 | 39.7 | ||||||||||||||
Total
|
438 | $ | 44 | $ | 242 | 100.0 | % |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Revenues:
|
||||||||
Manufactured
products
|
$ | 921 | $ | 913 | ||||
Net investment
income
|
10 | 32 | ||||||
Total
|
931 | 945 | ||||||
Expenses:
|
||||||||
Cost of manufactured products
sold
|
555 | 544 | ||||||
Other operating
|
100 | 82 | ||||||
Interest
|
1 | |||||||
Total
|
656 | 626 | ||||||
275 | 319 | |||||||
Income tax
expense
|
101 | 117 | ||||||
Net
income
|
$ | 174 | $ | 202 |
|
·
|
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 March 31
|
2008
|
2007
|
||||||
(Units
in billions)
|
||||||||
Total
domestic Lorillard unit volume
|
8.415 | 8.387 | ||||||
Total
domestic industry unit volume
|
80.386 | 83.159 | ||||||
Lorillard’s
share of the domestic market
|
10.5 | % | 10.1 | % | ||||
Lorillard’s
premium segment as a percentage of its
|
||||||||
total domestic
volume
|
93.3 | % | 94.9 | % | ||||
Lorillard’s
share of the premium segment
|
13.3 | % | 13.1 | % | ||||
Newport
share of the domestic market
|
9.5 | % | 9.3 | % | ||||
Newport
share of the premium segment
|
13.0 | % | 12.7 | % | ||||
Total
menthol segment market share for the industry
|
28.4 | % | 28.3 | % | ||||
Total
discount segment market share for the industry
|
26.9 | % | 26.9 | % | ||||
Newport’s
share of the menthol segment
|
33.5 | % | 32.9 | % | ||||
Newport’s
share of Lorillard’s total volume (1)
|
91.1 | % | 92.4 | % | ||||
Newport’s
share of Lorillard’s net sales (1)
|
94.1 | % | 94.0 | % |
(1)
|
Source:
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 2007 Annual Report on Form 10-K and Note 14 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, continuing in perpetuity, and significant restrictions on
marketing and advertising have been agreed to and are required 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 domestic cigarette market, in which
Lorillard currently conducts its only significant business. As a result of
price increases, restrictions on advertising, promotions and smoking in
public and private facilities, 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, domestic
cigarette shipments have decreased at a compound rate of approximately
2.4% for the 12 months ending March 1999 through the 12 months ending
March 2008, according to information provided by
MSAI.
|
|
·
|
Increases
in cigarette prices since 1998 have led to an increase in the volume of
discount and, specifically, deep discount cigarettes. Cigarette price
increases have been driven by increases in state and local excise taxes
and by manufacturer price increases. Price increases have led, and
continue to lead, to high levels of discounting and other promotional
activities for premium brands. Deep discount brands have grown from an
estimated share in 1998 of less than 1.5% to an estimated 12.7% for three
months ending March 2008, and continue to be a significant competitive
factor in the domestic market. Lorillard does not have sufficient
empirical data to determine whether the increased price of cigarettes has
deterred consumers from starting to smoke or
encouraged
|
|
·
|
Substantial
federal, state and local excise taxes which are reflected in the retail
price of cigarettes. In the first three months of 2008, 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 three months of 2008, excise
tax increases of $1.00 per pack were implemented in two states. Proposals
continue to be made to increase federal, state and local excise taxes. For
example, New York State increased its excise tax by $1.25 to $2.75 per
pack effective June 3, 2008. One measure passed by Congress in September
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 deep 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. Since 1994, 33 states and many local and
municipal governments and agencies, as well as private businesses, have
adopted legislation, regulations or policies which prohibit, restrict, or
discourage smoking, including legislation, regulations or policies
prohibiting or restricting smoking in public buildings and facilities,
stores, restaurant s and bars, on airline flights and in the workplace.
Other similar laws and regulations are currently under consideration and
may be enacted by state and local governments in the future. A bill was
introduced in February 2007 in the U.S. Congress to grant the Food and
Drug Administration (“FDA”) authority to regulate tobacco products. The
bill has been considered and approved by Congressional committees in both
houses of Congress during 2007 and 2008. It is possible that the full
Senate and House of Representatives will consider and approve the bill
later in 2008. 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, require larger and more severe
health warnings on cigarette packaging, restrict the level of tar and
nicotine contained in or yielded by cigarettes and may alter the way
cigarette products are developed and manufactured. Lorillard also believes
that any such proposals, if enacted, would provide Lorillard’s larger
competitors with a competitive
advantage.
|
|
·
|
The
domestic market for cigarettes is highly competitive. Competition is
primarily based on a brand’s price, including the level of discounting and
other promotional activities, positioning, consumer loyalty, retail
display, quality and taste. Lorillard’s principal competitors are the two
other major U.S. cigarette manufacturers, Philip Morris and RAI. Lorillard
also competes with numerous other smaller manufacturers and importers of
cigarettes, including deep discount cigarette manufacturers. Lorillard
believes its ability to compete even more effectively has been restrained
in some marketing areas as a result of retail merchandising contracts
offered by Philip Morris and RAI which limit the retail shelf space
available to Lorillard’s brands. As a result, in some retail locations
Lorillard is limited in competitively supporting its promotional programs,
which may constrain sales.
|
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Revenues:
|
||||||||
Contract
drilling
|
$ | 770 | $ | 590 | ||||
Net investment
income
|
4 | 10 | ||||||
Investment losses
|
(3 | ) | ||||||
Other revenue, primarily
operating
|
18 | 19 | ||||||
Total
|
792 | 616 | ||||||
Expenses:
|
||||||||
Contract
drilling
|
287 | 216 | ||||||
Other operating
|
99 | 83 | ||||||
Interest
|
1 | 11 | ||||||
Total
|
387 | 310 | ||||||
405 | 306 | |||||||
Income tax
expense
|
125 | 93 | ||||||
Minority
interest
|
144 | 108 | ||||||
Net
income
|
$ | 136 | $ | 105 |
Three
Months Ended March 31
|
2008
|
|||
(In
millions)
|
||||
Revenues:
|
||||
Other revenue, primarily
operating
|
$ | 189 | ||
Total
|
189 | |||
Expenses:
|
||||
Operating
|
96 | |||
Interest
|
18 | |||
Total
|
114 | |||
75 | ||||
Income tax
expense
|
28 | |||
Net
income
|
47 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Revenues:
|
||||||||
Other revenue, primarily
operating
|
$ | 212 | $ | 186 | ||||
Net investment
income
|
1 | 4 | ||||||
Total
|
213 | 190 | ||||||
Expenses:
|
||||||||
Operating
|
105 | 93 | ||||||
Interest
|
19 | 17 | ||||||
Total
|
124 | 110 | ||||||
89 | 80 | |||||||
Income tax
expense
|
25 | 25 | ||||||
Minority interest
|
25 | 16 | ||||||
Net
income
|
$ | 39 | $ | 39 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Revenues:
|
||||||||
Other revenue, primarily
operating
|
$ | 97 | $ | 95 | ||||
Total
|
97 | 95 | ||||||
Expenses:
|
||||||||
Operating
|
76 | 74 | ||||||
Interest
|
3 | 3 | ||||||
Total
|
79 | 77 | ||||||
18 | 18 | |||||||
Income tax
expense
|
7 | 7 | ||||||
Net
income
|
$ | 11 | $ | 11 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Revenues:
|
||||||||
Net investment
income
|
$ | 40 | $ | 111 | ||||
Investment
gains
|
138 | |||||||
Other
|
1 | |||||||
Total
|
40 | 250 | ||||||
Expenses:
|
||||||||
Operating
|
20 | 16 | ||||||
Interest
|
14 | 13 | ||||||
Total
|
34 | 29 | ||||||
6 | 221 | |||||||
Income tax
expense
|
3 | 78 | ||||||
Income
from continuing operations
|
3 | 143 | ||||||
Discontinued
operations, net
|
82 | 3 | ||||||
Net
income
|
$ | 85 | $ | 146 |
|
·
|
inflation;
|
|
·
|
aggregate
volume of domestic cigarette
shipments;
|
|
·
|
market
share; and
|
|
·
|
industry
operating income.
|
Cash
|
|||||||||||||||
Estimated
|
Estimated
|
Total
|
Invested
|
||||||||||||
Initial
|
Additional
|
Estimated
|
through
|
||||||||||||
Project
Cost
|
Cost
|
Cost
|
March
31, 2008
|
||||||||||||
(In
millions)
|
|||||||||||||||
East
Texas to Mississippi Expansion
|
$ | 960 | $ | 960 | $ | 916 | |||||||||
Southeast
Expansion
|
775 | 775 | 395 | ||||||||||||
Gulf
Crossing Project
|
1,690 | 1,690 | 256 | ||||||||||||
Fayetteville
and Greenville Laterals
|
1,075 | $ |
175
|
(a) | 1,250 | 168 | |||||||||
Total
|
$ | 4,500 | $ |
175
|
$ | 4,675 | $ | 1,735 |
(a)
|
Related
to the addition of compression to increase the transmission capacity
from 0.8 Bcf per day to approximately 1.2 Bcf per day on the Fayetteville
Lateral and 1.0 Bcf per day on the Greenville Lateral. The compression is
expected to be in service
in 2010.
|
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Fixed
maturity securities
|
$ | 518 | $ | 496 | ||||
Short
term investments
|
39 | 50 | ||||||
Limited
partnerships
|
(39 | ) | 52 | |||||
Equity
securities
|
5 | 5 | ||||||
Income
(loss) from trading portfolio (a)
|
(77 | ) | 3 | |||||
Other
|
6 | 10 | ||||||
Total
investment income
|
452 | 616 | ||||||
Investment
expense
|
(18 | ) | (8 | ) | ||||
Net
investment income
|
$ | 434 | $ | 608 |
(a)
|
The
change in net unrealized gains on trading securities, included in net
investment income, was $(13) and $2 for the three months ended March 31,
2008 and 2007.
|
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Realized
investment gains (losses):
|
||||||||
Fixed maturity
securities:
|
||||||||
U.S. government
bonds
|
$ | 32 | $ | 2 | ||||
Corporate and other taxable
bonds
|
(31 | ) | 25 | |||||
Tax-exempt
bonds
|
40 | (11 | ) | |||||
Asset-backed
bonds
|
(39 | ) | (33 | ) | ||||
Redeemable preferred
stock
|
(4 | ) | ||||||
Total fixed maturity
securities
|
(2 | ) | (17 | ) | ||||
Equity
securities
|
(15 | ) | 4 | |||||
Derivative
securities
|
(44 | ) | (8 | ) | ||||
Short term
investments
|
2 | |||||||
Other invested assets,
including dispositions
|
8 | |||||||
Total
realized investment gains (losses)
|
(51 | ) | (21 | ) | ||||
Income
tax benefit
|
18 | 7 | ||||||
Minority
interest
|
4 | 2 | ||||||
Net
realized investment gains (losses)
|
$ | (29 | ) | $ | (12 | ) |
March
31, 2008
|
December
31, 2007
|
|||||||||||||||
Effective
Duration
|
Effective
Duration
|
|||||||||||||||
Fair
Value
|
(In
years)
|
Fair
Value
|
(In
years)
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Segregated
investments
|
$ | 8,927 | 10.6 | $ | 9,211 | 10.7 | ||||||||||
Other
interest sensitive investments
|
28,267 | 3.3 | 29,406 | 3.3 | ||||||||||||
Total
|
$ | 37,194 | 5.0 | $ | 38,617 | 5.1 |
Three
Months Ended March 31
|
2008
|
2007
|
||||||
(In
millions)
|
||||||||
Net
realized gains (losses) on fixed maturity
|
||||||||
and equity
securities:
|
||||||||
Fixed maturity
securities:
|
||||||||
Gross realized
gains
|
$ | 117 | $ | 98 | ||||
Gross realized
losses
|
(119 | ) | (115 | ) | ||||
Net realized losses on fixed
maturity securities
|
(2 | ) | (17 | ) | ||||
Equity
securities:
|
||||||||
Gross realized
gains
|
4 | 7 | ||||||
Gross realized
losses
|
(19 | ) | (4 | ) | ||||
Net realized gains (losses) on
equity securities
|
(15 | ) | 3 | |||||
Net
realized losses on fixed maturity
|
||||||||
and equity
securities
|
$ | (17 | ) | $ | (14 | ) |
Months
in
|
||||||||||||
Fair
Value
|
Unrealized
|
|||||||||||
Date
of
|
Loss
|
Loss
Prior
|
||||||||||
Issuer
Description and Discussion
|
Sale
|
On
Sale
|
To
Sale (a)
|
|||||||||
(In
millions)
|
||||||||||||
A
provider of wireless and wire line communication services.
|
||||||||||||
Securities
were sold to reduce exposure because the company
|
||||||||||||
announced
a significant shortfall in operating results, causing
|
||||||||||||
significant
credit deterioration which resulted in a rating
|
||||||||||||
downgrade.
|
$ | 38 | $ | 16 | 7 - 12 | |||||||
A
provider of electronic communications solutions. Company
|
||||||||||||
announced
a decision to explore the sale of a struggling and
|
||||||||||||
major
product unit creating uncertainty with respect to asset
|
||||||||||||
value
relative to total debt. Securities were sold to
reduce
|
||||||||||||
exposure.
|
61 | 7 | 7 - 12 | |||||||||
Total
|
$ | 99 | $ | 23 |
(a)
|
Represents
the range of consecutive months the various positions were in an
unrealized loss prior to sale.
|
March
31, 2008
|
December
31, 2007
|
|||||||||||||||
(In
millions of dollars)
|
||||||||||||||||
General
account investments:
|
||||||||||||||||
Fixed
maturity securities available-for-sale:
|
||||||||||||||||
U.S. Treasury securities and
obligations of
|
||||||||||||||||
government
agencies
|
$ | 1,468 | 3.6 | % | $ | 687 | 1.7 | % | ||||||||
Asset-backed
securities
|
10,332 | 25.5 | 11,409 | 27.3 | ||||||||||||
States, municipalities and
political subdivisions-
|
||||||||||||||||
tax-exempt
|
6,957 | 17.1 | 7,675 | 18.4 | ||||||||||||
Corporate
securities
|
8,624 | 21.3 | 8,952 | 21.4 | ||||||||||||
Other debt
securities
|
3,934 | 9.7 | 4,299 | 10.3 | ||||||||||||
Redeemable preferred
stock
|
1,025 | 2.5 | 1,058 | 2.5 | ||||||||||||
Total
fixed maturity securities available-for-sale
|
32,340 | 79.7 | 34,080 | 81.6 | ||||||||||||
Fixed
maturity securities trading:
|
||||||||||||||||
U.S. Treasury securities and
obligations of
|
||||||||||||||||
government
agencies
|
5 | 5 | ||||||||||||||
Asset-backed
securities
|
24 | 0.1 | 31 | 0.1 | ||||||||||||
Corporate
securities
|
110 | 0.3 | 123 | 0.3 | ||||||||||||
Other debt
securities
|
17 | 18 | ||||||||||||||
Total
fixed maturity securities trading
|
156 | 0.4 | 177 | 0.4 | ||||||||||||
Equity
securities available-for-sale:
|
||||||||||||||||
Common stock
|
432 | 1.1 | 452 | 1.1 | ||||||||||||
Preferred stock
|
42 | 0.1 | 116 | 0.3 | ||||||||||||
Total
equity securities available-for-sale
|
474 | 1.2 | 568 | 1.4 | ||||||||||||
Short
term investments available-for-sale
|
5,209 | 12.9 | 4,497 | 10.8 | ||||||||||||
Short
term investments trading
|
138 | 0.3 | 180 | 0.4 | ||||||||||||
Limited
partnerships
|
2,245 | 5.5 | 2,214 | 5.3 | ||||||||||||
Other
investments
|
9 | 46 | 0.1 | |||||||||||||
Total
general account investments
|
$ | 40,571 | 100.0 | % | $ | 41,762 | 100.0 | % |
Percent
of
|
Percent
of
|
|||||||
Market
|
Unrealized
|
|||||||
Value
|
Loss
|
|||||||
Due
in one year or less
|
6.0 | % | 3.0 | % | ||||
Due
after one year through five years
|
34.0 | 30.0 | ||||||
Due
after five years through ten years
|
19.0 | 25.0 | ||||||
Due
after ten years
|
41.0 | 42.0 | ||||||
Total
|
100.0 | % | 100.0 | % |
Gross
|
||||||||||||||||||||||||
Estimated
|
Fair
Value as a Percentage of Amortized Cost
|
Unrealized
|
||||||||||||||||||||||
March
31, 2008
|
Fair
Value
|
90-99 | % | 80-89 | % | 70-79 | % |
<70%
|
Loss
|
|||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Fixed
maturity securities:
|
||||||||||||||||||||||||
Non-investment
grade:
|
||||||||||||||||||||||||
0-6 months
|
$ | 1,688 | $ | 63 | $ | 65 | $ | 25 | $ | 6 | $ | 159 | ||||||||||||
7-12 months
|
814 | 27 | 66 | 11 | 65 | 169 | ||||||||||||||||||
13-24 months
|
27 | 3 | 4 | 7 | ||||||||||||||||||||
Greater than 24
months
|
2 | |||||||||||||||||||||||
Total non-investment
grade
|
$ | 2,531 | $ | 90 | $ | 134 | $ | 36 | $ | 75 | $ | 335 | ||||||||||||
December
31, 2007
|
||||||||||||||||||||||||
Fixed
maturity securities:
|
||||||||||||||||||||||||
Non-investment
grade:
|
||||||||||||||||||||||||
0-6 months
|
$ | 1,549 | $ | 57 | $ | 16 | $ | 3 | $ | 76 | ||||||||||||||
7-12 months
|
125 | 7 | 1 | 8 | ||||||||||||||||||||
13-24 months
|
26 | 1 | 1 | 1 | $ | 1 | 4 | |||||||||||||||||
Greater than 24
months
|
8 | 2 | 2 | |||||||||||||||||||||
Total non-investment
grade
|
$ | 1,708 | $ | 65 | $ | 20 | $ | 4 | $ | 1 | $ | 90 |
March
31, 2008
|
December
31, 2007
|
|||||||||||||||
(In
millions of dollars)
|
||||||||||||||||
U.S.
Government and affiliated agency securities
|
$ | 1,596 | 5.1 | % | $ | 816 | 2.5 | % | ||||||||
Other
AAA rated
|
13,864 | 44.0 | 16,728 | 50.4 | ||||||||||||
AA
and A rated
|
6,787 | 21.6 | 6,326 | 19.1 | ||||||||||||
BBB
rated
|
5,745 | 18.3 | 5,713 | 17.2 | ||||||||||||
Non
investment-grade
|
3,479 | 11.0 | 3,616 | 10.8 | ||||||||||||
Total
|
$ | 31,471 | 100.0 | % | $ | 33,199 | 100.0 | % |
March
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
(In
millions)
|
||||||||
Short
term investments available-for-sale:
|
||||||||
Commercial
paper
|
$ | 2,294 | $ | 3,040 | ||||
U.S. Treasury
securities
|
536 | 577 | ||||||
Money market
funds
|
194 | 72 | ||||||
Other, including collateral
held related to securities lending
|
2,185 | 808 | ||||||
Total
short term investments available-for-sale
|
5,209 | 4,497 | ||||||
Short
term investments trading:
|
||||||||
Commercial
paper
|
18 | 35 | ||||||
Money market
funds
|
114 | 139 | ||||||
Other
|
6 | 6 | ||||||
Total
short term investments trading
|
138 | 180 | ||||||
Total
short term investments
|
$ | 5,347 | $ | 4,677 |
Percent
|
Percent
|
|||||||||||||||||||||||||||
Security
Type
|
Of
Total
|
Of
Total
|
||||||||||||||||||||||||||
March
31, 2008
|
MBS
|
CMO
|
ABS
|
CDO
|
Total
|
Security
Type
|
Investments
|
|||||||||||||||||||||
(In
millions of dollars)
|
||||||||||||||||||||||||||||
U.S.
government agencies
|
$ | 1,022 | $ | 1,229 | $ | 2,251 | 21.4 | % | 4.7 | % | ||||||||||||||||||
AAA
|
4,962 | $ | 2,235 | $ | 9 | 7,206 | 68.3 | 15.2 | ||||||||||||||||||||
AA
|
24 | 254 | 51 | 329 | 3.1 | 0.7 | ||||||||||||||||||||||
A
|
23 | 157 | 126 | 306 | 2.9 | 0.6 | ||||||||||||||||||||||
BBB
|
8 | 381 | 12 | 401 | 3.8 | 0.8 | ||||||||||||||||||||||
Non-investment
grade and
|
||||||||||||||||||||||||||||
equity
tranches
|
2 | 39 | 11 | 52 | 0.5 | 0.1 | ||||||||||||||||||||||
Total
fair value
|
$ | 1,022 | $ | 6,248 | $ | 3,066 | $ | 209 | $ | 10,545 | 100.0 | % | 22.1 | % | ||||||||||||||
Total
amortized cost
|
$ | 1,018 | $ | 6,561 | $ | 3,336 | $ | 413 | $ | 11,328 | ||||||||||||||||||
Percent
of total fair value
|
||||||||||||||||||||||||||||
by
security type
|
9.7 | % | 59.3 | % | 29.0 | % | 2.0 | % | 100.0 | % | ||||||||||||||||||
Sub-prime
(included
|
||||||||||||||||||||||||||||
above)
|
||||||||||||||||||||||||||||
Fair
value
|
$ | 5 | $ | 1,485 | $ | 18 | $ | 1,508 | 14.6 | % | 3.2 | % | ||||||||||||||||
Amortized
cost
|
5 | 1,634 | 37 | 1,676 | 14.8 | 3.5 | ||||||||||||||||||||||
Alt-A
(included above)
|
||||||||||||||||||||||||||||
Fair
value
|
$ | 1,213 | $ | 1 | $ | 32 | $ | 1,246 | 11.8 | % | 2.6 | % | ||||||||||||||||
Amortized
cost
|
1,299 | 1 | 35 | 1,335 | 11.8 | 2.8 |
|
·
|
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, 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;
|
|
·
|
regulatory
requirements imposed by coastal state regulators in the wake of hurricanes
or other natural disasters, including limitations on the ability to exit
markets or to non-renew, cancel or change terms and conditions in
policies, as well as mandatory assessments to fund any shortfalls arising
from the inability of quasi-governmental insurers to pay
claims;
|
|
·
|
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 2014 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, construction defect
claims and exposure to liabilities due to claims made by insureds and
others relating to lead-based paint and other mass
torts;
|
|
·
|
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 “Results of Operations by Business Segment - CNA Financial - Reserves – Estimates
and Uncertainties” in the MD&A portion of our Annual Report on Form
10-K for the year ended December 31,
2007;
|
|
·
|
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 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.
|
|
·
|
the
outcome of pending litigation;
|
|
·
|
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;
and
|
|
·
|
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.
|
|
·
|
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 and timing of planned expansion
projects as well as the financing of such projects;
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 (sub-prime)
including claims under directors and officers and errors and omissions
coverages in connection with market disruptions recently experienced in
relation to the sub-prime crisis in the U.S.
economy;
|
|
·
|
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 FASB, 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, including the
closing of the Separation and the impact of the Separation on our future
financial position, results of operations, cash flows and risk
profile;
|
|
·
|
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
|
||||||||||||||
March
31,
|
December
31,
|
March
31,
|
December
31,
|
|||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Equity
markets
(1):
|
||||||||||||||||
Equity securities (a)
|
$ | 750 | $ | 744 | $ | (187 | ) | $ | (186 | ) | ||||||
Futures – short
|
21 | 102 | ||||||||||||||
Options –
purchased
|
45 | 35 | 11 | 1 | ||||||||||||
–written
|
(26 | ) | (16 | ) | (5 | ) | ||||||||||
Short sales
|
(81 | ) | (84 | ) | 20 | 21 | ||||||||||
Limited partnership
investments
|
419 | 443 | (29 | ) | (30 | ) | ||||||||||
Interest
rate (2):
|
||||||||||||||||
Futures
– long
|
(9 | ) | ||||||||||||||
Fixed maturities –
long
|
567 | 582 | (2 | ) | (4 | ) | ||||||||||
Fixed maturities –
short
|
(16 | ) | 2 | |||||||||||||
Short term
investments
|
3,273 | 2,628 | ||||||||||||||
Other
derivatives
|
1 | 2 | (3 | ) |
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% and (2) an increase in interest rates of 100 basis
points. 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
$(157) and $(171) at March 31, 2008 and December 31, 2007, 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
|
||||||||||||||
March
31,
|
December
31,
|
March
31,
|
December
31,
|
|||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Equity
markets (1):
|
||||||||||||||||
Equity
securities:
|
||||||||||||||||
General accounts (a)
|
$ | 477 | $ | 568 | $ | (119 | ) | $ | (142 | ) | ||||||
Separate
accounts
|
40 | 45 | (10 | ) | (11 | ) | ||||||||||
Limited
partnership investments
|
1,928 | 1,927 | (108 | ) | (118 | ) | ||||||||||
Interest
rate (2):
|
||||||||||||||||
Fixed maturities (a)(b)
|
32,340 | 34,081 | (1,900 | ) | (1,900 | ) | ||||||||||
Short term investments (a)
|
7,620 | 6,843 | (4 | ) | (4 | ) | ||||||||||
Other invested
assets
|
6 | 8 | ||||||||||||||
Interest rate swaps and other
(c)
|
(136 | ) | (88 | ) | 69 | 81 | ||||||||||
Other derivative
securities
|
1 | 38 | 126 | 33 | ||||||||||||
Separate accounts (a):
|
||||||||||||||||
Fixed maturities
|
410 | 419 | (18 | ) | (20 | ) | ||||||||||
Short term
investments
|
9 | 6 | ||||||||||||||
Debt
|
(7,268 | ) | (7,204 | ) | ||||||||||||
Commodities
(3):
|
||||||||||||||||
Forwards – short
(c)
|
(128 | ) | 11 | (195 | ) | (119 | ) | |||||||||
Forwards – long
|
3 | 3 | 3 |
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 $(315) and $(317) at March 31, 2008 and
December 31, 2007, 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 $(103) and $(106) at March 31, 2008 and December
31, 2007, respectively.
|
|
(c)
|
The
market risk at March 31, 2008 and December 31, 2007 will generally be
offset by recognition of the underlying hedged
transaction.
|
|
·
|
require
larger and more severe health warnings on packs and
cartons;
|
|
·
|
ban
the use of descriptors on tobacco products, such as “low-tar” and
“light”;
|
|
·
|
require
the disclosure of ingredients and additives to
consumers;
|
|
·
|
require
pre-market approval by the FDA for claims made with respect to reduced
risk or reduced exposure products;
|
|
·
|
require
the reduction or elimination of nicotine or any other compound in
cigarettes;
|
|
·
|
allow
the FDA to mandate the use of reduced risk technologies in conventional
cigarettes;
|
|
·
|
allow
the FDA to place more severe restrictions on the advertising, marketing
and sales of cigarettes;
|
|
·
|
permit
inconsistent state regulation of labeling and advertising and eliminate
the existing federal preemption of such regulation;
and
|
|
·
|
grant
the FDA the regulatory authority to consider and impose broad additional
restrictions through a rule making process, including a ban on the use of
menthol in cigarettes.
|
Exhibit
|
|
Description
of Exhibit
|
Number
|
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*
|
|
LOEWS
CORPORATION
|
|
|
(Registrant)
|
|
|
||
|
||
|
||
Dated: April
30, 2008
|
By:
|
/s/
Peter W. Keegan
|
|
PETER
W. KEEGAN
|
|
|
Senior
Vice President and
|
|
Chief
Financial Officer
|
||
(Duly
authorized officer
|
||
and
principal financial
|
||
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: April
30, 2008
|
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: April
30, 2008
|
By:
|
/s/
Peter W. Keegan
|
PETER
W. KEEGAN
|
||
Chief
Financial Officer
|
Dated: April
30, 2008
|
By:
|
/s/
James S. Tisch
|
JAMES
S. TISCH
|
||
Chief
Executive Officer
|
Dated: April
30, 2008
|
By:
|
/s/
Peter W. Keegan
|
PETER
W. KEEGAN
|
||
Chief
Financial Officer
|