x
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)
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Delaware
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13-2646102
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
|
Title
of each class
|
Name
of each exchange on which registered
|
|
Loews
Common Stock, par value $1.00 per share
|
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New
York Stock Exchange
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Carolina
Group Stock, par value $0.01 per share
|
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New
York Stock Exchange
|
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Yes
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X
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No
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Yes
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No
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X
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Yes
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X
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No
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Large
accelerated filer
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X
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Accelerated
filer
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Non-accelerated
filer
|
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Yes
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No
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X
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Item
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Page
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|||
No.
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PART
I
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No.
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||
1
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Business
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3
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||
Carolina
Group Tracking Stock
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3
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|||
CNA
Financial Corporation
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4
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|||
Lorillard,
Inc.
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11
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|||
Boardwalk
Pipeline Partners, LP
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17
|
|||
Diamond
Offshore Drilling, Inc.
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20
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|||
Loews
Hotels Holding Corporation
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23
|
|||
Bulova
Corporation
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24
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|||
Available
information
|
25
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|||
1
|
A
|
Risk
Factors
|
25
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|
1
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B
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Unresolved
Staff Comments
|
53
|
|
2
|
Properties
|
54
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||
3
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Legal
Proceedings
|
54
|
||
4
|
Submission
of Matters to a Vote of Security Holders
|
55
|
||
Executive
Officers of the Registrant
|
55
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|||
PART
II
|
||||
5
|
Market
for the Registrant’s Common Equity, Related Stockholder Matters and
Issuer
|
|||
Purchases
of Equity Securities
|
56
|
|||
Management’s Report
on Internal Control Over Financial Reporting
|
58
|
|||
Report
of Independent Registered Public Accounting Firm
|
60
|
|||
6
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Selected
Financial Data
|
63
|
||
7
|
Management’s
Discussion and Analysis of Financial Condition and Results
of
Operations
|
64
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||
7
|
A
|
Quantitative
and Qualitative Disclosures about Market Risk
|
128
|
|
8
|
Financial
Statements and Supplementary Data
|
131
|
||
9
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
232
|
||
9
|
A
|
Controls
and Procedures
|
232
|
|
9
|
B
|
Other
Information
|
233
|
|
PART
III
|
||||
Certain
information called for by Part III (Items 10, 11, 12, 13 and
14) has been
omitted as Registrant intends to file with the Securities and
Exchange
Commission not later than 120 days after the close of its fiscal
year a
definitive Proxy Statement pursuant to Regulation 14A.
|
||||
PART
IV
|
||||
15
|
Exhibits
and Financial Statement Schedules
|
233
|
·
|
commercial
property and casualty insurance (CNA Financial Corporation,
a 91% owned
subsidiary);
|
·
|
production
and sale of cigarettes (Lorillard, Inc., a wholly owned
subsidiary);
|
·
|
operation
of interstate natural gas transmission pipeline systems (Boardwalk
Pipeline Partners, LP, an 85% owned
subsidiary);
|
·
|
operation
of offshore oil and gas drilling rigs (Diamond Offshore Drilling,
Inc., a
54% owned subsidiary);
|
·
|
operation
of hotels (Loews Hotels Holding Corporation, a wholly owned
subsidiary);
and
|
·
|
distribution
and sale of watches and clocks (Bulova Corporation, a wholly
owned
subsidiary).
|
·
|
our
100% stock ownership interest in Lorillard, Inc.;
|
·
|
notional,
intergroup debt owed by the Carolina Group to the Loews Group,
which we
describe below, bearing interest at the annual rate of 8.0%
and, subject
to optional prepayment, due December 31, 2021 (as of February
15, 2006,
$1.5 billion was outstanding);
|
·
|
any
and all liabilities, costs and expenses of ours, and our subsidiaries,
including Lorillard, Inc. and the subsidiaries and predecessors
of
Lorillard, Inc., arising out of or related to tobacco or otherwise
arising
out of the past, present or future business of Lorillard, Inc.
or its
subsidiaries or predecessors, or claims arising out of or related
to the
sale of any businesses previously sold by Lorillard, Inc. or
its
subsidiaries or predecessors, in each case, whether grounded
in tort,
contract, statute or otherwise, whether pending or asserted
in the
future;
|
·
|
all
net income or net losses arising from the assets and liabilities
that are
reflected in the Carolina Group and all net proceeds from any
disposition
of those assets, in each case, after deductions to reflect
dividends paid
to holders of Carolina Group stock or credited to the Loews
Group in
respect of its intergroup interest;
and
|
·
|
any
acquisitions or investments made from assets reflected in the
Carolina
Group.
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions, except ratio information)
|
||||||||||
Trade
Ratios - GAAP basis (a):
|
||||||||||
Loss
and loss adjustment expense ratio
|
89.4
|
%
|
74.6
|
%
|
111.8
|
%
|
||||
Expense
ratio
|
31.2
|
31.5
|
37.3
|
|||||||
Dividend
ratio
|
0.3
|
0.2
|
1.4
|
|||||||
Combined
ratio
|
120.9
|
%
|
106.3
|
%
|
150.5
|
%
|
||||
Trade
Ratios - Statutory basis (a):
|
||||||||||
Loss
and loss adjustment expense ratio
|
92.2
|
%
|
78.1
|
%
|
118.1
|
%
|
||||
Expense
ratio
|
31.0
|
27.2
|
34.6
|
|||||||
Dividend
ratio
|
0.5
|
0.6
|
1.2
|
|||||||
Combined
ratio
|
123.7
|
%
|
105.9
|
%
|
153.9
|
%
|
||||
Individual
Life and Group Life Insurance Inforce (b):
|
||||||||||
Individual
Life
|
$
|
10,711.0
|
$
|
11,566.0
|
$
|
330,805.0
|
||||
Group
Life
|
9,838.0
|
45,079.0
|
58,163.0
|
|||||||
Total
|
$
|
20,549.0
|
$
|
56,645.0
|
$
|
388,968.0
|
||||
Other
Data - Statutory basis (c):
|
||||||||||
Property
and casualty companies’ capital and surplus (d)
|
$
|
6,940.0
|
$
|
6,998.0
|
$
|
6,170.0
|
||||
Life
and group companies’ capital and surplus
|
627.0
|
1,177.0
|
707.0
|
|||||||
Property
and casualty companies’ written premiums to surplus
|
||||||||||
ratio
|
1.0
|
1.0
|
1.1
|
|||||||
Life
companies’ capital and surplus-percent to total
liabilities
|
33.1
|
%
|
56.0
|
%
|
13.0
|
%
|
||||
Participating
policyholders-percent of gross life insurance inforce
|
3.5
|
%
|
1.4
|
%
|
0.5
|
%
|
(a)
|
Trade
ratios reflect the results of CNA’s property and casualty insurance
subsidiaries. Trade ratios are industry measures of property
and casualty
underwriting results. The loss and loss adjustment expense
ratio is the
percentage of net incurred claim and claim adjustment expenses
and the
expenses incurred related to uncollectible reinsurance receivables
to net
earned premiums. The primary difference in this ratio between
accounting
principles generally accepted in the United States of America
(“GAAP”) and
statutory accounting practices (“SAP”) is related to the treatment of
active life reserves (“ALR”) related to long term care insurance products
written in property and casualty insurance subsidiaries. For
GAAP, ALR is
classified as claim and claim adjustment expense reserves whereas
for SAP,
ALR is classified as unearned premium reserves. The expense
ratio, using
amounts determined in accordance with GAAP, is the percentage
of
underwriting and acquisition expenses (including the amortization
of
deferred acquisition expenses) to net earned premiums. The
expense ratio,
using amounts determined in accordance with SAP, is the percentage
of
acquisition and underwriting expenses (with no deferral of
acquisition
expenses) to net written premiums. The dividend ratio, using
amounts
determined in accordance with GAAP, is the ratio of dividends
incurred to
net earned premiums. The dividend ratio, using amounts determined
in
accordance with SAP, is the ratio of dividends paid to net
earned
premiums. The combined ratio is the sum of the loss and loss
adjustment
expense, expense and dividend
ratios.
|
(b)
|
The
decline in gross inforce is attributable to the sales of the
group
benefits and the individual life businesses. Please read Note
18 of the
Notes to Consolidated Financial Statements included in Item
8 for
additional inforce information.
|
(c)
|
Other
data is determined in accordance with SAP. Life and group statutory
capital and surplus as a percent of total liabilities is determined
after
excluding separate account liabilities and reclassifying the
statutorily
required Asset Valuation Reserve to
surplus.
|
(d)
|
Surplus
includes the property and casualty companies’ equity ownership of the life
and group companies’ capital and
surplus.
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
California
|
9.0
|
%
|
9.3
|
%
|
8.5
|
%
|
||||
New
York
|
7.9
|
7.9
|
7.3
|
|||||||
Florida
|
7.1
|
7.1
|
7.6
|
|||||||
Texas
|
5.7
|
5.4
|
5.7
|
|||||||
Illinois
|
4.2
|
5.1
|
9.3
|
|||||||
Pennsylvania
|
4.2
|
4.7
|
4.2
|
|||||||
New
Jersey
|
3.8
|
5.3
|
4.5
|
|||||||
Massachusetts
|
3.3
|
3.2
|
3.1
|
|||||||
All
other states, countries or political subdivisions (a)
|
54.8
|
52.0
|
49.8
|
|||||||
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
(a)
|
No
other individual state, country or political subdivision accounts
for more
than 3.0% of gross written
premiums.
|
Schedule
of Loss Reserve Development
|
||||||||||||||||||||||||||||||||||
Year
Ended December 31
|
1995(a)
|
1996
|
1997
|
1998
|
1999(b)
|
2000
|
2001(c)
|
2002(d)
|
2003
|
2004
|
2005
|
|||||||||||||||||||||||
(In
millions of dollars)
|
||||||||||||||||||||||||||||||||||
Originally
reported gross
|
||||||||||||||||||||||||||||||||||
reserves for unpaid claim | ||||||||||||||||||||||||||||||||||
and claim adjustment | ||||||||||||||||||||||||||||||||||
expenses
|
31,296
|
29,559
|
28,731
|
28,506
|
26,850
|
26,510
|
29,649
|
25,719
|
31,284
|
31,204
|
30,694
|
|||||||||||||||||||||||
Originally
reported ceded
|
||||||||||||||||||||||||||||||||||
recoverable
|
5,784
|
5,385
|
5,056
|
5,182
|
6,091
|
7,333
|
11,703
|
10,490
|
13,847
|
13,682
|
10,438
|
|||||||||||||||||||||||
Originally
reported net
|
||||||||||||||||||||||||||||||||||
reserves for unpaid claim | ||||||||||||||||||||||||||||||||||
and
claim adjustment
|
||||||||||||||||||||||||||||||||||
expenses
|
25,512
|
24,174
|
23,675
|
23,324
|
20,759
|
19,177
|
17,946
|
15,229
|
17,437
|
17,522
|
20,256
|
|||||||||||||||||||||||
Cumulative
net paid as of:
|
||||||||||||||||||||||||||||||||||
One
year later
|
6,594
|
5,851
|
5,954
|
7,321
|
6,547
|
7,686
|
5,981
|
5,373
|
4,382
|
2,651
|
-
|
|||||||||||||||||||||||
Two
years later
|
10,635
|
9,796
|
11,394
|
12,241
|
11,937
|
11,992
|
10,355
|
8,768
|
6,104
|
-
|
-
|
|||||||||||||||||||||||
Three
years later
|
13,516
|
13,602
|
14,423
|
16,020
|
15,256
|
15,291
|
12,954
|
9,747
|
-
|
-
|
-
|
|||||||||||||||||||||||
Four
years later
|
16,454
|
15,793
|
17,042
|
18,271
|
18,151
|
17,333
|
13,244
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Five
years later
|
18,179
|
17,736
|
18,568
|
20,779
|
19,686
|
17,775
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Six
years later
|
19,697
|
18,878
|
20,723
|
21,970
|
20,206
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Seven
years later
|
20,642
|
20,828
|
21,649
|
22,564
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Eight
years later
|
22,469
|
21,609
|
22,077
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Nine
years later
|
23,156
|
21,986
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Ten
years later
|
23,459
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Net reserves re-estimated as | ||||||||||||||||||||||||||||||||||
of:
|
||||||||||||||||||||||||||||||||||
End
of initial year
|
25,512
|
24,174
|
23,675
|
23,324
|
20,759
|
19,177
|
17,946
|
15,229
|
17,437
|
17,522
|
20,256
|
|||||||||||||||||||||||
One
year later
|
25,388
|
23,970
|
23,904
|
24,306
|
21,163
|
21,502
|
17,980
|
17,650
|
17,671
|
18,513
|
-
|
|||||||||||||||||||||||
Two
years later
|
24,859
|
23,610
|
24,106
|
24,134
|
23,217
|
21,555
|
20,533
|
18,248
|
19,120
|
-
|
-
|
|||||||||||||||||||||||
Three
years later
|
24,363
|
23,735
|
23,776
|
26,038
|
23,081
|
24,058
|
21,109
|
19,814
|
-
|
-
|
-
|
|||||||||||||||||||||||
Four
years later
|
24,597
|
23,417
|
25,067
|
25,711
|
25,590
|
24,587
|
22,547
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Five
years later
|
24,344
|
24,499
|
24,636
|
27,754
|
26,000
|
25,594
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Six
years later
|
25,345
|
24,120
|
26,338
|
28,078
|
26,625
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Seven
years later
|
25,086
|
25,629
|
26,537
|
28,437
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Eight
years later
|
26,475
|
25,813
|
26,770
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Nine
years later
|
26,618
|
26,072
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Ten
years later
|
26,848
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Total net (deficiency) | ||||||||||||||||||||||||||||||||||
redundancy
|
(1,336
|
)
|
(1,898
|
)
|
(3,095
|
)
|
(5,113
|
)
|
(5,866
|
)
|
(6,417
|
)
|
(4,601
|
)
|
(4,585
|
)
|
(1,683
|
)
|
(991
|
)
|
-
|
|||||||||||||
Reconciliation
to gross
|
||||||||||||||||||||||||||||||||||
re-estimated
reserves:
|
||||||||||||||||||||||||||||||||||
Net
reserves re-estimated
|
26,848
|
26,072
|
26,770
|
28,437
|
26,625
|
25,594
|
22,547
|
19,814
|
19,120
|
18,513
|
-
|
|||||||||||||||||||||||
Re-estimated ceded | ||||||||||||||||||||||||||||||||||
recoverable
|
8,459
|
7,626
|
6,967
|
7,440
|
9,671
|
10,447
|
16,043
|
15,451
|
13,908
|
12,840
|
-
|
|||||||||||||||||||||||
Total gross re-estimated | ||||||||||||||||||||||||||||||||||
reserves
|
35,307
|
33,698
|
33,737
|
35,877
|
36,296
|
36,041
|
38,590
|
35,265
|
33,028
|
31,353
|
-
|
|||||||||||||||||||||||
Net
(deficiency) redundancy
|
||||||||||||||||||||||||||||||||||
related
to:
|
||||||||||||||||||||||||||||||||||
Asbestos
claims
|
(2,361
|
)
|
(2,463
|
)
|
(2,362
|
)
|
(2,120
|
)
|
(1,543
|
)
|
(1,478
|
)
|
(706
|
)
|
(705
|
)
|
(64
|
)
|
(10
|
)
|
-
|
|||||||||||||
Environmental
and mass tort
|
||||||||||||||||||||||||||||||||||
claims
|
(802
|
)
|
(749
|
)
|
(776
|
)
|
(561
|
)
|
(663
|
)
|
(654
|
)
|
(193
|
)
|
(200
|
)
|
(52
|
)
|
(53
|
)
|
-
|
|||||||||||||
Total
asbestos, environmental
|
||||||||||||||||||||||||||||||||||
and
mass tort
|
(3,163
|
)
|
(3,212
|
)
|
(3,138
|
)
|
(2,681
|
)
|
(2,206
|
)
|
(2,132
|
)
|
(899
|
)
|
(905
|
)
|
(116
|
)
|
(63
|
)
|
-
|
|||||||||||||
Other
claims
|
1,827
|
1,314
|
43
|
(2,432
|
)
|
(3,660
|
)
|
(4,285
|
)
|
(3,702
|
)
|
(3,680
|
)
|
(1,567
|
)
|
(928
|
)
|
-
|
||||||||||||||||
Total net (deficiency) | ||||||||||||||||||||||||||||||||||
redundancy
|
(1,336
|
)
|
(1,898
|
)
|
(3,095
|
)
|
(5,113
|
)
|
(5,866
|
)
|
(6,417
|
)
|
(4,601
|
)
|
(4,585
|
)
|
(1,683
|
)
|
(991
|
)
|
-
|
(a)
|
Includes
CIC gross reserves of $9,713.0 and net reserves of $6,063.0
acquired on
May 10, 1995 and subsequent development
thereon.
|
(b)
|
Ceded
recoverable includes reserves transferred under retroactive
reinsurance
agreements of $784.0 as of December 31,
1999.
|
(c)
|
Effective
January 1, 2001, CNA established a new life insurance company,
CNA Group
Life Assurance Company (“CNAGLA”). Further, on January 1, 2001
approximately $1,055.0 of reserves were transferred from CCC
to
CNAGLA.
|
(d)
|
Effective
October 31, 2002, CNA sold CNA Reinsurance Company Limited
(“CNA Re
U.K.”). As a result of the sale, net reserves were reduced by
approximately $1,316.0.
|
Size
|
||||
Location
|
(square
feet)
|
Principal
Usage
|
||
CNA
Center
|
904,990
|
|
Principal
executive offices of CNA
|
|
333
S. Wabash
|
||||
Chicago,
Illinois
|
||||
401
Penn Street
|
171,406
|
Property
and casualty insurance offices
|
||
Reading,
Pennsylvania
|
||||
2405
Lucien Way
|
150,825
|
Property
and casualty insurance offices
|
||
Maitland,
Florida
|
||||
40
Wall Street
|
124,482
|
Property
and casualty insurance offices
|
||
New
York, New York
|
||||
1111
E. Broad Street
|
97,276
|
Property
and casualty insurance offices
|
||
Columbus,
Ohio
|
||||
675
Placentia Avenue
|
78,655
|
Property
and casualty insurance offices
|
||
Brea,
California
|
||||
600
N. Pearl Street
|
76,666
|
Property
and casualty insurance offices
|
||
Dallas,
Texas
|
||||
405
Howard Street
|
47,667
|
Property
and casualty insurance offices
|
||
San
Francisco, California
|
||||
1100
Cornwall Road
|
41,767
|
Property
and casualty insurance offices
|
||
Monmouth
Junction, New Jersey
|
||||
100
CNA Drive
|
35,653
|
Property
and casualty insurance offices
|
||
Nashville,
Tennessee
|
·
|
prohibit
all tobacco advertising and
promotion;
|
·
|
require
new health warnings on cigarette packages and
advertising;
|
·
|
authorize
the establishment of various anti-smoking education
programs;
|
·
|
provide
that current federal law should not be construed to relieve
any person of
liability under common or state
law;
|
·
|
permit
state and local governments to restrict the sale and distribution
of
cigarettes;
|
·
|
direct
the placement of advertising of tobacco products;
|
·
|
provide
that cigarette advertising not be deductible as a business
expense;
|
·
|
prohibit
the mailing of unsolicited samples of cigarettes and otherwise
to restrict
the sale or distribution of cigarettes in retail stores, by
mail or over
the internet;
|
·
|
impose
an additional, or increase existing, excise taxes on
cigarettes;
|
·
|
require
that cigarettes be manufactured in a manner that will cause
them, under
certain circumstances, to be self-extinguishing;
and
|
·
|
subject
cigarettes to regulation in various ways by the U.S. Department
of Health
and Human Services or other regulatory
agencies.
|
·
|
prohibits
the targeting of youth in the advertising, promotion or marketing
of
tobacco products;
|
·
|
bans
the use of cartoon characters in all tobacco advertising and
promotion;
|
·
|
limits
each tobacco manufacturer to one event sponsorship during any
twelve-month
period, which may not include major team sports or events in
which the
intended audience includes a significant percentage of
youth;
|
·
|
bans
all outdoor advertising of tobacco products with the exception
of small
signs at retail establishments that sell tobacco
products;
|
·
|
bans
tobacco manufacturers from offering or selling apparel and
other
merchandise that bears a tobacco brand name, subject to specified
exceptions;
|
·
|
prohibits
the distribution of free samples of tobacco products except
within
adult-only facilities;
|
·
|
prohibits
payments for tobacco product placement in various media; and
|
·
|
bans
gift offers based on the purchase of tobacco products without
sufficient
proof that the intended gift recipient is an
adult.
|
·
|
industry
volume or Lorillard volume,
|
·
|
the
mix between premium and discount
sales,
|
·
|
Lorillard’s
market share or
|
·
|
Lorillard’s
profits and earnings.
|
·
|
approximately
5,900 miles of pipeline, having a peak-day delivery capacity
of
approximately 2.8 Bcf per day;
|
·
|
31
compressor stations having an aggregate of approximately 531,000
horsepower; and
|
·
|
nine
natural gas storage fields located in Indiana and Kentucky,
having
aggregate storage capacity of approximately 178.0 Bcf of gas,
of which
approximately 63.0 Bcf is certificated as working
gas.
|
·
|
approximately
7,570 miles of pipeline, having a peak-day delivery capacity
of
approximately 3.5 Bcf of gas;
|
·
|
30
compressor stations having an aggregate of approximately 223,000
horsepower; and
|
·
|
two
natural gas storage fields located in Louisiana and Mississippi,
having
aggregate storage capacity of approximately 129.0 Bcf of gas,
of which
approximately 80.0 Bcf is certificated as working
gas.
|
· |
the
Clean Air Act, and analogous state laws which impose obligations
related
to air emissions;
|
· |
the
Water Pollution Control Act, commonly referred to as the Clean
Water Act,
and analogous state laws which regulate discharge of wastewaters
from our
facilities into state and federal waters;
|
· |
the
Comprehensive Environmental Response, Compensation and Liability
Act
commonly referred to as CERCLA, or the Superfund law, and analogous
state
laws which regulate the cleanup of hazardous substances; and
|
· |
the
Resource Conservation and Recovery Act, and analogous state
laws which
impose requirements for the handling and discharge of solid
and hazardous
waste.
|
·
|
the
Gulf of Mexico, including the United States and
Mexico;
|
·
|
Europe,
principally in the U.K and Norway; and Africa and
Egypt
|
·
|
South
America, principally in Brazil
|
·
|
Australia,
Asia and Middle East, including, Malaysia, Indonesia and
Qatar
|
Number
of
|
||||
Name
and Location
|
Rooms
|
Owned,
Leased or Managed
|
||
Loews
Annapolis
|
220
|
Owned
|
||
Annapolis,
Maryland
|
||||
Loews
Beverly Hills Hotel
|
137
|
Management
contract expiring 2006
|
||
Beverly
Hills, California
|
||||
Loews
Coronado Bay Resort
|
440
|
Land
lease expiring 2034
|
||
San
Diego, California
|
||||
Loews
Denver
|
185
|
Owned
|
||
Denver,
Colorado
|
||||
Don
CeSar Beach Resort, a Loews Hotel
|
347
|
Management
contract (a)(b)
|
||
St.
Pete Beach, Florida
|
||||
Hard
Rock Hotel,
|
650
|
Management
contract (c)
|
||
at
Universal Orlando
|
||||
Orlando,
Florida
|
||||
Loews
Le Concorde
|
405
|
Land
lease expiring 2069
|
||
Quebec
City, Canada
|
||||
Loews
Miami Beach Hotel
|
790
|
Owned
|
||
Miami
Beach, Florida
|
||||
Loews
New Orleans Hotel
|
285
|
Management
contract expiring 2018 (a)
|
||
New
Orleans, Louisiana
|
||||
Loews
Philadelphia Hotel
|
585
|
Owned
|
||
Philadelphia,
Pennsylvania
|
||||
Portofino
Bay Hotel,
|
750
|
Management
contract (c)
|
||
at
Universal Orlando, a Loews Hotel
|
||||
Orlando,
Florida
|
||||
The
Regency, a Loews Hotel
|
350
|
Land
lease expiring 2013, with renewal option
|
||
New
York, New York
|
for
47 years
|
|||
Royal
Pacific Resort
|
1,000
|
Management
contract (c)
|
||
at
Universal Orlando, a Loews Hotel
|
||||
Orlando,
Florida
|
||||
Loews
Santa Monica Beach
|
340
|
Management
contract expiring 2018, with
|
||
Santa
Monica, California
|
renewal
option for 5 years (a)
|
|||
Loews
Vanderbilt Plaza
|
340
|
Owned
|
||
Nashville,
Tennessee
|
||||
Loews
Ventana Canyon Resort
|
400
|
Management
contract expiring 2019 (a)
|
||
Tucson,
Arizona
|
||||
Loews
Hotel Vogue
|
140
|
Owned
|
||
Montreal,
Canada
|
(a)
|
These
management contracts are subject to termination
rights.
|
(b)
|
A
Loews Hotels subsidiary is a 20% owner of the hotel, which
is being
operated by Loews Hotels pursuant to a management
contract.
|
(c)
|
A
Loews Hotels subsidiary is a 50% owner of these hotels
located
at
the Universal
Orlando theme park,
through
a
joint venture
with Universal Studios and the Rank Group. The hotels are constructed
on
land leased by the joint
venture from the
resort’s owners and are being operated by Loews Hotels pursuant to
a
management contract.
|
·
|
the
discretion of our board of directors to make determinations
that may
affect Carolina Group stock and our common stock differently;
|
·
|
our
redemption and/or exchange rights under particular circumstances;
and
|
·
|
the
disparate voting rights of Carolina Group stock and our common
stock.
|
·
|
pay
or omit the payment of dividends on our common stock or Carolina
Group
stock;
|
·
|
redeem
shares of Carolina Group stock;
|
·
|
approve
dispositions of our assets attributed to either
group;
|
·
|
reallocate
funds or assets between groups and determine the amount and
type of
consideration paid therefore;
|
·
|
allocate
business opportunities, resources and personnel;
|
·
|
allocate
the proceeds of issuances of Carolina Group stock either to
the Loews
Group, with a corresponding reduction in the intergroup interest,
if and
to the extent there is an intergroup interest, or to the combined
attributed net assets of the Carolina
Group;
|
·
|
formulate
public policy positions for us;
|
·
|
establish
relationships between the groups;
|
·
|
make
financial decisions with respect to one group that could be
considered to
be detrimental to the other group;
and
|
·
|
settle
or otherwise seek to resolve actual or potential litigation
against us in
ways that might adversely affect Lorillard.
|
·
|
pay
a special dividend to holders of Carolina Group stock in an
amount equal
to their pro rata share of the net proceeds (subject to reduction
for
repayment of notional debt, amounts not distributed from Lorillard
to us
and the creation by us of reserves for tobacco-related contingent
liabilities and future costs) from the disposition in the form
of cash
and/or securities (other than our common
stock);
|
·
|
redeem
shares of Carolina Group stock for cash and/or securities (other
than our
common stock) in an amount equal to the pro rata share of the
net proceeds
(subject to reduction for repayment of notional debt) from
the disposition
of all of the assets attributable to the Carolina
Group;
|
·
|
redeem
shares of Carolina Group stock for shares of our common stock
at a 15%
premium based on the respective market values of Carolina Group
stock and
our common stock during the 20 consecutive trading days ending
on the 5th
trading day prior to announcement of the sale; or
|
·
|
take
some combination of the actions described
above.
|
·
|
Lorillard
has distributed to us all previously undistributed portions
of the net
proceeds;
|
·
|
no
amounts remain in reserve in respect of tobacco-related contingent
liabilities and future costs; and
|
·
|
the
only asset remaining in the Carolina Group is cash and/or cash
equivalents,
|
·
|
increases
in the number and size of claims relating to injuries from
medical
products, and exposure to lead;
|
·
|
the
effects of accounting and financial reporting scandals and
other major
corporate governance failures, which have resulted in an increase
in the
number and size of claims, including director and officer and
errors and
omissions insurance claims;
|
·
|
increases
in the volume of class action litigation challenging a range
of industry
practices including claims
handling;
|
·
|
increases
in the number of construction defect claims, including claims
for a broad
range of additional insured endorsements on policies;
and
|
·
|
increases
in the number of claims alleging abuse by members of the clergy,
including
passage of legislation to reopen or extend various statutes
of
limitations.
|
·
|
coverage
issues, including whether certain costs are covered under the
policies and
whether policy limits apply;
|
·
|
inconsistent
court decisions and developing legal
theories;
|
·
|
increasingly
aggressive tactics of plaintiffs’
lawyers;
|
·
|
the
risks and lack of predictability inherent in major
litigation;
|
·
|
changes
in the volume of asbestos, environmental pollution and mass
tort claims
which cannot now be anticipated;
|
·
|
continued
increases in mass tort claims relating to silica and silica-containing
products;
|
·
|
the
impact of the exhaustion of primary limits and the resulting
increase in
claims on any umbrella or excess policies CNA has
issued;
|
·
|
the
number and outcome of direct actions against
CNA;
|
·
|
CNA’s
ability to recover reinsurance for these claims;
and
|
·
|
changes
in the legal and legislative environment in which CNA
operates.
|
·
|
whether
cleanup costs are considered damages under the policies (and
accordingly
whether CNA would be liable for these
costs);
|
·
|
the
trigger of coverage, and the allocation of liability among
triggered
policies;
|
·
|
the
applicability of pollution exclusions and owned property
exclusions;
|
·
|
the
potential for joint and several liability;
and
|
·
|
the
definition of an occurrence.
|
·
|
inconsistency
of court decisions and jury attitudes, as well as future court
decisions;
|
·
|
specific
policy provisions;
|
·
|
allocation
of liability among insurers and
insureds;
|
·
|
missing
policies and proof of coverage;
|
·
|
the
proliferation of bankruptcy proceedings and attendant
uncertainties;
|
·
|
novel
theories asserted by policyholders and their legal
counsel;
|
·
|
the
targeting of a broader range of businesses and entities as
defendants;
|
·
|
uncertainties
in predicting the number of future claims and which other insureds
may be
targeted in the future;
|
·
|
volatility
in claim numbers and settlement
demands;
|
·
|
increases
in the number of non-impaired claimants and the extent to which
they can
be precluded from making claims;
|
·
|
the
efforts by insureds to obtain coverage that is not subject
to aggregate
limits;
|
·
|
the
long latency period between asbestos exposure and disease manifestation,
as well as the resulting potential for involvement of multiple
policy
periods for individual claims;
|
·
|
medical
inflation trends;
|
·
|
the
mix of asbestos-related diseases presented;
and
|
·
|
the
ability to recover reinsurance.
|
·
|
the
political environment of oil-producing regions, including uncertainty
or
instability resulting from an escalation or additional outbreak
of armed
hostilities in the Middle East or other geographic areas or
further acts
of terrorism in the United States or
elsewhere;
|
·
|
worldwide
demand for oil and gas;
|
·
|
the
cost of exploring for, producing and delivering oil and
gas;
|
·
|
the
discovery rate of new oil and gas
reserves;
|
·
|
the
rate of decline of existing and new oil and gas
reserves;
|
·
|
available
pipeline and other oil and gas transportation
capacity;
|
·
|
the
ability of oil and gas companies to raise
capital;
|
·
|
weather
conditions in the United States and
elsewhere;
|
·
|
the
ability of the Organization of Petroleum Exporting Countries,
commonly
called OPEC, to set and maintain production levels and
pricing;
|
·
|
the
level of production in non-OPEC
countries;
|
·
|
the
policies of the various governments regarding exploration and
development
of their oil and gas reserves; and
|
·
|
advances
in exploration and development
technology.
|
·
|
terrorist
acts, war and civil disturbances;
|
·
|
expropriation
of property or equipment;
|
·
|
foreign
and domestic monetary policy;
|
·
|
the
inability to repatriate income or
capital;
|
·
|
regulatory
or financial requirements to comply with foreign bureaucratic
actions;
and
|
·
|
changing
taxation policies.
|
·
|
the
equipping and operation of drilling
units;
|
·
|
repatriation
of foreign earnings;
|
·
|
oil
and gas exploration and
development;
|
·
|
taxation
of offshore earnings and earnings of expatriate personnel;
and
|
·
|
use
and compensation of local employees and suppliers by foreign
contractors.
|
·
|
existing
and new competition to deliver natural gas to Boardwalk Pipeline’s
markets;
|
·
|
the
growth in demand for natural gas in Boardwalk Pipeline’s markets;
|
·
|
whether
the market will continue to support long-term contracts;
|
·
|
the
reduction of basis differentials - market price spreads between
two points
on the pipeline - across the Boardwalk Pipeline systems;
and
|
·
|
the
effects of state regulation on customer contracting practices.
|
·
|
worldwide
economic conditions;
|
·
|
weather
conditions and seasonal trends;
|
·
|
levels
of domestic production and consumer demand;
|
·
|
the
availability of LNG;
|
·
|
the
availability of adequate transportation capacity;
|
·
|
the
price and availability of alternative fuels;
|
·
|
the
effect of energy conservation measures;
|
·
|
the
nature and extent of governmental regulation and taxation;
and
|
·
|
the
anticipated future prices of natural gas, LNG and other commodities.
|
·
|
performance
of Boardwalk Pipeline’s business following the acquisition, expansion or
construction of assets that does not meet expectations;
|
·
|
a
significant increase in Boardwalk Pipeline’s indebtedness and working
capital requirements, which could, among other things, have
an adverse
impact on its credit ratings;
|
·
|
the
inability to timely and effectively integrate into Boardwalk
Pipeline’s
operations the operations of newly acquired, expanded or constructed
assets;
|
·
|
the
incurrence of substantial unforeseen environmental and other
liabilities,
including liabilities arising from the operation of an acquired
business
or asset;
|
·
|
diversion
of management’s attention from other business concerns; and
|
·
|
regulatory
risks created by the nature or location of acquired businesses.
|
·
|
standards
of solvency, including risk-based capital
measurements;
|
·
|
restrictions
on the nature, quality and concentration of
investments;
|
· |
restrictions
on CNA’s ability to withdraw from unprofitable lines of
insurance;
|
·
|
the
required use of certain methods of accounting and
reporting;
|
·
|
the
establishment of reserves for unearned premiums, losses and
other
purposes;
|
·
|
potential
assessments for funds necessary to settle covered claims
against impaired,
insolvent or failed insurance
companies;
|
·
|
licensing
of insurers and agents;
|
·
|
approval
of policy forms; and
|
·
|
limitations
on the ability of CNA’s insurance subsidiaries to pay dividends to
us.
|
·
|
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;
|
·
|
allow
the FDA to 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;
|
·
|
place
more severe restrictions on the advertising, marketing and
sales of
cigarettes;
|
·
|
permit
state regulation of labeling and advertising and eliminate
the existing
federal preemption of such regulation; and
|
·
|
grant
the FDA the authority to impose broad additional restrictions.
|
·
|
operating
terms and conditions of service;
|
·
|
the
types of services Boardwalk may offer to Boardwalk’s customers;
|
·
|
construction
of new facilities;
|
·
|
acquisition,
extension or abandonment of services or facilities;
|
·
|
accounts
and records; and
|
·
|
relationships
with affiliated companies involved in all aspects of the natural
gas and
electricity businesses.
|
·
|
as
discussed in more detail above, many of CNA’s policyholders have made
claims for defense costs and indemnification in connection
with
environmental pollution matters;
|
·
|
as
an operator of mobile offshore drilling units in navigable
U.S. waters and
some offshore areas, Diamond Offshore may be liable for, among
other
things, damages and costs incurred in connection with oil spills
related
to those operations, including for conduct of or conditions
caused by
others or for acts that were in compliance with all applicable
laws at the
time they were performed;
|
·
|
the
risk of substantial environmental costs and liabilities is
inherent in
natural gas transportation, gathering and storage, including
with respect
to, among other things, the handling and discharge of solid
and hazardous
waste from Boardwalk’s facilities, compliance with clean air standards and
the abandonment and reclamation of Boardwalk’s facilities, sites and other
properties; and
|
·
|
Bulova
no longer manufactures time pieces; however, it has substantial
ongoing
clean-up obligations and will continue to incur substantial
costs, which
could exceed Bulova’s current estimates, related to contaminated
properties that were previously operated by Bulova as manufacturing
sites.
|
First
|
|||
Became
|
|||
Name
|
Position
and Offices
Held
|
Age
|
Officer
|
David
B. Edelson
|
Senior
Vice President
|
46
|
2005
|
Gary
W. Garson
|
Senior
Vice President, General Counsel and
|
59
|
1988
|
Secretary
|
|||
Herbert
C. Hofmann
|
Senior
Vice President
|
63
|
1979
|
Peter
W. Keegan
|
Senior
Vice President and Chief Financial Officer
|
61
|
1997
|
Arthur
L. Rebell
|
Senior
Vice President
|
65
|
1998
|
Andrew
H. Tisch
|
Office
of the President, Co-Chairman of the Board
|
56
|
1985
|
and
Chairman of the Executive Committee
|
|||
James
S. Tisch
|
Office
of the President, President and
|
53
|
1981
|
Chief
Executive Officer
|
|||
Jonathan
M. Tisch
|
Office
of the President and Co-Chairman of the Board
|
52
|
1987
|
2005
|
2004
|
||||||||||||
High
|
Low
|
High
|
Low
|
||||||||||
First
Quarter
|
$
|
74.60
|
$
|
67.05
|
$
|
63.20
|
$
|
49.07
|
|||||
Second
Quarter
|
80.28
|
68.94
|
61.35
|
55.45
|
|||||||||
Third
Quarter
|
93.97
|
76.70
|
60.16
|
53.35
|
|||||||||
Fourth
Quarter
|
98.70
|
87.50
|
71.01
|
55.54
|
2005
|
2004
|
||||||||||||
High
|
Low
|
High
|
Low
|
||||||||||
First
Quarter
|
$
|
34.50
|
$
|
28.47
|
$
|
29.85
|
$
|
24.46
|
|||||
Second
Quarter
|
33.49
|
29.25
|
27.90
|
22.49
|
|||||||||
Third
Quarter
|
40.29
|
33.10
|
25.04
|
22.92
|
|||||||||
Fourth
Quarter
|
46.06
|
38.72
|
30.00
|
24.05
|
Number
of
|
|||||||||||
securities
remaining
|
|||||||||||
Number
of
|
available
for future
|
||||||||||
securities
to be
|
issuance
under
|
||||||||||
issued
upon exercise
|
Weighted
average
|
equity
compensation
|
|||||||||
of
outstanding
|
exercise
price of
|
plans
(excluding
|
|||||||||
options,
warrants
|
outstanding
options,
|
securities
reflected
|
|||||||||
Plan
category
|
and
rights
|
warrants
and rights
|
in
the first column)
|
||||||||
Loews
common stock:
|
|||||||||||
Equity
compensation plans approved by
|
|||||||||||
security
holders (a)
|
1,285,658
|
$58.020
|
2,283,253
|
||||||||
Carolina
Group stock:
|
|||||||||||
Equity
compensation plans approved by
|
|||||||||||
security
holders (b)
|
536,572
|
$28.526
|
736,750
|
||||||||
Equity
compensation plans not approved
|
|||||||||||
by
security holders (c)
|
N/A
|
N/A
|
N/A
|
(a)
|
Consists
of the Loews Corporation 2000 Stock Option Plan.
|
(b)
|
Consists
of the Carolina Group 2002 Stock Option
Plan.
|
(c)
|
We
do not have equity compensation plans that have not been authorized
by our
stockholders.
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
2002
|
2001
|
|||||||||||
(In
millions, except per share data)
|
Restated(a)
|
Restated(a)
|
Restated(a)
|
Restated(a)
|
||||||||||||
Results
of Operations:
|
||||||||||||||||
Revenues
|
$
|
16,017.8
|
$
|
15,236.9
|
$
|
16,459.7
|
$
|
17,463.9
|
$
|
18,736.2
|
||||||
Income
(loss) before taxes and minority
|
||||||||||||||||
interest
|
$
|
1,846.5
|
$
|
1,828.8
|
$
|
(1,357.1
|
)
|
$
|
1,666.1
|
$
|
(764.5
|
)
|
||||
Income
(loss) from continuing operations
|
$
|
1,192.9
|
$
|
1,235.3
|
$
|
(654.0
|
)
|
$
|
993.5
|
$
|
(510.4
|
)
|
||||
Discontinued
operations, net
|
18.7
|
(19.5
|
)
|
56.8
|
(33.8
|
)
|
9.9
|
|||||||||
Cumulative
effect of changes in
|
||||||||||||||||
accounting
principles, net
|
(39.6
|
)
|
(53.3
|
)
|
||||||||||||
Net
income (loss)
|
$
|
1,211.6
|
$
|
1,215.8
|
$
|
(597.2
|
)
|
$
|
920.1
|
$
|
(553.8
|
)
|
||||
Income
(loss) attributable to:
|
||||||||||||||||
Loews
common stock:
|
||||||||||||||||
Income
(loss) from continuing
|
||||||||||||||||
operations
|
$
|
941.6
|
$
|
1,050.8
|
$
|
(769.2
|
)
|
$
|
852.8
|
$
|
(510.4
|
)
|
||||
Discontinued
operations, net
|
18.7
|
(19.5
|
)
|
56.8
|
(33.8
|
)
|
9.9
|
|||||||||
Cumulative
effect of changes in
|
||||||||||||||||
accounting
principles, net
|
(39.6
|
)
|
(53.3
|
)
|
||||||||||||
Loews
common stock
|
960.3
|
1,031.3
|
(712.4
|
)
|
779.4
|
(553.8
|
)
|
|||||||||
Carolina
Group stock
|
251.3
|
184.5
|
115.2
|
140.7
|
||||||||||||
Net
income (loss)
|
$
|
1,211.6
|
$
|
1,215.8
|
$
|
(597.2
|
)
|
$
|
920.1
|
$
|
(553.8
|
)
|
||||
Diluted
Income (Loss) Per Share:
|
||||||||||||||||
Loews
common stock:
|
||||||||||||||||
Income
(loss) from continuing operations
|
$
|
5.06
|
$
|
5.66
|
$
|
(4.15
|
)
|
$
|
4.54
|
$
|
(2.61
|
)
|
||||
Discontinued
operations, net
|
0.10
|
(0.10
|
)
|
0.31
|
(0.18
|
)
|
0.05
|
|||||||||
Cumulative
effect of changes in
|
||||||||||||||||
accounting
principles, net
|
(0.21
|
)
|
(0.27
|
)
|
||||||||||||
Net
income (loss)
|
$
|
5.16
|
$
|
5.56
|
$
|
(3.84
|
)
|
$
|
4.15
|
$
|
(2.83
|
)
|
||||
Carolina
Group stock
|
$
|
3.62
|
$
|
3.15
|
$
|
2.76
|
$
|
3.50
|
||||||||
Financial
Position:
|
||||||||||||||||
Investments
|
$
|
45,396.0
|
$
|
44,298.5
|
$
|
42,514.8
|
$
|
40,136.7
|
$
|
41,159.1
|
||||||
Total
assets
|
70,675.6
|
73,720.3
|
77,673.9
|
70,211.0
|
74,732.9
|
|||||||||||
Debt
|
5,206.8
|
6,990.3
|
5,820.2
|
5,651.9
|
5,920.3
|
|||||||||||
Shareholders’
equity
|
13,092.1
|
11,969.9
|
10,855.3
|
10,995.5
|
9,170.5
|
|||||||||||
Cash
dividends per share:
|
||||||||||||||||
Loews
common stock
|
0.60
|
0.60
|
0.60
|
0.60
|
0.58
|
|||||||||||
Carolina
Group stock
|
1.82
|
1.82
|
1.81
|
1.34
|
||||||||||||
Book
value per share of Loews common
|
||||||||||||||||
stock
|
70.93
|
65.56
|
59.85
|
60.39
|
47.89
|
|||||||||||
Shares
outstanding:
|
||||||||||||||||
Loews
common stock
|
185.85
|
185.58
|
185.45
|
185.44
|
191.49
|
|||||||||||
Carolina
Group stock
|
78.19
|
67.97
|
57.97
|
39.91
|
(a)
|
Restated
to correct CNA’s accounting for discontinued operations acquired in CNA’s
merger with The Continental Corporation in 1995. Please read
information
about the restatement included in Note 25 of the Notes to
Consolidated
Financial Statements included under Item
8.
|
Page
|
||
No.
|
||
Overview
|
||
Consolidated
Financial Results
|
65
|
|
Classes
of Common Stock
|
66
|
|
Parent
Company Structure
|
67
|
|
Critical
Accounting Estimates
|
67
|
|
Results
of Operations by Business Segment
|
69
|
|
CNA
Financial
|
69
|
|
Net
Prior Year Development
|
70
|
|
Reserves
- Estimates and Uncertainties
|
72
|
|
Reinsurance
|
74
|
|
Terrorism
Insurance
|
76
|
|
Restructuring
|
77
|
|
Standard
Lines
|
77
|
|
Specialty
Lines
|
80
|
|
Life
and Group Non-Core
|
82
|
|
Other
Insurance
|
83
|
|
APMT
Reserves
|
85
|
|
Lorillard
|
92
|
|
Results
of Operations
|
92
|
|
Business
Environment
|
95
|
|
Boardwalk
Pipeline
|
97
|
|
Diamond
Offshore
|
99
|
|
Loews
Hotels
|
102
|
|
Corporate
and Other
|
103
|
|
Liquidity
and Capital Resources
|
104
|
|
CNA
Financial
|
104
|
|
Lorillard
|
107
|
|
Boardwalk
Pipeline
|
109
|
|
Diamond
Offshore
|
109
|
|
Loews
Hotels
|
110
|
|
Corporate
and Other
|
111
|
|
Investments
|
112
|
|
Accounting
Standards
|
120
|
|
Forward-Looking
Statements Disclaimer
|
121
|
|
Supplemental
Financial Information
|
125
|
·
|
commercial
property and casualty insurance (CNA Financial Corporation (“CNA”), a 91%
owned subsidiary);
|
·
|
the
production and sale of cigarettes (Lorillard, Inc. (“Lorillard”), a wholly
owned subsidiary);
|
·
|
operation
of interstate natural gas transmission
pipeline systems
(Boardwalk Pipeline Partners, LP
(“Boardwalk Pipeline”),
an 85% owned subsidiary);
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Overview
- (Continued)
|
·
|
operation
of offshore oil and gas drilling rigs (Diamond Offshore Drilling,
Inc.
(“Diamond Offshore”), a 54% owned subsidiary);
|
·
|
operation
of hotels (Loews Hotels Holding Corporation (“Loews Hotels”), a wholly
owned subsidiary)
and
|
·
|
distribution
and sale of watches and clocks (Bulova Corporation (“Bulova”), a wholly
owned subsidiary).
|
Year
Ended December 31
|
2005
|
2004
|
|||||
(In
millions, except per share data)
|
(Restated)
|
||||||
Net
income attributable to Loews common stock:
|
|||||||
Income
before net investment gains (losses)
|
$
|
951.9
|
$
|
1,195.7
|
|||
Net
investment gains (losses) (a)
|
(10.3
|
)
|
(144.9
|
)
|
|||
Income
from continuing operations
|
941.6
|
1,050.8
|
|||||
Discontinued
operations, net
|
18.7
|
(19.5
|
)
|
||||
Net
income attributable to Loews common stock
|
960.3
|
1,031.3
|
|||||
Net
income attributable to Carolina Group stock (b)
|
251.3
|
184.5
|
|||||
Consolidated
net income
|
$
|
1,211.6
|
$
|
1,215.8
|
|||
Net
income per share:
|
|||||||
Loews
common stock
|
|||||||
Income
from continuing operations
|
$
|
5.06
|
$
|
5.66
|
|||
Discontinued
operations, net
|
0.10
|
(0.10
|
)
|
||||
Loews
common stock
|
$
|
5.16
|
$
|
5.56
|
|||
Carolina
Group stock
|
$
|
3.62
|
$
|
3.15
|
(a)
|
Includes
a loss of $352.9 (after tax and minority interest) for the year ended
December 31, 2004 related to CNA’s sale of its individual life insurance
business.
|
(b)
|
Reflects
Loews Corporation’s
sales of
10,000,000 shares of Carolina Group stock in each of November of
2005 and
December of 2004. Net income per share of Carolina Group stock was
not
impacted by these sales.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Consolidated
Financial Results -
(Continued)
|
·
|
our
100% stock ownership interest in Lorillard,
Inc.;
|
·
|
notional,
intergroup debt owed by the Carolina Group to the Loews Group ($1.6
billion outstanding at December 31, 2005), 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.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Classes
of Common Stock - (Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Critical
Accounting Estimates
- (Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Critical
Accounting Estimates -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Standard
|
Specialty
|
Other
|
|||||||||||
Year
Ended December 31, 2005
|
Lines
|
Lines
|
Insurance
|
Total
|
|||||||||
(In
millions)
|
|||||||||||||
Pretax
unfavorable net prior year claim and
|
|||||||||||||
allocated
claim adjustment expense development,
|
|||||||||||||
excluding
the impact of corporate aggregate
|
|||||||||||||
reinsurance
treaties:
|
|||||||||||||
Core
(Non-APMT)
|
$
|
376.0
|
$
|
42.0
|
$
|
171.0
|
$
|
589.0
|
|||||
APMT
|
63.0
|
63.0
|
|||||||||||
Total
|
376.0
|
42.0
|
234.0
|
652.0
|
|||||||||
Ceded
losses related to corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
183.0
|
5.0
|
57.0
|
245.0
|
|||||||||
Pretax
unfavorable net prior year development
|
|||||||||||||
before
impact of premium development
|
559.0
|
47.0
|
291.0
|
897.0
|
|||||||||
Unfavorable
(favorable) premium
|
|||||||||||||
development,
excluding impact of corporate
|
|||||||||||||
aggregate
reinsurance treaties
|
(101.0
|
)
|
(12.0
|
)
|
11.0
|
(102.0
|
)
|
||||||
Ceded
premiums related to corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
(6.0
|
)
|
19.0
|
4.0
|
17.0
|
||||||||
Total
premium development
|
(107.0
|
)
|
7.0
|
15.0
|
(85.0
|
)
|
|||||||
Total
2005 unfavorable net prior year development
|
|||||||||||||
(pretax)
|
$
|
452.0
|
$
|
54.0
|
$
|
306.0
|
$
|
812.0
|
|||||
Total
2005 unfavorable net prior year development
|
|||||||||||||
(after
tax and minority interest)
|
$
|
268.3
|
$
|
31.9
|
$
|
181.7
|
$
|
481.9
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Standard
|
Specialty
|
Other
|
|||||||||||
Year
Ended December 31, 2004
|
Lines
|
Lines
|
Insurance
|
Total
|
|||||||||
(In
millions)
|
|||||||||||||
Pretax
unfavorable net prior year claim and
|
|||||||||||||
allocated
claim adjustment expense development,
|
|||||||||||||
excluding
the impact of corporate aggregate
|
|||||||||||||
reinsurance
treaties:
|
|||||||||||||
Core
(Non-APMT)
|
$
|
107.0
|
$
|
75.0
|
$
|
20.0
|
$
|
202.0
|
|||||
APMT
|
55.0
|
55.0
|
|||||||||||
Total
|
107.0
|
75.0
|
75.0
|
257.0
|
|||||||||
Ceded
losses related to corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
8.0
|
(17.0
|
)
|
9.0
|
|||||||||
Pretax
unfavorable net prior year development
|
|||||||||||||
before
impact of premium development
|
115.0
|
58.0
|
84.0
|
257.0
|
|||||||||
Unfavorable
(favorable) premium
|
|||||||||||||
development,
excluding impact of corporate
|
|||||||||||||
aggregate
reinsurance treaties
|
(96.0
|
)
|
(33.0
|
)
|
12.0
|
(117.0
|
)
|
||||||
Ceded
premiums related to corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
(1.0
|
)
|
5.0
|
(3.0
|
)
|
1.0
|
|||||||
Total premium
development
|
(97.0
|
)
|
(28.0
|
)
|
9.0
|
(116.0
|
)
|
||||||
Total
2004 unfavorable net prior year development
|
|||||||||||||
(pretax)
|
$
|
18.0
|
$
|
30.0
|
$
|
93.0
|
$
|
141.0
|
|||||
Total
2004 unfavorable net prior year development
|
|||||||||||||
(after
tax and minority interest)
|
$
|
11.0
|
$
|
18.3
|
$
|
54.8
|
$
|
84.1
|
|||||
Year
Ended December 31, 2003
|
|||||||||||||
Pretax
unfavorable net prior year claim and allocated
|
|||||||||||||
claim
adjustment expense development, excluding
|
|||||||||||||
the
impact of corporate aggregate reinsurance
|
|||||||||||||
treaties:
|
|||||||||||||
Core
(Non-APMT)
|
$
|
1,423.0
|
$
|
313.0
|
$
|
346.0
|
$
|
2,082.0
|
|||||
APMT
|
795.0
|
795.0
|
|||||||||||
Total
|
1,423.0
|
313.0
|
1,141.0
|
2,877.0
|
|||||||||
Ceded
losses related to corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
(485.0
|
)
|
(56.0
|
)
|
(102.0
|
)
|
(643.0
|
)
|
|||||
Pretax
unfavorable net prior year development before
|
|||||||||||||
impact
of premium development
|
938.0
|
257.0
|
1,039.0
|
2,234.0
|
|||||||||
Unfavorable
(favorable) premium development,
|
|||||||||||||
excluding
impact of corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
209.0
|
6.0
|
(32.0
|
)
|
183.0
|
||||||||
Ceded
premiums related to corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
269.0
|
31.0
|
58.0
|
358.0
|
|||||||||
Total
premium development
|
478.0
|
37.0
|
26.0
|
541.0
|
|||||||||
Total
2003 unfavorable net prior year development
|
|||||||||||||
(pretax)
|
$
|
1,416.0
|
$
|
294.0
|
$
|
1,065.0
|
$
|
2,775.0
|
|||||
Total
2003 unfavorable net prior year development
|
|||||||||||||
(after
tax and minority interest)
|
$
|
829.5
|
$
|
172.2
|
$
|
624.0
|
$
|
1,625.7
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
·
|
increases
in the number and size of claims relating to injuries from medical
products, and exposure to lead;
|
·
|
the
effects of accounting and financial reporting scandals and other
major
corporate governance failures, which have resulted in an increase
in the
number and size of claims, including director and officer and errors
and
omissions insurance claims;
|
·
|
class
action litigation relating to claims handling and other practices;
|
·
|
construction
defect claims, including claims for a broad range of additional insured
endorsements on policies; and
|
·
|
increases
in the number of claims alleging abuse by members of the clergy,
including
passage of legislation to reopen or extend various statutes of
limitations.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
·
|
coverage
issues, including whether certain costs are covered under the policies
and
whether policy limits apply;
|
·
|
inconsistent
court decisions and developing legal
theories;
|
·
|
increasingly
aggressive tactics of plaintiffs’
lawyers;
|
·
|
the
risks and lack of predictability inherent in major
litigation;
|
·
|
changes
in the volume of asbestos and environmental pollution and mass tort
claims
which cannot now be anticipated;
|
·
|
continued
increase in mass tort claims relating to silica and silica-containing
products;
|
·
|
the
impact of the exhaustion of primary limits and the resulting increase
in
claims on any umbrella or excess policies CNA has
issued;
|
·
|
the
number and outcome of direct actions against CNA;
and
|
·
|
CNA’s
ability to recover reinsurance for asbestos and environmental pollution
and mass tort claims.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Gross
|
|||||||
Carried
|
Estimated
|
||||||
Loss
|
Volatility
in
|
||||||
December
31, 2005
|
Reserves
|
Reserves
|
|||||
(In
millions, except %)
|
|||||||
Standard
Lines
|
$
|
15,084.0
|
+/-7.0
|
%
|
|||
Specialty
Lines
|
5,205.0
|
+/-7.0
|
%
|
||||
Other
Insurance
|
7,372.0
|
+/-25.0
|
%
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
December
31,
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Reinsurance
receivables related to insurance reserves:
|
|||||||
Ceded
claim and claim adjustment expense
|
$
|
10,605.2
|
$
|
13,878.4
|
|||
Ceded
future policy benefits
|
1,192.9
|
1,259.6
|
|||||
Ceded
policyholders’ funds
|
56.3
|
64.8
|
|||||
Billed
reinsurance receivables
|
582.3
|
685.2
|
|||||
Reinsurance
receivables
|
12,436.7
|
15,888.0
|
|||||
Allowance
for uncollectible reinsurance
|
(519.3
|
)
|
(546.3
|
)
|
|||
Reinsurance
receivables, net of allowance for uncollectible
reinsurance
|
$
|
11,917.4
|
$
|
15,341.7
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions, except %)
|
||||||||||
Net
written premiums
|
$
|
4,382.0
|
$
|
4,582.0
|
$
|
4,563.0
|
||||
Net
earned premiums
|
4,410.0
|
4,917.0
|
4,532.0
|
|||||||
Net
investment income
|
766.9
|
495.8
|
408.2
|
|||||||
Income
(loss) before net realized investment gains
|
(37.7
|
)
|
201.2
|
(853.2
|
)
|
|||||
Net
realized investment gains
|
8.5
|
126.2
|
211.1
|
|||||||
Net
income (loss)
|
(29.2
|
)
|
327.4
|
(642.1
|
)
|
|||||
Ratios:
|
||||||||||
Loss
and loss adjustment expense
|
87.5
|
%
|
70.8
|
%
|
98.0
|
%
|
||||
Expense
|
32.4
|
34.6
|
42.7
|
|||||||
Dividend
|
0.4
|
0.2
|
2.2
|
|||||||
Combined
|
120.3
|
%
|
105.6
|
%
|
142.9
|
%
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Gross
Case Reserves
|
$
|
7,033.0
|
$
|
6,904.0
|
|||
Gross
IBNR Reserves
|
8,051.0
|
7,398.0
|
|||||
Total
Gross Carried Claim and Claim Adjustment Expense Reserves
|
$
|
15,084.0
|
$
|
14,302.0
|
|||
Net
Case Reserves
|
$
|
5,165.0
|
$
|
4,761.0
|
|||
Net
IBNR Reserves
|
6,081.0
|
4,547.0
|
|||||
Total
Net Carried Claim and Claim Adjustment Expense Reserves
|
$
|
11,246.0
|
$
|
9,308.0
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions, except %)
|
||||||||||
Net
written premiums
|
$
|
2,463.0
|
$
|
2,391.0
|
$
|
2,038.0
|
||||
Net
earned premiums
|
2,475.0
|
2,277.0
|
1,840.0
|
|||||||
Net
investment income
|
281.3
|
245.5
|
201.0
|
|||||||
Income
(loss) before net realized investment gains
|
306.7
|
295.3
|
(30.6
|
)
|
||||||
Net
realized investment gains
|
10.7
|
49.6
|
66.7
|
|||||||
Net
income
|
317.4
|
344.9
|
36.1
|
|||||||
Ratios:
|
||||||||||
Loss
and loss adjustment expense
|
65.3
|
%
|
63.3
|
%
|
89.6
|
%
|
||||
Expense
|
26.1
|
26.1
|
27.6
|
|||||||
Dividend
|
0.2
|
0.2
|
0.2
|
|||||||
Combined
|
91.6
|
%
|
89.6
|
%
|
117.4
|
%
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Gross
Case Reserves
|
$
|
1,907.0
|
$
|
1,659.0
|
|||
Gross
IBNR Reserves
|
3,298.0
|
3,201.0
|
|||||
Total
Gross Carried Claim and Claim Adjustment Expense Reserves
|
$
|
5,205.0
|
$
|
4,860.0
|
|||
Net
Case Reserves
|
$
|
1,442.0
|
$
|
1,191.0
|
|||
Net
IBNR Reserves
|
2,352.0
|
2,042.0
|
|||||
Total
Net Carried Claim and Claim Adjustment Expense Reserves
|
$
|
3,794.0
|
$
|
3,233.0
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Net
earned premiums
|
$
|
704.0
|
$
|
921.0
|
$
|
2,376.0
|
||||
Net
investment income
|
593.4
|
691.8
|
820.6
|
|||||||
Income
(loss) before net realized investment losses
|
(46.7
|
)
|
(26.2
|
)
|
102.0
|
|||||
Net
realized investment losses
|
(17.6
|
)
|
(349.0
|
)
|
(97.6
|
)
|
||||
Net
income (loss)
|
(64.3
|
)
|
(375.2
|
)
|
4.4
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
(Restated)
|
(Restated)
|
||||||||
Net
investment income
|
$
|
250.3
|
$
|
246.4
|
$
|
226.2
|
||||
Revenues
|
313.8
|
358.2
|
750.9
|
|||||||
Income
(loss) before net realized investment gains (losses)
|
24.4
|
91.8
|
(730.0
|
)
|
||||||
Net
realized investment gains (losses)
|
(8.5
|
)
|
36.1
|
85.5
|
||||||
Net
income (loss)
|
15.9
|
127.9
|
(644.5
|
)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Gross
Case Reserves
|
$
|
3,297.0
|
$
|
3,806.0
|
|||
Gross
IBNR Reserves
|
4,075.0
|
4,875.0
|
|||||
Total
Gross Carried Claim and Claim Adjustment Expense Reserves
|
$
|
7,372.0
|
$
|
8,681.0
|
|||
Net
Case Reserves
|
$
|
1,554.0
|
$
|
1,588.0
|
|||
Net
IBNR Reserves
|
1,902.0
|
1,691.0
|
|||||
Total
Net Carried Claim and Claim Adjustment Expense Reserves
|
$
|
3,456.0
|
$
|
3,279.0
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
December
31
|
2005
|
2004
|
|||||||||||
Environmental
|
|
Environmental
|
|||||||||||
Pollution
and
|
Pollution
and
|
||||||||||||
Asbestos
|
Mass
Tort
|
Asbestos
|
Mass
Tort
|
||||||||||
(In
millions)
|
|||||||||||||
Gross
reserves
|
$
|
2,992.0
|
$
|
680.0
|
$
|
3,218.0
|
$
|
755.0
|
|||||
Ceded
reserves
|
(1,438.0
|
)
|
(257.0
|
)
|
(1,532.0
|
)
|
(258.0
|
)
|
|||||
Net
reserves
|
$
|
1,554.0
|
$
|
423.0
|
$
|
1,686.0
|
$
|
497.0
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Percent
of
|
|||||||||||||
Number
of
|
Net
Paid
|
Net
Asbestos
|
Asbestos
Net
|
||||||||||
December
31, 2005
|
Policyholders
|
Losses
|
Reserves
|
Reserves
|
|||||||||
(In
millions of dollars)
|
|||||||||||||
Policyholders
with settlement agreements
|
|||||||||||||
Structured
settlements
|
13
|
$
|
30.0
|
$
|
167.0
|
10.7
|
%
|
||||||
Wellington
|
4
|
2.0
|
15.0
|
1.0
|
|||||||||
Coverage
in place
|
34
|
13.0
|
58.0
|
3.7
|
|||||||||
Fibreboard
|
1
|
54.0
|
3.5
|
||||||||||
Total
with settlement agreements
|
52
|
45.0
|
294.0
|
18.9
|
|||||||||
Other
policyholders with active accounts
|
|||||||||||||
Large
asbestos accounts
|
199
|
68.0
|
273.0
|
17.6
|
|||||||||
Small
asbestos accounts
|
1,073
|
23.0
|
135.0
|
8.7
|
|||||||||
Total
other policyholders
|
1,272
|
91.0
|
408.0
|
26.3
|
|||||||||
Assumed
reinsurance and pools
|
6.0
|
143.0
|
9.2
|
||||||||||
Unassigned
IBNR
|
709.0
|
45.6
|
|||||||||||
Total
|
1,324
|
$
|
142.0
|
$
|
1,554.0
|
100.0
|
%
|
||||||
December
31, 2004
|
|||||||||||||
Policyholders
with settlement agreements
|
|||||||||||||
Structured
settlements
|
11
|
$
|
39.0
|
$
|
175.0
|
10.4
|
%
|
||||||
Wellington
|
4
|
4.0
|
17.0
|
1.0
|
|||||||||
Coverage
in place
|
33
|
14.0
|
76.0
|
4.5
|
|||||||||
Fibreboard
|
1
|
54.0
|
3.2
|
||||||||||
Total
with settlement agreements
|
49
|
57.0
|
322.0
|
19.1
|
|||||||||
Other
policyholders with active accounts
|
|||||||||||||
Large
asbestos accounts
|
180
|
47.0
|
368.0
|
21.8
|
|||||||||
Small
asbestos accounts
|
1,109
|
23.0
|
141.0
|
8.4
|
|||||||||
Total
other policyholders
|
1,289
|
70.0
|
509.0
|
30.2
|
|||||||||
Assumed
reinsurance and pools
|
8.0
|
148.0
|
8.8
|
||||||||||
Unassigned
IBNR
|
707.0
|
41.9
|
|||||||||||
Total
|
1,338
|
$
|
135.0
|
$
|
1,686.0
|
100.0
|
%
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - CNA Financial -
(Continued)
|
Net
|
Percent
of
|
||||||||||||
Environmental
|
Environmental
|
||||||||||||
Number
of
|
Net
|
Pollution
|
Pollution
Net
|
||||||||||
December
31, 2005
|
Policyholders
|
Paid
Losses
|
Reserves
|
Reserve
|
|||||||||
(In
millions of dollars)
|
|||||||||||||
Policyholders
with Settlement Agreements
|
|||||||||||||
Structured
settlements
|
6
|
$
|
10.0
|
$
|
17.0
|
5.1
|
%
|
||||||
Coverage
in place
|
16
|
10.0
|
23.0
|
6.8
|
|||||||||
Total
with Settlement Agreements
|
22
|
20.0
|
40.0
|
11.9
|
|||||||||
Other
Policyholders with Active Accounts
|
|||||||||||||
Large
pollution accounts
|
120
|
18.0
|
63.0
|
18.8
|
|||||||||
Small
pollution accounts
|
362
|
15.0
|
50.0
|
14.9
|
|||||||||
Total
Other Policyholders
|
482
|
33.0
|
113.0
|
33.7
|
|||||||||
Assumed
Reinsurance & Pools
|
3.0
|
33.0
|
9.8
|
||||||||||
Unassigned
IBNR
|
150.0
|
44.6
|
|||||||||||
Total
|
504
|
$
|
56.0
|
$
|
336.0
|
100.0
|
%
|
||||||
December
31, 2004
|
|||||||||||||
Policyholders
with Settlement Agreements
|
|||||||||||||
Structured
settlements
|
2
|
$
|
14.0
|
$
|
5.0
|
1.5
|
%
|
||||||
Coverage
in place
|
15
|
5.0
|
16.0
|
4.7
|
|||||||||
Total
with Settlement Agreements
|
17
|
19.0
|
21.0
|
6.2
|
|||||||||
Other
Policyholders with Active Accounts
|
|||||||||||||
Large
pollution accounts
|
134
|
18.0
|
75.0
|
21.9
|
|||||||||
Small
pollution accounts
|
405
|
14.0
|
47.0
|
13.7
|
|||||||||
Total
Other Policyholders
|
539
|
32.0
|
122.0
|
35.6
|
|||||||||
Assumed
Reinsurance & Pools
|
2.0
|
36.0
|
10.5
|
||||||||||
Unassigned
IBNR
|
163.0
|
47.7
|
|||||||||||
Total
|
556
|
$
|
53.0
|
$
|
342.0
|
100.0
|
%
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - Lorillard
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Revenues:
|
||||||||||
Manufactured
products
|
$
|
3,567.8
|
$
|
3,347.8
|
$
|
3,255.6
|
||||
Net
investment income
|
63.6
|
36.6
|
39.9
|
|||||||
Investment
gains (losses)
|
(2.1
|
)
|
1.4
|
(9.7
|
)
|
|||||
Other
|
6.0
|
(0.1
|
)
|
|||||||
Total
|
3,635.3
|
3,385.8
|
3,285.7
|
|||||||
Expenses:
|
||||||||||
Cost
of sales
|
2,114.4
|
1,965.6
|
1,893.1
|
|||||||
Other
operating
|
369.1
|
380.6
|
460.0
|
|||||||
Interest
|
0.5
|
0.1
|
||||||||
Total
|
2,484.0
|
2,346.2
|
2,353.2
|
|||||||
1,151.3
|
1,039.6
|
932.5
|
||||||||
Income
tax expense
|
444.9
|
397.3
|
351.2
|
|||||||
Net
income
|
$
|
706.4
|
$
|
642.3
|
$
|
581.3
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - Lorillard -
(Continued)
|
·
|
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.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - Lorillard -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - Lorillard -
(Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(Units
in billions)
|
||||||||||
Total
Lorillard domestic unit volume (1)
|
35.193
|
34.503
|
34.431
|
|||||||
Total
industry domestic unit volume (1)
|
381.047
|
394.487
|
401.224
|
|||||||
Lorillard’s
share of the domestic market (1)
|
9.2
|
%
|
8.8
|
%
|
8.6
|
%
|
||||
Lorillard’s
premium segment as a percentage of its total domestic
|
||||||||||
volume
(1)
|
95.2
|
%
|
95.4
|
%
|
95.5
|
%
|
||||
Lorillard’s
share of the premium segment (1)
|
12.3
|
%
|
12.0
|
%
|
12.0
|
%
|
||||
Newport
share of the domestic market (1)
|
8.4
|
%
|
7.9
|
%
|
7.7
|
%
|
||||
Newport
share of the premium segment (1)
|
11.9
|
%
|
11.4
|
%
|
11.2
|
%
|
||||
Total
menthol segment market share for the industry (2)
|
27.1
|
%
|
26.9
|
%
|
26.7
|
%
|
||||
Total
discount segment market share for the industry
(1)
|
28.8
|
%
|
30.4
|
%
|
31.2
|
%
|
||||
Newport’s
share of the menthol segment (2)
|
32.5
|
%
|
31.3
|
%
|
30.5
|
%
|
||||
Newport
as a percentage of Lorillard’s (3):
|
||||||||||
Total
volume
|
91.6
|
%
|
91.0
|
%
|
90.2
|
%
|
||||
Net
sales
|
92.8
|
%
|
92.2
|
%
|
90.0
|
%
|
(1)
|
Management
Science Associates, Inc.
|
(2)
|
Lorillard
proprietary data
|
(3)
|
Lorillard
shipment reports
|
·
|
A
substantial volume
of
litigation seeking compensatory and punitive damages ranging
into the billions
of dollars,
as well as equitable and
injunctive relief, arising out of allegations
of
cancer and other health
effects resulting
from the use
of
cigarettes,
addiction
to smoking
or
exposure to environmental
tobacco smoke,including
claims for reimbursement of health care costs allegedly incurred
as a
result of smoking, as well as other alleged damages. Please read
Item 3 -
Legal Proceedings and Note 20 of the Notes to Consolidated Financial
Statements included in Item 8 of this Report for information with
respect
to litigation and the State Settlement
Agreements.
|
·
|
Substantial
annual payments by Lorillard, continuing in perpetuity, and significant
restrictions on marketing and advertising agreed to under the terms
of the
State Settlement Agreements. The State Settlement Agreements impose
a
stream of future payment obligations on Lorillard and the other major
U.S.
cigarette manufacturers and place significant restrictions on their
ability to market and sell
cigarettes.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - Lorillard -
(Continued)
|
·
|
The
cigarette market is highly concentrated with Lorillard’s two major
competitors, Philip Morris USA and Reynolds American Inc. having
a
combined market share of approximately 76.9% in 2005. In addition,
Reynolds American Inc. owns the third and fourth leading menthol
brands,
Kool and Salem, which have a combined share of the menthol segment
of
approximately 19.0%. The concentration of U.S. market share could
make it
more difficult for Lorillard to compete for shelf space in retail
outlets,
which is already exacerbated by restrictive marketing programs of
Lorillard’s larger competitors, and could impact price competition among
menthol brands.
|
·
|
The
continuing contraction of the U.S. cigarette market, in which Lorillard
currently conducts its only significant business. As a result of
price
increases, restrictions on advertising and promotions, increases
in
regulation and excise taxes, health concerns, a decline in the social
acceptability of smoking, increased pressure from anti-tobacco groups
and
other factors, U.S. cigarette shipments among the three major U.S.
cigarette manufacturers have decreased at a compound annual rate
of
approximately 2.4% over the period 1984 through 2005 according to
information provided by MSAI.
|
·
|
Competition
from deep discounters who enjoy competitive cost and pricing advantages
because they are not subject to the same payment obligations under
the
State Settlement Agreements as Lorillard. Market share for the deep
discount brands decreased 1.4 share points from 14.7% in the fourth
quarter of 2004 to 13.3% in the fourth quarter of 2005, as estimated
by
MSAI. Lorillard’s focus on the premium market and its obligations under
the State Settlement Agreements make it very difficult to compete
successfully in the deep discount
market.
|
·
|
Continuing
sizable industry-wide promotional expenses and sales incentives are
being
implemented in response to declining unit volume, state excise tax
increases and continuing competition among the three largest cigarette
manufacturers, including Lorillard, and smaller participants who
have
established a competitive level of market share in recent years,
principally in the deep discount cigarette segment. As a result of
on-going high levels of competition based on the retail price of
brands
and the competitive price advantages of deep discounters, the ability
of
Lorillard and the other major manufacturers to raise prices has been
adversely affected. While the environment remains highly price
competitive, during 2005, Lorillard reduced promotional and sales
incentives which had the effect of increasing unit
prices.
|
·
|
Substantial
federal, state and local excise taxes which are reflected in the
retail
price of cigarettes. In 2005, the federal excise tax was $0.39 per
pack
and combined state and local excise taxes ranged from $0.07 to $3.00
per
pack. In 2005, excise tax increases ranging from $0.10 to $1.00 per
pack
were implemented in twelve states. Proposals continue to be made
to
increase federal, state and local excise taxes. Lorillard believes
that
increases in excise and similar taxes have had an adverse impact
on sales
of cigarettes and that future increases, the extent of which cannot
be
predicted, could result in further volume declines for the cigarette
industry, including Lorillard, and an increased sales shift toward
lower
priced discount cigarettes rather than premium brands. In addition,
Lorillard and other cigarette manufacturers are required to pay an
assessment under a federal law designed to fund payments to tobacco
quota
holders and growers.
|
·
|
Substantial
and increasing regulation of the tobacco industry and governmental
restrictions on smoking. Bills have been introduced in the U.S. Congress
to grant the Food and Drug Administration (“FDA”) authority to regulate
tobacco products. Lorillard believes that FDA regulations, if enacted,
could among other things result in new restrictions on the manner
in which
cigarettes can be advertised and marketed, and may alter the way
cigarette
products are developed and manufactured. Lorillard also believes
that any
such proposals, if enacted, would provide Philip Morris, as the largest
tobacco company in the country, with a competitive
advantage.
|
·
|
Sales
of counterfeit cigarettes in the United States continue to adversely
impact sales by the manufacturer of the counterfeited brands, including
Lorillard, and potentially damage the value and reputation of those
brands.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - Boardwalk
Pipeline
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Revenues:
|
||||||||||
Operating
|
$
|
569.8
|
$
|
264.4
|
$
|
143.0
|
||||
Net
investment income
|
1.5
|
0.7
|
0.2
|
|||||||
Total
|
571.3
|
265.1
|
143.2
|
|||||||
Expenses:
|
||||||||||
Operating
|
353.1
|
153.9
|
86.2
|
|||||||
Interest
|
60.1
|
30.1
|
19.4
|
|||||||
Total
|
413.2
|
184.0
|
105.6
|
|||||||
158.1
|
81.1
|
37.6
|
||||||||
Income
tax expense
|
60.8
|
32.3
|
15.1
|
|||||||
Minority
interest
|
5.2
|
|||||||||
Net
income
|
$
|
92.1
|
$
|
48.8
|
$
|
22.5
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - Boardwalk Pipeline -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - Diamond Offshore
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Revenues:
|
||||||||||
Operating
|
$
|
1,268.1
|
$
|
823.4
|
$
|
682.9
|
||||
Net
investment income
|
26.0
|
12.2
|
12.0
|
|||||||
Investment
gains (losses)
|
(1.2
|
)
|
0.3
|
(6.9
|
)
|
|||||
Total
|
1,292.9
|
835.9
|
688.0
|
|||||||
Expenses:
|
||||||||||
Operating
|
901.3
|
815.2
|
724.2
|
|||||||
Interest
|
41.8
|
30.2
|
23.9
|
|||||||
Total
|
943.1
|
845.4
|
748.1
|
|||||||
349.8
|
(9.5
|
)
|
(60.1
|
)
|
||||||
Income
tax expense (benefit)
|
104.3
|
3.0
|
(8.1
|
)
|
||||||
Minority
interest
|
118.6
|
(3.3
|
)
|
(22.4
|
)
|
|||||
Net
income (loss)
|
$
|
126.9
|
$
|
(9.2
|
)
|
$
|
(29.6
|
)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - Diamond Offshore -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - Diamond Offshore -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - Loews Hotels
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Revenues:
|
||||||||||
Operating
|
$
|
344.5
|
$
|
312.9
|
$
|
283.6
|
||||
Net
investment income
|
6.0
|
2.3
|
2.4
|
|||||||
Total
|
350.5
|
315.2
|
286.0
|
|||||||
Expenses:
|
||||||||||
Operating
|
289.6
|
278.3
|
258.4
|
|||||||
Interest
|
10.9
|
5.7
|
9.0
|
|||||||
Total
|
300.5
|
284.0
|
267.4
|
|||||||
50.0
|
31.2
|
18.6
|
||||||||
Income
tax expense
|
18.8
|
9.8
|
7.4
|
|||||||
Income
from continuing operations
|
31.2
|
21.4
|
11.2
|
|||||||
Discontinued
operations, net
|
55.4
|
|||||||||
Net
income
|
$
|
31.2
|
$
|
21.4
|
$
|
66.6
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - Loews Hotels -
(Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Revenues:
|
||||||||||
Manufactured
products
|
$
|
184.6
|
$
|
167.4
|
$
|
163.2
|
||||
Net
investment income
|
109.8
|
144.0
|
148.7
|
|||||||
Investment
gains (losses)
|
(3.4
|
)
|
(13.2
|
)
|
7.3
|
|||||
Other
|
11.7
|
208.5
|
9.5
|
|||||||
Total
|
302.7
|
506.7
|
328.7
|
|||||||
Expenses:
|
||||||||||
Cost
of sales
|
87.9
|
79.8
|
79.7
|
|||||||
Operating
|
129.7
|
127.8
|
113.6
|
|||||||
Interest
|
126.6
|
134.2
|
126.2
|
|||||||
Total
|
344.2
|
341.8
|
319.5
|
|||||||
(41.5
|
)
|
164.9
|
9.2
|
|||||||
Income
tax expense (benefit)
|
(38.0
|
)
|
57.6
|
2.1
|
||||||
Minority
interest
|
0.3
|
0.4
|
||||||||
Net
income (loss)
|
$
|
(3.5
|
)
|
$
|
107.0
|
$
|
6.7
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Results
of Operations - Corporate and Other -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Liquidity
and Capital Resources - CNA Financial -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Liquidity
and Capital Resources - CNA Financial -
(Continued)
|
Insurance
Financial Strength Ratings
|
Debt
Ratings
|
||||
Property
& Casualty (a)
|
Life
|
CNA
|
Continental
|
||
CCC
|
CIC
|
Senior
|
Senior
|
||
Group
|
Group
|
CAC(b)
|
Debt
|
Debt
|
|
A.M.
Best
|
A
|
A
|
A-
|
bbb
|
Not
rated
|
Fitch
|
A-
|
A-
|
A-
|
BBB-
|
BBB-
|
Moody’s
|
A3
|
A3
|
Baa1
|
Baa3
|
Baa3
|
S&P
|
A-
|
A-
|
BBB+
|
BBB-
|
BBB-
|
(a)
|
Fitch
and Moody’s outlook for the Property & Casualty companies’ financial
strength and holding company debt ratings are stable. All others
are
negative.
|
(b)
|
A.M.
Best, Fitch and Moody’s have a stable outlook while S&P has a negative
outlook on the CAC rating.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Liquidity
and Capital Resources - CNA Financial -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Liquidity
and Capital Resources - Lorillard -
(Continued)
|
·
|
inflation;
|
·
|
aggregate
volume of domestic cigarette shipments;
|
·
|
market
share; and
|
·
|
industry
operating income.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Liquidity
and Capital Resources - Lorillard -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Liquidity
and Capital Resources - Diamond Offshore -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Liquidity
and Capital Resources - Loews Hotels -
(Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Liquidity
and Capital Resources - Contractual Cash Payment Obligations
|
Payments
Due by Period
|
||||||||||||||||
Less
than
|
More
than
|
|||||||||||||||
December
31, 2005
|
Total
|
1
year
|
1-3
years
|
4-5
years
|
5
years
|
|||||||||||
(In
millions)
|
||||||||||||||||
Debt
|
$
|
5,245.3
|
$
|
598.2
|
$
|
866.4
|
$
|
87.4
|
$
|
3,693.3
|
||||||
Operating
leases
|
391.7
|
71.9
|
113.1
|
81.8
|
124.9
|
|||||||||||
Claim
and claim expense reserves (a)
|
32,861.0
|
7,522.0
|
9,610.0
|
4,969.0
|
10,760.0
|
|||||||||||
Future
policy benefits reserves (b)
|
10,010.0
|
200.0
|
362.0
|
349.0
|
9,099.0
|
|||||||||||
Policyholder
funds reserves (b)
|
1,489.0
|
960.0
|
285.0
|
95.0
|
149.0
|
|||||||||||
Purchase
obligations (c)
|
447.6
|
294.7
|
152.8
|
0.1 | ||||||||||||
Total
|
$
|
50,444.6
|
$
|
9,646.8
|
$
|
11,389.3
|
$
|
5,582.3
|
$
|
23,826.2
|
(a)
|
Claim
and claim adjustment expense reserves are not discounted and represent
CNA’s estimate of the amount and timing of the ultimate settlement and
administration of claims based on its assessment of facts and
circumstances known as of December 31, 2005. See the Reserves - Estimates
and Uncertainties section of this MD&A for further information. Claim
and claim adjustment expense reserves of $15.0 million related to
business
which has been 100% ceded to unaffiliated parties in connection with
the
individual life sale are not
included.
|
(b)
|
Future
policy benefits and policyholder funds reserves are not discounted
and
represent CNA’s estimate of the ultimate amount and timing of the
settlement of benefits based on its assessment of facts and circumstances
known as of December 31, 2005. Future policy benefit reserves of
$968.0
million and policyholder fund reserves of $51.0 million related to
business which has been 100% ceded to unaffiliated parties in connection
with the individual life sale are not included. Additional information
on
future policy benefits and policyholder funds reserves is included
in Note
1 of the Notes to Consolidated Financial Statements included under
Item
8.
|
(c)
|
Consists
primarily of purchase obligations aggregating approximately $411.0
million
relating to Diamond Offshore’s major upgrade of its Ocean
Endeavor
rig and construction of two new jack-up rigs, the Ocean
Scepter
and Ocean
Shield.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Investments
- (Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Fixed
maturity securities
|
$
|
1,607.5
|
$
|
1,571.2
|
$
|
1,651.1
|
||||
Short-term
investments
|
146.6
|
56.1
|
63.2
|
|||||||
Limited
partnerships
|
254.4
|
212.0
|
220.6
|
|||||||
Equity
securities
|
25.0
|
13.8
|
18.8
|
|||||||
Income
from trading portfolio (a)
|
46.7
|
110.2
|
||||||||
Interest
on funds withheld and other deposits
|
(165.8
|
)
|
(261.1
|
)
|
(334.6
|
)
|
||||
Other
|
19.7
|
17.1
|
84.4
|
|||||||
Total
investment income
|
1,934.1
|
1,719.3
|
1,703.5
|
|||||||
Investment
expenses
|
(42.2
|
)
|
(39.8
|
)
|
(47.6
|
)
|
||||
Net
investment income
|
$
|
1,891.9
|
$
|
1,679.5
|
$
|
1,655.9
|
(a)
|
The
change in net unrealized gains (losses) on trading securities, included
in
net investment income, was $(7.0) and $2.0 million for the years
ended
December 31, 2005 and 2004.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Investments
- (Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Realized
investment gains (losses):
|
||||||||||
Fixed
maturity securities:
|
||||||||||
U.S.
government bonds
|
$
|
(32.8
|
)
|
$
|
10.4
|
$
|
(69.9
|
)
|
||
Corporate
and other taxable bonds
|
(86.1
|
)
|
122.8
|
380.5
|
||||||
Tax-exempt
bonds
|
12.2
|
42.4
|
96.7
|
|||||||
Asset-backed
bonds
|
13.7
|
52.8
|
41.7
|
|||||||
Redeemable
preferred stock
|
2.5
|
18.7
|
(11.6
|
)
|
||||||
Total
fixed maturity securities
|
(90.5
|
)
|
247.1
|
437.4
|
||||||
Equity
securities
|
38.2
|
202.2
|
114.5
|
|||||||
Derivative
securities
|
49.1
|
(84.1
|
)
|
78.4
|
||||||
Short-term
investments
|
0.5
|
(3.4
|
)
|
3.2
|
||||||
Other
invested assets, including dispositions
|
(6.5
|
)
|
(597.3
|
)
|
(156.3
|
)
|
||||
Allocated
to participating policyholders’ and minority interests
|
2.7
|
(9.0
|
)
|
(3.8
|
)
|
|||||
Total
realized investment gains (losses)
|
(6.5
|
)
|
(244.5
|
)
|
473.4
|
|||||
Income
tax (expense) benefit
|
(1.3
|
)
|
94.1
|
(179.2
|
)
|
|||||
Minority
interest
|
0.9
|
13.3
|
(28.5
|
)
|
||||||
Net
realized investment gains (losses)
|
$
|
(6.9
|
)
|
$
|
(137.1
|
)
|
$
|
265.7
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Investments
- (Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Net
realized gains (losses) on fixed maturity and equity
securities:
|
||||||||||
Fixed
maturity securities:
|
||||||||||
Gross
realized gains
|
$
|
360.7
|
$
|
703.9
|
$
|
1,244.0
|
||||
Gross
realized losses
|
(451.2
|
)
|
(456.8
|
)
|
(806.6
|
)
|
||||
Net
realized gains (losses) on fixed maturity securities
|
(90.5
|
)
|
247.1
|
437.4
|
||||||
Equity
securities:
|
||||||||||
Gross
realized gains
|
73.2
|
225.3
|
143.1
|
|||||||
Gross
realized losses
|
(35.0
|
)
|
(23.1
|
)
|
(28.6
|
)
|
||||
Net
realized gains (losses) on equity securities
|
38.2
|
202.2
|
114.5
|
|||||||
Net
realized gains (losses) on fixed maturity and equity
securities
|
$
|
(52.3
|
)
|
$
|
449.3
|
$
|
551.9
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Investments
- (Continued)
|
Months
in
|
||||||||
Fair
Value
|
Unrealized
|
|||||||
Date
of
|
Loss
|
Loss
Prior
|
||||||
Issuer
Description and Discussion
|
Sale
|
On
Sale
|
To
Sale (a)
|
|||||
(In
millions)
|
||||||||
Various
notes and bonds issued by the United States Treasury.
|
||||||||
Volatility
of interest rates prompted movement to other asset
classes.
|
$
|
16,716.0
|
$
|
92.0
|
0-12
|
+
|
||
Manufactures
and sells vehicles worldwide under various brand
|
||||||||
names.
The company also has financing and insurance operations.
|
||||||||
The
company is experiencing inventory capacity issues. Losses
relate
|
||||||||
to
trades that took place to reduce issuer exposure.
|
356.0
|
45.0
|
0-12
|
+
|
||||
Agency
issued security that is secured by a pool of federally insured
|
||||||||
and
conventional mortgages. Specific pools were sold and replaced
|
||||||||
with
non-agency pools to enhance yield.
|
1,326.0
|
|
9.0
|
0-12
|
||||
Issuer
of high grade state revenue bonds. Loss was incurred as a
result
|
||||||||
of
unfavorable interest rate change.
|
242.0
|
6.0
|
0-12
|
+
|
||||
|
||||||||
Large
retail food-drug chain. Company was soliciting bidders,
but
|
||||||||
failed
to be acquired. Sold securities to reduce issuer exposure.
|
40.0
|
6.0
|
0-6
|
|||||
Manufacturers
and sells vehicles worldwide under various brand
|
||||||||
names.
The company also has financing operations. The company
|
||||||||
has
been downgraded. Losses relate to trades that took place
to
|
||||||||
reduce
issuer exposure.
|
27.0
|
6.0
|
0-12
|
|||||
Large
media company that was downgraded to below investment
|
||||||||
grade.
Losses relate to trades that took place to reduce issuer
|
||||||||
exposure.
|
74.0
|
5.0
|
0-12
|
+
|
||||
Issuer
of municipal general obligation bonds. Loss was incurred as
a
|
||||||||
result
of unfavorable interest rate change.
|
418.0
|
5.0
|
0-6
|
|||||
Issuer
of high grade state general obligation bonds. Loss was
incurred
|
||||||||
as
a result of unfavorable interest rate change.
|
244.0
|
5.0
|
0-12
|
|||||
Large
domestic passenger and freight airline that filed for bankruptcy
|
||||||||
during
third quarter 2005. Losses relate to trades that took place
to
|
||||||||
reduce
issuer exposure.
|
12.0
|
5.0
|
0-6
|
|||||
Total
|
$
|
19,455.0
|
$
|
184.0
|
(a)
|
Represents
the range of consecutive months the various positions were in an
unrealized loss prior to sale. 0-12+ means certain positions were
less
than 12 months, while others were greater than 12
months.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Investments
- (Continued)
|
December
31
|
2005
|
2004
|
|||||||||||
(In
millions of dollars)
|
|||||||||||||
General
account investments:
|
|||||||||||||
Fixed
maturity securities available-for-sale:
|
|||||||||||||
U.S.
Treasury securities and obligations of
|
|||||||||||||
government
agencies
|
$
|
1,469.0
|
3.7
|
%
|
$
|
4,346.0
|
11.1
|
%
|
|||||
Asset-backed
securities
|
12,859.0
|
32.4
|
7,788.0
|
19.9
|
|||||||||
States,
municipalities and political subdivisions-
|
|||||||||||||
tax-exempt
|
9,209.0
|
23.2
|
8,857.0
|
22.6
|
|||||||||
Corporate
securities
|
6,165.0
|
15.5
|
6,513.0
|
16.6
|
|||||||||
Other
debt securities
|
3,044.0
|
7.7
|
3,053.0
|
7.8
|
|||||||||
Redeemable
preferred stock
|
216.0
|
0.5
|
146.0
|
0.3
|
|||||||||
Options
embedded in convertible debt securities
|
1.0
|
234.0
|
0.6
|
||||||||||
Total
fixed maturity securities available-for-sale
|
32,963.0
|
83.0
|
30,937.0
|
78.9
|
|||||||||
Fixed
maturity securities trading:
|
|||||||||||||
U.S.
Treasury securities and obligations of
|
|||||||||||||
government
agencies
|
4.0
|
27.0
|
0.1
|
||||||||||
Asset-backed
securities
|
87.0
|
0.2
|
125.0
|
0.3
|
|||||||||
Corporate
securities
|
154.0
|
0.4
|
199.0
|
0.5
|
|||||||||
Other
debt securities
|
26.0
|
0.1
|
35.0
|
0.1
|
|||||||||
Redeemable
preferred stock
|
4.0
|
||||||||||||
Total
fixed maturity securities trading
|
271.0
|
0.7
|
390.0
|
1.0
|
|||||||||
Equity
securities available-for-sale:
|
|||||||||||||
Common
stock
|
289.0
|
0.7
|
260.0
|
0.7
|
|||||||||
Non-redeemable
preferred stock
|
343.0
|
0.9
|
150.0
|
0.3
|
|||||||||
Total
equity securities available-for-sale
|
632.0
|
1.6
|
410.0
|
1.0
|
|||||||||
Equity
securities trading
|
49.0
|
0.1
|
46.0
|
0.1
|
|||||||||
Short-term
investments available-for-sale
|
3,870.0
|
9.8
|
5,404.0
|
13.8
|
|||||||||
Short-term
investments trading
|
368.0
|
0.9
|
459.0
|
1.2
|
|||||||||
Limited
partnerships
|
1,509.0
|
3.8
|
1,549.0
|
3.9
|
|||||||||
Other
investments
|
33.0
|
0.1
|
36.0
|
0.1
|
|||||||||
Total
general account investments
|
$
|
39,695.0
|
100.0
|
%
|
$
|
39,231.0
|
100.0
|
%
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Investments
- (Continued)
|
Percent
of
|
Percent
of
|
||||||
Market
|
Unrealized
|
||||||
Value
|
Loss
|
||||||
Due
in one year or less
|
4.0
|
%
|
1.0
|
%
|
|||
Due
after one year through five years
|
6.0
|
5.0
|
|||||
Due
after five years through ten years
|
7.0
|
14.0
|
|||||
Due
after ten years
|
22.0
|
23.0
|
|||||
Asset-backed
securities
|
61.0
|
57.0
|
|||||
Total
|
100.0
|
%
|
100.0
|
%
|
Estimated
|
Fair
Value as a Percentage of Book Value
|
Unrealized
|
|||||||||||||||||
December
31, 2005
|
Fair
Value
|
90-99%
|
80-89%
|
70-79%
|
<70%
|
Loss
|
|||||||||||||
(In
millions)
|
|||||||||||||||||||
Fixed
maturity securities:
|
|||||||||||||||||||
Non-investment
grade:
|
|||||||||||||||||||
0-6
months
|
$
|
632.0
|
$
|
20.0
|
$
|
8.0
|
$
|
1.0
|
$
|
29.0
|
|||||||||
7-12
months
|
118.0
|
4.0
|
6.0
|
10.0
|
|||||||||||||||
13-24
months
|
122.0
|
3.0
|
3.0
|
||||||||||||||||
Greater
than 24 months
|
2.0
|
||||||||||||||||||
Total
non-investment grade
|
$
|
874.0
|
$
|
27.0
|
$
|
14.0
|
$
|
1.0
|
$
|
42.0
|
|||||||||
December
31, 2004
|
|||||||||||||||||||
Fixed
maturity securities:
|
|||||||||||||||||||
Non-
investment grade:
|
|||||||||||||||||||
0-6
months
|
$
|
188.0
|
$
|
6.0
|
$
|
1.0
|
$
|
7.0
|
|||||||||||
7-12
months
|
69.0
|
3.0
|
1.0
|
4.0
|
|||||||||||||||
13-24
months
|
20.0
|
1.0
|
1.0
|
2.0
|
|||||||||||||||
Greater
than 24 months
|
|||||||||||||||||||
Total
non-investment grade
|
$
|
277.0
|
$
|
10.0
|
$
|
3.0
|
$
|
13.0
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Investments
- (Continued)
|
December
31
|
2005
|
2004
|
|||||||||||
(In
millions of dollars)
|
|||||||||||||
U.S.
Government and affiliated agency securities
|
$
|
1,628.0
|
4.9
|
%
|
$
|
4,640.0
|
14.9
|
%
|
|||||
Other
AAA rated
|
18,233.0
|
55.2
|
14,628.0
|
46.9
|
|||||||||
AA
and A rated
|
6,046.0
|
18.3
|
5,597.0
|
17.9
|
|||||||||
BBB
rated
|
4,499.0
|
13.7
|
4,072.0
|
13.1
|
|||||||||
Non
investment-grade
|
2,612.0
|
7.9
|
2,240.0
|
7.2
|
|||||||||
Total
|
$
|
33,018.0
|
100.0
|
%
|
$
|
31,177.0
|
100.0
|
%
|
December
31
|
2005
|
2004
|
|||||||||||
(In
millions of dollars)
|
|||||||||||||
Other
AAA rated
|
$
|
120.0
|
25.8
|
%
|
$
|
156.0
|
32.1
|
%
|
|||||
AA
and A rated
|
193.0
|
41.4
|
184.0
|
37.9
|
|||||||||
BBB
rated
|
142.0
|
30.4
|
117.0
|
24.0
|
|||||||||
Non
investment-grade
|
11.0
|
2.4
|
29.0
|
6.0
|
|||||||||
Total
|
$
|
466.0
|
100.0
|
%
|
$
|
486.0
|
100.0
|
%
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Investments
- (Continued)
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Short-term
investments available-for-sale:
|
|||||||
Commercial
paper
|
$
|
1,906.0
|
$
|
1,655.0
|
|||
U.S.
Treasury securities
|
251.0
|
2,382.0
|
|||||
Money
market funds
|
294.0
|
174.0
|
|||||
Other
|
1,419.0
|
1,193.0
|
|||||
Total
short-term investments available-for-sale
|
3,870.0
|
5,404.0
|
|||||
Short-term
investments trading:
|
|||||||
Commercial
paper
|
94.0
|
46.0
|
|||||
U.S.
Treasury securities
|
64.0
|
300.0
|
|||||
Money
market funds
|
200.0
|
99.0
|
|||||
Other
|
10.0
|
14.0
|
|||||
Total
short-term investments trading
|
368.0
|
459.0
|
|||||
Total
short-term investments
|
$
|
4,238.0
|
$
|
5,863.0
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Accounting
Standards - (Continued)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Forward-Looking
Statements Disclaimer - (Continued)
|
·
|
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
underpriced accounts, to achieve premium targets and profitability
and to
realize growth and retention
estimates;
|
·
|
development
of claims and the impact on loss reserves, including changes in claim
settlement policies;
|
·
|
the
performance of reinsurance companies under reinsurance contracts
with
CNA;
|
·
|
the
effects upon insurance markets and upon industry business practices
and
relationships of current litigation, investigations and regulatory
activity by the New York State Attorney General’s office and other
authorities concerning contingent commission arrangements with brokers
and
bid solicitation activities;
|
·
|
legal
and regulatory activities with respect to certain non-traditional
and
finite-risk insurance products, and possible resulting changes in
accounting and financial reporting in relation to such products,
including
our restatement of financial results in May of 2005 and CNA’s relationship
with an affiliate, Accord Re Ltd., as disclosed in connection with
that
restatement;
|
·
|
regulatory
limitations, impositions and restrictions upon CNA, including the
effects
of assessments and other surcharges for guaranty funds and second-injury
funds and other mandatory pooling
arrangements;
|
·
|
weather
and other natural physical events, including the severity and frequency
of
storms, hail, snowfall and other winter conditions, as well as of
natural
disasters such as hurricanes and
earthquakes;
|
·
|
man-made
disasters, including the possible occurrence of terrorist attacks
and the
effect of the absence or insufficiency of applicable terrorism legislation
on coverages;
|
·
|
the
unpredictability of the nature, targets, severity or frequency of
potential terrorist events, as well as the uncertainty as to CNA’s ability
to contain its terrorism exposure effectively, notwithstanding the
extension until 2007 of the Terrorism Risk Insurance Act of
2002;
|
·
|
the
occurrence of epidemics;
|
·
|
exposure
to liabilities due to claims made by insureds and others relating
to
asbestos remediation and health-based asbestos impairments, as well
as
exposure to liabilities for environmental pollution, mass tort and
construction defect claims;
|
·
|
whether
a national privately financed trust to replace litigation of asbestos
claims with payments to claimants from the trust will be established
or
approved through federal legislation, or, if established and approved,
whether it will contain funding requirements in excess of CNA’s
established loss reserves or carried loss
reserves;
|
·
|
the
sufficiency of CNA’s loss reserves and the possibility of future increases
in reserves:
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Forward-Looking
Statements Disclaimer - (Continued)
|
·
|
regulatory
limitations, impositions and restrictions, including limitations
upon
CNA’s ability to receive dividends from its insurance subsidiaries and
to
pay dividends to us, imposed by state regulatory agencies and minimum
risk-based capital standards established by the National Association
of
Insurance Commissioners;
|
·
|
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, such as Enron and WorldCom, on
capital
markets and on the markets for directors and officers and errors
and
omissions coverages;
|
·
|
the
effects of assessments and other surcharges for guaranty funds and
second-injury funds and other mandatory pooling
arrangements;
|
·
|
general
economic and business conditions, including inflationary pressures
on
medical care costs, construction costs and other economic sectors
that
increase the severity of claims;
|
·
|
the
effectiveness of current initiatives by claims management to reduce
the
loss and expense ratios through more efficacious claims handling
techniques; and
|
·
|
changes
in the composition of CNA’s operating
segments.
|
·
|
health
concerns, claims and regulations relating to the use of tobacco products
and exposure to environmental tobacco
smoke;
|
·
|
legislation,
including actual and potential excise tax increases, and the effects
of
tobacco litigation settlements on pricing and consumption
rates;
|
·
|
continued
intense competition from other cigarette manufacturers, including
significant levels of promotional activities and the presence of
a sizable
deep-discount category;
|
·
|
the
continuing decline in volume in the domestic cigarette
industry;
|
·
|
increasing
marketing and regulatory restrictions, governmental regulation and
privately imposed smoking
restrictions;
|
·
|
litigation,
including risks associated with adverse jury and judicial determinations,
courts reaching conclusions at variance with the general understandings
of
applicable law, bonding requirements and the absence of adequate
appellate
remedies to get timely relief from any of the foregoing;
and
|
·
|
the
impact of each of the factors described under “Results of
Operations—Lorillard” in the MD&A portion of this
report.
|
·
|
the
impact of changes in demand for oil and natural gas and oil and gas
price
fluctuations on exploration and production
activity;
|
·
|
costs
and timing of rig upgrades;
|
·
|
utilization
levels and dayrates for offshore oil and gas drilling
rigs;
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Forward-Looking
Statements Disclaimer - (Continued)
|
·
|
regulatory
issues affecting natural gas transmission, including ratemaking and
other
proceedings particularly affecting our gas transmission
subsidiaries;
|
·
|
the
ability of Texas Gas and Gulf South to renegotiate, extend or replace
existing customer contracts on favorable
terms;
|
·
|
the
successful development and projected cost of planned expansion projects
and investments; and
|
·
|
the
development of additional natural gas reserves and the completion
of
projected new liquefied natural gas facilities and expansion of existing
facilities.
|
·
|
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;
|
·
|
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;
|
·
|
the
economic effects of the September 11, 2001 terrorist attacks, other
terrorist attacks and the war in
Iraq;
|
·
|
potential
changes in accounting policies by the Financial Accounting Standards
Board
(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;
and
|
·
|
the
outcome of pending litigation.
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
(Restated)
|
||||||
Assets :
|
|||||||
Current
assets
|
$
|
1,006.9
|
$
|
932.4
|
|||
Investments,
primarily short-term instruments
|
4,883.2
|
4,184.5
|
|||||
Total
current assets and investments in securities
|
5,890.1
|
5,116.9
|
|||||
Investment
in CNA
|
8,245.2
|
8,262.5
|
|||||
Investment
in Diamond Offshore
|
1,039.7
|
935.1
|
|||||
Property,
plant and equipment
|
2,469.3
|
2,472.3
|
|||||
Other
assets
|
602.4
|
665.1
|
|||||
Total
assets
|
$
|
18,246.7
|
$
|
17,451.9
|
|||
Liabilities
and Shareholders’ Equity:
|
|||||||
Current
liabilities
|
$
|
2,047.8
|
$
|
1,528.2
|
|||
Long-term
debt, less current maturities and unamortized discount
|
2,202.4
|
3,553.7
|
|||||
Other
liabilities
|
904.4
|
400.1
|
|||||
Total
liabilities
|
5,154.6
|
5,482.0
|
|||||
Shareholders’
equity
|
13,092.1
|
11,969.9
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
18,246.7
|
$
|
17,451.9
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Supplemental
Financial Information -
(Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
(Restated)
|
(Restated)
|
||||||||
Revenues:
|
||||||||||
Manufactured
products and other
|
$
|
4,684.4
|
$
|
4,304.7
|
$
|
3,858.5
|
||||
Net
investment income
|
180.9
|
189.9
|
191.2
|
|||||||
Investment
losses
|
(5.5
|
)
|
(11.8
|
)
|
(2.4
|
)
|
||||
Total
|
4,859.8
|
4,482.8
|
4,047.3
|
|||||||
Expenses:
|
||||||||||
Cost
of manufactured products sold and other
|
3,349.0
|
2,990.0
|
2,895.1
|
|||||||
Interest
|
198.1
|
176.3
|
154.7
|
|||||||
Income
tax expense
|
486.5
|
497.0
|
375.8
|
|||||||
Total
|
4,033.6
|
3,663.3
|
3,425.6
|
|||||||
Income
from operations
|
826.2
|
819.5
|
621.7
|
|||||||
Equity
in income (loss) of:
|
||||||||||
CNA
|
239.8
|
425.0
|
(1,246.1
|
)
|
||||||
Diamond
Offshore
|
126.9
|
(9.2
|
)
|
(29.6
|
)
|
|||||
Income
(loss) from continuing operations
|
1,192.9
|
1,235.3
|
(654.0
|
)
|
||||||
Discontinued
operations, net
|
18.7
|
(19.5
|
)
|
56.8
|
||||||
Net
income (loss)
|
$
|
1,211.6
|
$
|
1,215.8
|
$
|
(597.2
|
)
|
Item
7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
Supplemental
Financial Information -
(Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
(Restated)
|
(Restated)
|
||||||||
Operating
Activities:
|
||||||||||
Net
income (loss)
|
$
|
1,211.6
|
$
|
1,215.8
|
$
|
(597.2
|
)
|
|||
Adjustments
to reconcile net income (loss) to net cash provided by
|
||||||||||
operating
activities:
|
||||||||||
Undistributed
(earnings) loss of CNA and Diamond Offshore
|
(359.1
|
)
|
(378.8
|
)
|
1,305.0
|
|||||
Gain
on disposal of discontinued operations
|
(56.7
|
)
|
||||||||
Investment
losses
|
5.5
|
11.8
|
2.4
|
|||||||
Other
|
184.7
|
81.5
|
144.7
|
|||||||
Changes
in assets and liabilities-net
|
(153.7
|
)
|
68.1
|
884.9
|
||||||
Net
cash flow operating activities - continuing operations
|
889.0
|
998.4
|
1,683.1
|
|||||||
Net
cash flow operating activities - discontinued operations
|
(100.3
|
)
|
||||||||
Net
cash flow operating activities - total
|
889.0
|
998.4
|
1,582.8
|
|||||||
Investing
Activities:
|
||||||||||
Net
increase in investments
|
(261.5
|
)
|
(361.5
|
)
|
(551.5
|
)
|
||||
Purchases
of CNA preferred stock
|
(750.0
|
)
|
||||||||
Acquisition
of Gas Pipelines-net of cash
|
(1,111.4
|
)
|
(803.3
|
)
|
||||||
Other
|
(116.0
|
)
|
(101.4
|
)
|
(103.4
|
)
|
||||
Net
cash flow investing activities - continuing operations
|
(377.5
|
)
|
(1,574.3
|
)
|
(2,208.2
|
)
|
||||
Net
cash flow investing activities - discontinued operations
|
8.4
|
100.3
|
||||||||
Net
cash flow investing activities - total
|
(369.1
|
)
|
(1,574.3
|
)
|
(2,107.9
|
)
|
||||
Financing
Activities:
|
||||||||||
Dividends
paid to shareholders
|
(239.9
|
)
|
(216.8
|
)
|
(191.8
|
)
|
||||
Increase
(decrease) in long-term debt-net
|
(1,025.6
|
)
|
555.8
|
300.5
|
||||||
Issuance
of common stock
|
432.5
|
287.8
|
399.7
|
|||||||
Proceeds
from subsidiary stock offering
|
271.4
|
|||||||||
Total
|
(561.6
|
)
|
626.8
|
508.4
|
||||||
Net
change in cash
|
(41.7
|
)
|
50.9
|
(16.7
|
)
|
|||||
Net
cash transactions from:
|
||||||||||
Continuing
operations to discontinued operations
|
8.4
|
|||||||||
Discontinued
operations to continuing operations
|
(8.4
|
)
|
||||||||
Cash,
beginning of year
|
73.5
|
22.6
|
39.3
|
|||||||
Cash,
end of year
|
$
|
31.8
|
$
|
73.5
|
$
|
22.6
|
Item
7A. Quantitative and Qualitative Disclosures about Market
Risk
|
Category
of risk exposure:
|
Fair
Value Asset (Liability)
|
Market
Risk
|
|||||||||||
December
31
|
2005
|
2004
|
2005
|
2004
|
|||||||||
(Amounts
in millions)
|
|||||||||||||
Equity
markets (1):
|
|||||||||||||
Equity
securities (a)
|
$
|
441.8
|
$
|
233.1
|
$
|
(110.0
|
)
|
$
|
(59.0
|
)
|
|||
Options -
purchased
|
33.5
|
19.9
|
(1.0
|
)
|
(2.0
|
)
|
|||||||
-
written
|
(9.1
|
)
|
(2.6
|
)
|
2.0
|
1.0
|
|||||||
Warrants
|
0.1
|
1.0
|
|||||||||||
Short
sales
|
(67.3
|
)
|
(77.6
|
)
|
17.0
|
19.0
|
|||||||
Limited
partnership investments
|
371.7
|
427.7
|
(25.0
|
)
|
(30.0
|
)
|
|||||||
Interest
rate (2):
|
|||||||||||||
Treasury
- short
|
(78.6
|
)
|
(7.0
|
)
|
|||||||||
Futures
- short
|
(10.0
|
)
|
(10.0
|
)
|
|||||||||
Interest
rate swaps-short
|
(0.1
|
)
|
(5.5
|
)
|
(2.0
|
)
|
(46.0
|
)
|
|||||
Short
sales-foreign
|
(19.9
|
)
|
(2.0
|
)
|
|||||||||
Fixed
maturities
|
415.7
|
390.0
|
3.0
|
4.0
|
|||||||||
Short-term
investments
|
367.7
|
459.2
|
|||||||||||
Other
derivatives
|
0.1
|
2.1
|
(3.0
|
)
|
(6.0
|
)
|
|||||||
Gold
(3):
|
|||||||||||||
Options -
purchased
|
0.5
|
0.2
|
10.0
|
11.0
|
|||||||||
-
written
|
(0.7
|
)
|
(0.1
|
)
|
(14.0
|
)
|
(15.0
|
)
|
Note:
|
The
calculation of estimated market risk exposure is based on assumed
adverse
changes in the underlying reference price or index of (1) a decrease
in
equity prices of 25%, (2) a decrease in interest rates of 100 basis
points
and (3) a decrease in gold prices of 20%. Adverse changes on options
which
differ from those presented above would not necessarily result in
a
proportionate change to the estimated market risk
exposure.
|
(a)
|
A
decrease in equity prices of 25% would result in market risk amounting
to
$(255.0) and $(289.0) at December 31, 2005 and 2004, respectively.
This
market risk would be offset by decreases in liabilities to customers
under
variable insurance contracts.
|
Item
7A. Quantitative and Qualitative Disclosures about Market
Risk
|
Category
of risk exposure:
|
Fair
Value Asset (Liability)
|
Market
Risk
|
|||||||||||
December
31
|
2005
|
2004
|
2005
|
2004
|
|||||||||
(Amounts
in millions)
|
|||||||||||||
Equity
markets (1):
|
|||||||||||||
Equity
securities:
|
|||||||||||||
General accounts (a) | $ | 631.8 | $ | 410.1 | $ | (158.0 | ) | $ | (103.0 | ) | |||
Separate accounts | 43.5 | 55.0 | (11.0 | ) | (14.0 | ) | |||||||
Limited
partnership investments
|
1,397.3
|
1,355.7
|
(112.0
|
)
|
(75.0
|
)
|
|||||||
Interest
rate (2):
|
|||||||||||||
Fixed
maturities (a)(b)
|
32,965.5
|
33,112.1
|
(1,897.0
|
)
|
(1,855.0
|
)
|
|||||||
Short-term
investments (a)
|
8,738.9
|
7,847.6
|
(4.0
|
)
|
(7.0
|
)
|
|||||||
Other
invested assets
|
27.8
|
47.8
|
|||||||||||
Other
derivative securities
|
3.6
|
(7.9
|
)
|
66.0
|
9.0
|
||||||||
Separate
accounts (a):
|
|||||||||||||
Fixed
maturities
|
466.1
|
486.3
|
(23.0
|
)
|
(24.0
|
)
|
|||||||
Short-term
investments
|
36.2
|
19.8
|
|||||||||||
Debt
|
(5,530.0
|
)
|
(7,101.0
|
)
|
Note:
|
The
calculation of estimated market risk exposure is based on assumed
adverse
changes in the underlying reference price or index of (1) a decrease
in
equity prices of 25% and (2) an increase in interest rates of 100
basis
points.
|
(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 $(245.0), and $(254.0) at December
31, 2005
and 2004, 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 $(54.0) and $(63.0) at December 31, 2005
and
2004, respectively.
|
Page
|
||||
No.
|
||||
Consolidated
Balance Sheets
|
132
|
|||
Consolidated
Statements of Operations
|
134
|
|||
Consolidated
Statements of Shareholders’ Equity
|
135
|
|||
Consolidated
Statements of Cash Flows
|
136
|
|||
Notes
to Consolidated Financial Statements:
|
||||
1.
|
Summary
of Significant Accounting Policies
|
138
|
||
2.
|
Investments
|
148
|
||
3.
|
Fair
Value of Financial Instruments
|
152
|
||
4.
|
Derivative
Financial Instruments
|
153
|
||
5.
|
Earnings
Per Share
|
157
|
||
6.
|
Loews
and Carolina Group Consolidating Condensed Financial
Information
|
158
|
||
7.
|
Receivables
|
166
|
||
8.
|
Property,
Plant and Equipment
|
167
|
||
9.
|
Claim
and Claim Adjustment Expense Reserves
|
167
|
||
10.
|
Leases
|
183
|
||
11.
|
Income
Taxes
|
183
|
||
12.
|
Debt
|
185
|
||
13.
|
Comprehensive
Income (Loss)
|
188
|
||
14.
|
Significant
Transactions
|
188
|
||
15.
|
Restructuring
and Other Related Charges
|
192
|
||
16.
|
Statutory
Accounting Practices (Unaudited)
|
192
|
||
17.
|
Benefit
Plans
|
193
|
||
18.
|
Reinsurance
|
200
|
||
19.
|
Quarterly
Financial Data (Unaudited)
|
205
|
||
20.
|
Legal
Proceedings
|
206
|
||
Insurance
Related
|
206
|
|||
Tobacco
Related
|
208
|
|||
21.
|
Commitments
and Contingencies
|
217
|
||
22.
|
Discontinued
Operations
|
219
|
||
23.
|
Business
Segments
|
221
|
||
24.
|
Consolidating
Financial Information
|
224
|
||
25.
|
Restatement
for Discontinued Operations and Classification of Cash
Flows
|
230
|
Assets:
|
|||||||
December
31
|
2005
|
2004
|
|||||
(Dollar
amounts in millions, except per share data)
|
Restated
|
||||||
See
Note 25
|
|||||||
Investments
(Notes 1, 2, 3 and 4):
|
|||||||
Fixed
maturities, amortized cost of $32,759.0 and $32,435.1
|
$
|
33,381.2
|
$
|
33,502.1
|
|||
Equity
securities, cost of $903.5 and $501.5
|
1,107.2
|
664.1
|
|||||
Limited
partnership investments
|
1,769.0
|
1,783.4
|
|||||
Other
investments
|
32.0
|
42.1
|
|||||
Short-term
investments
|
9,106.6
|
8,306.8
|
|||||
Total
investments
|
45,396.0
|
44,298.5
|
|||||
Cash
|
153.1
|
219.9
|
|||||
Receivables
(Notes 1 and 7)
|
15,313.7
|
18,833.5
|
|||||
Property,
plant and equipment (Notes 1 and 8)
|
4,951.6
|
4,840.7
|
|||||
Deferred
income taxes (Note 11)
|
905.3
|
645.3
|
|||||
Goodwill
and other intangible assets (Note 1)
|
297.4
|
299.1
|
|||||
Other
assets (Notes 1, 14, 17, 18 and 25)
|
1,909.6
|
2,747.4
|
|||||
Deferred
acquisition costs of insurance subsidiaries (Note 1)
|
1,197.4
|
1,268.1
|
|||||
Separate
account business (Notes 1, 3 and 4)
|
551.5
|
567.8
|
|||||
Total
assets
|
$
|
70,675.6
|
$
|
73,720.3
|
Liabilities
and Shareholders’ Equity:
|
|||||||
December
31
|
2005
|
2004
|
|||||
(Dollar
amounts in millions, except per share data)
|
Restated
|
||||||
See
Note 25
|
|||||||
Insurance
reserves (Notes 1 and 9):
|
|||||||
Claim
and claim adjustment expense
|
$
|
30,938.0
|
$
|
31,523.0
|
|||
Future
policy benefits
|
6,297.2
|
5,882.5
|
|||||
Unearned
premiums
|
3,705.7
|
4,522.1
|
|||||
Policyholders’
funds
|
1,495.3
|
1,724.6
|
|||||
Total
insurance reserves
|
42,436.2
|
43,652.2
|
|||||
Payable
for securities purchased (Note 4)
|
401.7
|
595.5
|
|||||
Collateral
on loaned securities and derivatives (Notes 1 and 2)
|
767.4
|
918.0
|
|||||
Short-term
debt (Notes 3 and 12)
|
598.2
|
1,010.1
|
|||||
Long-term
debt (Notes 3 and 12)
|
4,608.6
|
5,980.2
|
|||||
Reinsurance
balances payable (Notes 1 and 14)
|
1,636.2
|
2,980.8
|
|||||
Other
liabilities (Notes 1, 3, 15 and 17)
|
4,524.8
|
4,383.8
|
|||||
Separate
account business (Notes 1, 3 and 4)
|
551.5
|
567.8
|
|||||
Total
liabilities
|
55,524.6
|
60,088.4
|
|||||
Minority
interest
|
2,058.9
|
1,662.0
|
|||||
Commitments
and contingent liabilities
|
|||||||
(Notes
1, 2, 4, 9, 10, 11, 12, 14, 15, 16, 17, 18, 20 and 21)
|
|||||||
Shareholders’
equity (Notes 1, 2, 5, 12 and 13):
|
|||||||
Preferred
stock, $0.10 par value:
|
|||||||
Authorized
- 100,000,000 shares
|
|||||||
Loews
common stock, $1.00 par value:
|
|||||||
Authorized
- 600,000,000 shares
|
|||||||
Issued
and outstanding - 185,846,889 and 185,584,575 shares
|
185.8
|
185.6
|
|||||
Carolina
Group stock, $0.01 par value:
|
|||||||
Authorized
- 600,000,000 shares
|
|||||||
Issued
- 78,531,678 and 68,307,250 shares
|
0.8
|
0.7
|
|||||
Additional
paid-in capital
|
2,237.7
|
1,801.2
|
|||||
Earnings
retained in the business
|
10,364.4
|
9,392.7
|
|||||
Accumulated
other comprehensive income
|
311.1
|
597.4
|
|||||
13,099.8
|
11,977.6
|
||||||
Less
treasury stock, at cost (340,000 shares of Carolina Group
stock)
|
7.7
|
7.7
|
|||||
Total
shareholders’ equity
|
13,092.1
|
11,969.9
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
70,675.6
|
$
|
73,720.3
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions, except per share data)
|
Restated
|
Restated
|
||||||||
See
Note 25
|
See
Note 25
|
|||||||||
Revenues
(Note 1):
|
||||||||||
Insurance
premiums (Note 18)
|
$
|
7,568.6
|
$
|
8,205.2
|
$
|
9,211.6
|
||||
Net
investment income (Note 2)
|
2,098.8
|
1,875.3
|
1,859.1
|
|||||||
Investment
gains (losses) (Note 2)
|
(13.2
|
)
|
(256.0
|
)
|
464.1
|
|||||
Manufactured
products (including excise taxes of $676.1, $658.1
|
||||||||||
and
$651.4)
|
3,752.4
|
3,515.2
|
3,418.8
|
|||||||
Other
|
2,611.2
|
1,897.2
|
1,506.1
|
|||||||
Total
|
16,017.8
|
15,236.9
|
16,459.7
|
|||||||
Expenses
(Note 1):
|
||||||||||
Insurance
claims and policyholders’ benefits (Notes 9 and 18)
|
6,998.7
|
6,445.0
|
10,276.2
|
|||||||
Amortization
of deferred acquisition costs
|
1,542.6
|
1,679.8
|
1,964.6
|
|||||||
Cost
of manufactured products sold (Note 20)
|
2,202.3
|
2,045.4
|
1,972.8
|
|||||||
Other
operating expenses
|
3,063.5
|
2,913.8
|
3,294.8
|
|||||||
Interest
|
364.2
|
324.1
|
308.4
|
|||||||
Total
|
14,171.3
|
13,408.1
|
17,816.8
|
|||||||
1,846.5
|
1,828.8
|
(1,357.1
|
)
|
|||||||
Income
tax expense (benefit) (Note 11)
|
490.4
|
536.2
|
(526.6
|
)
|
||||||
Minority
interest
|
163.2
|
57.3
|
(176.5
|
)
|
||||||
Total
|
653.6
|
593.5
|
(703.1
|
)
|
||||||
Income
(loss) from continuing operations
|
1,192.9
|
1,235.3
|
(654.0
|
)
|
||||||
Discontinued
operations, net (Notes 22 and 25)
|
18.7
|
(19.5
|
)
|
56.8
|
||||||
Net
income (loss)
|
$
|
1,211.6
|
$
|
1,215.8
|
$
|
(597.2
|
)
|
|||
Net
income (loss) attributable to (Note 5):
|
||||||||||
Loews
common stock:
|
||||||||||
Income
(loss) from continuing operations
|
$
|
941.6
|
$
|
1,050.8
|
$
|
(769.2
|
)
|
|||
Discontinued
operations, net
|
18.7
|
(19.5
|
)
|
56.8
|
||||||
Loews
common stock
|
960.3
|
1,031.3
|
(712.4
|
)
|
||||||
Carolina
Group stock
|
251.3
|
184.5
|
115.2
|
|||||||
Total
|
$
|
1,211.6
|
$
|
1,215.8
|
$
|
(597.2
|
)
|
|||
Basic
income (loss) per Loews common share (Note 5):
|
||||||||||
Income
(loss) from continuing operations
|
$
|
5.07
|
$
|
5.66
|
$
|
(4.15
|
)
|
|||
Discontinued
operations, net
|
0.10
|
(0.10
|
)
|
0.31
|
||||||
Net
income (loss)
|
$
|
5.17
|
$
|
5.56
|
$
|
(3.84
|
)
|
|||
Diluted
income (loss) per Loews common share (Note 5):
|
||||||||||
Income
(loss) from continuing operations
|
$
|
5.06
|
$
|
5.66
|
$
|
(4.15
|
)
|
|||
Discontinued
operations, net
|
0.10
|
(0.10
|
)
|
0.31
|
||||||
Net
income (loss)
|
$
|
5.16
|
$
|
5.56
|
$
|
(3.84
|
)
|
|||
Basic
and diluted net income per Carolina Group share (Note
5)
|
$
|
3.62
|
$
|
3.15
|
$
|
2.76
|
||||
Basic
weighted average number of shares outstanding:
|
||||||||||
Loews
common stock
|
185.70
|
185.50
|
185.45
|
|||||||
Carolina
Group stock
|
69.40
|
58.49
|
41.74
|
|||||||
Diluted
weighted average number of
|
||||||||||
shares
outstanding:
|
||||||||||
Loews
common stock
|
185.99
|
185.64
|
185.45
|
|||||||
Carolina
Group stock
|
69.49
|
58.50
|
41.74
|
Earnings
|
Accumulated
|
Common
|
||||||||||||||||||||
Comprehensive
|
Loews
|
Carolina
|
Additional
|
Retained
|
Other
|
Stock
|
||||||||||||||||
Income
|
Common
|
Group
|
Paid-in
|
in
the
|
Comprehensive
|
Held
in
|
||||||||||||||||
(Loss)
|
Stock
|
Stock
|
Capital
|
Business
|
Income
|
Treasury
|
||||||||||||||||
(In
millions, except per share data)
|
||||||||||||||||||||||
Balance,
January 1, 2003 - as
|
||||||||||||||||||||||
previously
reported
|
$
|
185.4
|
$
|
0.4
|
$
|
1,114.2
|
$
|
9,361.2
|
$
|
538.3
|
$
|
(7.7
|
)
|
|||||||||
Prior
period adjustment (Note 25)
|
(178.5
|
)
|
(17.9
|
)
|
||||||||||||||||||
Balance,
January 1, 2003 - restated
|
185.4
|
0.4
|
1,114.2
|
9,182.7
|
520.4
|
(7.7
|
)
|
|||||||||||||||
Comprehensive
loss:
|
||||||||||||||||||||||
Net
loss - restated
|
$
|
(597.2
|
)
|
(597.2
|
)
|
|||||||||||||||||
Other
comprehensive gains - restated
|
||||||||||||||||||||||
(Note
13)
|
249.1
|
249.1
|
||||||||||||||||||||
Comprehensive
loss - restated
|
$
|
(348.1
|
)
|
|||||||||||||||||||
Dividends
paid:
|
||||||||||||||||||||||
Loews
common stock, $0.60
|
||||||||||||||||||||||
per
share
|
(111.3
|
)
|
||||||||||||||||||||
Carolina
Group stock, $1.81
|
||||||||||||||||||||||
per
share
|
(80.5
|
)
|
||||||||||||||||||||
Issuance
of Loews common stock
|
0.2
|
|||||||||||||||||||||
Issuance
of Carolina Group stock
|
||||||||||||||||||||||
(Note
6)
|
0.2
|
399.3
|
||||||||||||||||||||
Balance,
December 31, 2003 - restated
|
185.4
|
0.6
|
1,513.7
|
8,393.7
|
769.5
|
(7.7
|
)
|
|||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||
Net
income - restated
|
$
|
1,215.8
|
1,215.8
|
|||||||||||||||||||
Other
comprehensive losses - restated
|
||||||||||||||||||||||
(Note
13)
|
(172.1
|
)
|
(172.1
|
)
|
||||||||||||||||||
Comprehensive
income - restated
|
$
|
1,043.7
|
||||||||||||||||||||
Dividends
paid:
|
||||||||||||||||||||||
Loews
common stock, $0.60
|
||||||||||||||||||||||
per
share
|
(111.3
|
)
|
||||||||||||||||||||
Carolina
Group stock, $1.82
|
||||||||||||||||||||||
per
share
|
(105.5
|
)
|
||||||||||||||||||||
Issuance
of Loews common stock
|
0.2
|
6.2
|
||||||||||||||||||||
Issuance
of Carolina Group stock
|
||||||||||||||||||||||
(Note
6)
|
0.1
|
281.3
|
||||||||||||||||||||
Balance,
December 31, 2004 - restated
|
185.6
|
0.7
|
1,801.2
|
9,392.7
|
597.4
|
(7.7
|
)
|
|||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||
Net
income
|
$
|
1,211.6
|
1,211.6
|
|||||||||||||||||||
Other
comprehensive losses
|
||||||||||||||||||||||
(Note
13)
|
(286.3
|
)
|
(286.3
|
)
|
||||||||||||||||||
Comprehensive
income
|
$
|
925.3
|
||||||||||||||||||||
Dividends
paid:
|
||||||||||||||||||||||
Loews
common stock, $0.60
|
||||||||||||||||||||||
per
share
|
(111.4
|
)
|
||||||||||||||||||||
Carolina
Group stock, $1.82
|
||||||||||||||||||||||
per
share
|
(128.5
|
)
|
||||||||||||||||||||
Issuance
of Loews common stock
|
0.2
|
15.3
|
||||||||||||||||||||
Issuance
of Carolina Group stock
|
||||||||||||||||||||||
(Note
6)
|
0.1
|
421.2
|
||||||||||||||||||||
Balance,
December 31, 2005
|
$
|
185.8
|
$
|
0.8
|
$
|
2,237.7
|
$
|
10,364.4
|
$
|
311.1
|
$
|
(7.7
|
)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
Restated
|
Restated
|
||||||||
See
Note 25
|
See
Note 25
|
|||||||||
Operating
Activities:
|
||||||||||
Net
income (loss)
|
$
|
1,211.6
|
$
|
1,215.8
|
$
|
(597.2
|
)
|
|||
Adjustments
to reconcile net income (loss) to net cash provided
|
||||||||||
(used)
by operating activities:
|
||||||||||
Income
(loss) from discontinued operations
|
(18.7
|
)
|
19.5
|
(56.8
|
)
|
|||||
Provision
for doubtful accounts and cash discounts
|
52.7
|
228.2
|
780.9
|
|||||||
Investment
losses (gains)
|
13.2
|
256.0
|
(464.1
|
)
|
||||||
Undistributed
earnings
|
(79.2
|
)
|
(42.2
|
)
|
(91.7
|
)
|
||||
Provision
for minority interest
|
163.2
|
57.3
|
(176.5
|
)
|
||||||
Amortization
of investments
|
(207.6
|
)
|
(21.5
|
)
|
(108.6
|
)
|
||||
Depreciation
and amortization
|
382.1
|
350.8
|
325.1
|
|||||||
Provision
for deferred income taxes
|
(109.6
|
)
|
55.1
|
154.0
|
||||||
Other
non-cash items
|
(2.3
|
)
|
62.4
|
41.8
|
||||||
Changes
in operating assets and liabilities-net:
|
||||||||||
Reinsurance
receivables
|
3,451.3
|
(971.7
|
)
|
(3,524.1
|
)
|
|||||
Other
receivables
|
84.9
|
156.3
|
(757.4
|
)
|
||||||
Prepaid
reinsurance premiums
|
789.3
|
233.7
|
(15.5
|
)
|
||||||
Deferred
acquisition costs
|
70.7
|
193.6
|
(61.5
|
)
|
||||||
Insurance
reserves and claims
|
(942.3
|
)
|
1,075.4
|
6,812.7
|
||||||
Reinsurance
balances payable
|
(1,344.6
|
)
|
(317.8
|
)
|
661.1
|
|||||
Other
liabilities
|
11.9
|
465.1
|
(116.8
|
)
|
||||||
Trading
securities
|
(125.7
|
)
|
13.1
|
32.1
|
||||||
Other,
net
|
14.0
|
169.2
|
351.4
|
|||||||
Net
cash flow operating activities - continuing operations
|
3,414.9
|
3,198.3
|
3,188.9
|
|||||||
Net
cash flow operating activities - discontinued operations
|
(47.8
|
)
|
(16.8
|
)
|
(128.4
|
)
|
||||
Net
cash flow operating activities - total
|
3,367.1
|
3,181.5
|
3,060.5
|
|||||||
Investing
Activities:
|
||||||||||
Purchases
of fixed maturities
|
(80,805.2
|
)
|
(76,690.4
|
)
|
(71,873.2
|
)
|
||||
Proceeds
from sales of fixed maturities
|
68,771.8
|
60,229.9
|
58,033.9
|
|||||||
Proceeds
from maturities of fixed maturities
|
11,298.8
|
9,257.3
|
12,684.8
|
|||||||
Purchases
of equity securities
|
(482.1
|
)
|
(386.8
|
)
|
(394.7
|
)
|
||||
Proceeds
from sales of equity securities
|
317.2
|
547.8
|
605.6
|
|||||||
Purchases
of property and equipment
|
(477.8
|
)
|
(267.0
|
)
|
(446.4
|
)
|
||||
Disposition
of property and equipment
|
85.0
|
52.7
|
6.1
|
|||||||
Change
in collateral on loaned securities and derivatives
|
(150.6
|
)
|
476.2
|
(110.6
|
)
|
|||||
Change
in short-term investments
|
(646.4
|
)
|
3,307.4
|
(1,495.3
|
)
|
|||||
Sales
of businesses, net of cash
|
57.3
|
648.0
|
428.3
|
|||||||
Change
in other investments
|
229.2
|
(123.5
|
)
|
139.6
|
||||||
Acquisition
of Gas Pipelines, net of cash
|
(1,111.4
|
)
|
(803.3
|
)
|
||||||
Net
cash flow investing activities - continuing operations
|
(1,802.8
|
)
|
(4,059.8
|
)
|
(3,225.2
|
)
|
||||
Net
cash flow investing activities - discontinued operations
|
28.3
|
18.0
|
96.2
|
|||||||
Net
cash flow investing activities - total
|
(1,774.5
|
)
|
(4,041.8
|
)
|
(3,129.0
|
)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
Restated
|
Restated
|
||||||||
See
Note 25
|
See
Note 25
|
|||||||||
Financing
Activities:
|
||||||||||
Dividends
paid
|
$
|
(239.9
|
)
|
$
|
(216.8
|
)
|
$
|
(191.8
|
)
|
|
Dividends
paid to minority interests
|
(22.0
|
)
|
(14.8
|
)
|
(26.4
|
)
|
||||
Purchases
of treasury shares by subsidiaries
|
(17.6
|
)
|
(17.9
|
)
|
||||||
Issuance
of common stock
|
432.5
|
287.8
|
399.7
|
|||||||
Proceeds
from subsidiary stock offering
|
271.4
|
|||||||||
Principal
payments on debt
|
(3,277.7
|
)
|
(606.0
|
)
|
(807.5
|
)
|
||||
Issuance
of debt
|
1,460.1
|
1,747.9
|
706.4
|
|||||||
Receipts of
policyholder account balances on
|
||||||||||
investment
contracts
|
6.6
|
|
180.8
|
|
250.5
|
|
||||
Withdrawals of policyholder account balances | ||||||||||
on investment contracts | (281.2 | ) | (479.4 | ) | (288.3 | ) | ||||
Other
|
5.6
|
6.5
|
(3.8
|
)
|
||||||
Net
cash flow financing activities - continuing operations
|
(1,644.6
|
)
|
888.4
|
20.9
|
||||||
Net
change in cash
|
(52.0
|
)
|
28.1
|
(47.6
|
)
|
|||||
Net
cash transactions from:
|
||||||||||
Continuing
operations to discontinued operations
|
(34.3
|
)
|
12.2
|
12.3
|
||||||
Discontinued
operations to continuing operations
|
34.3
|
(12.2
|
)
|
(12.3
|
)
|
|||||
Cash,
beginning of year
|
234.0
|
205.9
|
253.5
|
|||||||
Cash,
end of year
|
$
|
182.0
|
$
|
234.0
|
$
|
205.9
|
||||
Cash,
end of year:
|
||||||||||
Continuing
operations
|
$
|
153.1
|
$
|
219.9
|
$
|
180.8
|
||||
Discontinued
operations
|
28.9
|
14.1
|
25.1
|
|||||||
Total
|
$
|
182.0
|
$
|
234.0
|
$
|
205.9
|
Note
1.
|
Summary
of Significant Accounting
Policies
|
Notes
to Consolidated Financial Statements
|
Note
1. Summary of Significant Accounting Policies -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
1. Summary of Significant Accounting Policies -
(Continued)
|
Nature
of Hedge Designation
|
Derivative’s
Change in Fair Value Reflected in
|
No
hedge designation
|
Investment
gains (losses).
|
Fair
value
|
Investment
gains (losses), along with the change in fair value of the
hedged asset or
liability that are attributable to the hedged risk.
|
Cash
flow
|
Other
comprehensive income (loss), with subsequent reclassification
to earnings
when the hedged transaction, asset or liability impacts
earnings.
|
Foreign
currency
|
Consistent
with fair value or cash flow above, depending on the nature
of the hedging
relationship.
|
Notes
to Consolidated Financial Statements
|
Note
1. Summary of Significant Accounting Policies -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
1. Summary of Significant Accounting Policies -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
1. Summary of Significant Accounting Policies -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
1. Summary of Significant Accounting Policies -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
1. Summary of Significant Accounting Policies -
(Continued)
|
Years
|
|
Buildings
and building equipment
|
40
|
Building
fixtures
|
10
to 20
|
Offshore
drilling equipment
|
15
to 30
|
Pipeline
equipment
|
40
to 50
|
Machinery
and equipment
|
5
to 12
|
Hotel
equipment
|
4
to 12
|
Computer
equipment and software
|
3
to 5
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions, except per share data)
|
(Restated)
|
(Restated)
|
||||||||
Net
income (loss):
|
||||||||||
Loews
common stock:
|
||||||||||
Net
income (loss) as reported
|
$
|
960.3
|
$
|
1,031.3
|
$
|
(712.4
|
)
|
|||
Deduct:
Total stock-based employee compensation expense
|
||||||||||
determined
under the fair value based method, net
|
(5.4
|
)
|
(5.2
|
)
|
(5.5
|
)
|
||||
Pro
forma net income (loss)
|
$
|
954.9
|
$
|
1,026.1
|
$
|
(717.9
|
)
|
|||
Carolina
Group stock:
|
||||||||||
Net
income as reported
|
$
|
251.3
|
$
|
184.5
|
$
|
115.2
|
||||
Deduct:
Total stock-based employee compensation expense
|
||||||||||
determined
under the fair value based method, net
|
(0.2
|
)
|
(0.1
|
)
|
(0.1
|
)
|
||||
Pro
forma net income
|
$
|
251.1
|
$
|
184.4
|
$
|
115.1
|
Notes
to Consolidated Financial Statements
|
Note
1. Summary of Significant Accounting Policies -
(Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions, except per share data)
|
(Restated)
|
(Restated)
|
||||||||
Basic
net income (loss) per share:
|
||||||||||
Loews
common stock:
|
||||||||||
As
reported
|
$
|
5.17
|
$
|
5.56
|
$
|
(3.84
|
)
|
|||
Pro
forma
|
5.14
|
5.53
|
(3.87
|
)
|
||||||
Carolina
Group stock:
|
||||||||||
As
reported
|
3.62
|
3.15
|
2.76
|
|||||||
Pro
forma
|
3.62
|
3.15
|
2.76
|
Diluted
net income (loss) per share:
|
||||||||||
Loews
common stock:
|
||||||||||
As
reported
|
$
|
5.16
|
$
|
5.56
|
$
|
(3.84
|
)
|
|||
Pro
forma
|
5.13
|
5.53
|
(3.87
|
)
|
||||||
Carolina
Group stock:
|
||||||||||
As
reported
|
3.62
|
3.15
|
2.76
|
|||||||
Pro
forma
|
3.61
|
3.15
|
2.76
|
Notes
to Consolidated Financial Statements
|
Note
1. Summary of Significant Accounting Policies -
(Continued)
|
Notes
to Consolidated Financial
Statements
|
Note
2.
|
Investments
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Investment
income consisted of:
|
||||||||||
Fixed
maturity securities
|
$
|
1,644.4
|
$
|
1,593.1
|
$
|
1,670.4
|
||||
Short-term
investments
|
191.0
|
71.8
|
103.2
|
|||||||
Limited
partnerships
|
270.7
|
238.5
|
220.6
|
|||||||
Equity
securities
|
30.4
|
18.4
|
23.7
|
|||||||
Income
from trading portfolio
|
89.5
|
208.5
|
117.8
|
|||||||
Interest
expense on funds withheld and other deposits
|
(165.8
|
)
|
(261.1
|
)
|
(334.6
|
)
|
||||
Other
|
90.9
|
57.6
|
125.9
|
|||||||
Total
investment income
|
2,151.1
|
1,926.8
|
1,927.0
|
|||||||
Investment
expenses
|
(52.3
|
)
|
(51.5
|
)
|
(67.9
|
)
|
||||
Net
investment income
|
$
|
2,098.8
|
$
|
1,875.3
|
$
|
1,859.1
|
Investment
gains (losses) are as follows:
|
||||||||||
Derivative
instruments
|
$
|
49.1
|
$
|
(84.1
|
)
|
$
|
78.3
|
|||
Fixed
maturities
|
(98.9
|
)
|
233.7
|
444.7
|
||||||
Equity
securities, including short positions
|
43.2
|
202.2
|
114.5
|
|||||||
Short-term
investments
|
(2.8
|
)
|
(1.5
|
)
|
(13.4
|
)
|
||||
Other,
including guaranteed separate account business (a)
|
(3.8
|
)
|
(606.3
|
)
|
(160.0
|
)
|
||||
Investment
gains (losses)
|
(13.2
|
)
|
(256.0
|
)
|
464.1
|
|||||
Income
tax (expense) benefit
|
1.2
|
98.1
|
(175.9
|
)
|
||||||
Minority
interest
|
1.2
|
13.3
|
(26.4
|
)
|
||||||
Investment
gains (losses), net
|
$
|
(10.8
|
)
|
$
|
(144.6
|
)
|
$
|
261.8
|
(a)
|
Includes
a pretax loss of $618.6 ($352.9 after tax and minority interest)
related
to CNA’s sale of its individual life insurance business for the year
ended
December 31, 2004 and a pretax loss of $172.9 ($116.4 after
tax and
minority interest) related to the sale of CNA’s Group Benefits business
for the year ended December 31, 2003. See Note
14.
|
Notes
to Consolidated Financial Statements
|
Note
2. Investments -
(Continued)
|
Gross
Unrealized Losses
|
||||||||||||||||
December
31, 2005
|
Amortized
Cost
|
Unrealized
Gains
|
Less
than
12
Months
|
Greater
than
12
Months
|
Fair
Value
|
|||||||||||
(In
millions)
|
||||||||||||||||
Fixed
maturity securities:
|
||||||||||||||||
U.S.
government and obligations of
|
||||||||||||||||
government
agencies
|
$
|
1,357.2
|
$
|
119.1
|
$
|
3.4
|
$
|
1.2
|
$
|
1,471.7
|
||||||
Asset-backed
securities
|
12,985.8
|
43.6
|
136.7
|
33.1
|
12,859.6
|
|||||||||||
States,
municipalities and political
|
||||||||||||||||
subdivisions-tax
exempt
|
9,054.3
|
192.5
|
31.2
|
6.9
|
9,208.7
|
|||||||||||
Corporate
|
5,905.7
|
322.2
|
51.9
|
11.0
|
6,165.0
|
|||||||||||
Other
debt
|
2,830.3
|
233.9
|
17.9
|
2.3
|
3,044.0
|
|||||||||||
Redeemable
preferred stocks
|
213.3
|
3.5
|
0.4
|
0.7
|
215.7
|
|||||||||||
Options
embedded in convertible debt
|
||||||||||||||||
securities
|
0.8
|
0.8
|
||||||||||||||
Fixed
maturities available-for-sale
|
32,347.4
|
914.8
|
241.5
|
55.2
|
32,965.5
|
|||||||||||
Fixed
maturity trading securities
|
411.6
|
6.7
|
1.5
|
1.1
|
415.7
|
|||||||||||
Total
fixed maturities
|
32,759.0
|
921.5
|
243.0
|
56.3
|
33,381.2
|
|||||||||||
Equity
Securities:
|
||||||||||||||||
Equity
securities available-for-sale
|
461.7
|
172.6
|
2.0
|
632.3
|
||||||||||||
Equity
securities, trading portfolio
|
441.8
|
58.1
|
15.2
|
9.8
|
474.9
|
|||||||||||
Total
equity securities
|
903.5
|
230.7
|
17.2
|
9.8
|
1,107.2
|
|||||||||||
Short-term
investments available-for-sale
|
9,106.6
|
-
|
-
|
-
|
9,106.6
|
|||||||||||
Total
|
$
|
42,769.1
|
$
|
1,152.2
|
$
|
260.2
|
$
|
66.1
|
$
|
43,595.0
|
Notes
to Consolidated Financial Statements
|
Note
2. Investments -
(Continued)
|
Gross
Unrealized Losses
|
||||||||||||||||
December
31, 2004
|
Amortized
Cost
|
Unrealized
Gains
|
Less
than
12
Months
|
Greater
than
12
Months
|
Fair
Value
|
|||||||||||
Fixed
maturity securities:
|
||||||||||||||||
U.S.
government and obligations of
|
||||||||||||||||
government
agencies
|
$
|
6,307.4
|
$
|
128.8
|
$
|
13.1
|
$
|
2.1
|
$
|
6,421.0
|
||||||
Asset-backed
securities
|
7,706.0
|
104.6
|
19.1
|
3.3
|
7,788.2
|
|||||||||||
States,
municipalities and political
|
||||||||||||||||
subdivisions-tax
exempt
|
8,698.5
|
189.2
|
27.7
|
3.4
|
8,856.6
|
|||||||||||
Corporate
|
6,092.7
|
476.9
|
51.8
|
4.7
|
6,513.1
|
|||||||||||
Other
debt
|
2,769.1
|
294.6
|
11.0
|
0.1
|
3,052.6
|
|||||||||||
Redeemable
preferred stocks
|
141.6
|
5.8
|
0.2
|
1.7
|
145.5
|
|||||||||||
Options
embedded in convertible debt
|
||||||||||||||||
securities
|
234.3
|
234.3
|
||||||||||||||
Fixed
maturities available-for-sale
|
31,949.6
|
1,199.9
|
122.9
|
15.3
|
33,011.3
|
|||||||||||
Fixed
maturity trading securities
|
485.5
|
7.6
|
1.5
|
0.8
|
490.8
|
|||||||||||
Total
fixed maturities
|
32,435.1
|
1,207.5
|
124.4
|
16.1
|
33,502.1
|
|||||||||||
Equity
securities:
|
||||||||||||||||
Equity
securities available-for-sale
|
274.4
|
136.3
|
0.4
|
0.2
|
410.1
|
|||||||||||
Equity
securities, trading portfolio
|
227.1
|
38.4
|
5.4
|
6.1
|
254.0
|
|||||||||||
Total
equity securities
|
501.5
|
174.7
|
5.8
|
6.3
|
664.1
|
|||||||||||
Short-term
investments available-for-sale
|
8,306.0
|
0.8
|
-
|
-
|
8,306.8
|
|||||||||||
Total
|
$
|
41,242.6
|
$
|
1,383.0
|
$
|
130.2
|
$
|
22.4
|
$
|
42,473.0
|
Notes
to Consolidated Financial Statements
|
Note
2. Investments -
(Continued)
|
December
31
|
2005
|
2004
|
|||||||||||
Estimated
Fair
Value
|
Gross
Unrealized
Loss
|
Estimated
Fair
Value
|
Gross
Unrealized
Loss
|
||||||||||
(In
millions)
|
|||||||||||||
Fixed
maturity securities:
|
|||||||||||||
Investment
grade:
|
|||||||||||||
0-6
months
|
$
|
9,976.0
|
$
|
141.7
|
$
|
9,235.7
|
$
|
54.2
|
|||||
7-12
months
|
2,739.0
|
61.0
|
2,448.0
|
59.0
|
|||||||||
13-24
months
|
1,400.0
|
45.0
|
368.0
|
12.0
|
|||||||||
Greater
than 24 months
|
219.0
|
7.0
|
2.0
|
||||||||||
Total
investment grade
|
14,334.0
|
254.7
|
12,053.7
|
125.2
|
|||||||||
Non-investment
grade:
|
|||||||||||||
0-6
months
|
632.0
|
29.0
|
188.0
|
7.0
|
|||||||||
7-12
months
|
118.0
|
10.0
|
69.0
|
4.0
|
|||||||||
13-24
months
|
122.0
|
3.0
|
20.0
|
2.0
|
|||||||||
Greater
than 24 months
|
2.0
|
||||||||||||
Total
non-investment grade
|
874.0
|
42.0
|
277.0
|
13.0
|
|||||||||
Total
fixed maturity securities
|
15,208.0
|
296.7
|
12,330.7
|
138.2
|
|||||||||
Equity
securities:
|
|||||||||||||
0-6
months
|
49.0
|
2.0
|
4.0
|
0.3
|
|||||||||
7-12
months
|
1.0
|
1.0
|
0.1
|
||||||||||
13-24
months
|
1.0
|
|
|||||||||||
Greater
than 24 months
|
3.0
|
3.0
|
0.2
|
||||||||||
Total
equity securities
|
53.0
|
2.0
|
9.0
|
0.6
|
|||||||||
Total
fixed maturity and equity securities
|
$
|
15,261.0
|
$
|
298.7
|
$
|
12,339.7
|
$
|
138.8
|
December
31
|
2005
|
2004
|
|||||||||||
Amortized
Cost
|
Estimated
Fair
Value
|
Amortized
Cost
|
Estimated
Fair
Value
|
||||||||||
(In
millions)
|
|||||||||||||
Due
in one year or less
|
$
|
804.4
|
$
|
805.8
|
$
|
1,047.9
|
$
|
1,053.7
|
|||||
Due
after one year through five years
|
2,166.2
|
2,201.9
|
6,423.5
|
6,469.9
|
|||||||||
Due
after five years through ten years
|
3,417.1
|
3,523.3
|
9,238.4
|
9,577.1
|
|||||||||
Due
after ten years
|
12,973.9
|
13,574.9
|
7,533.8
|
8,122.4
|
|||||||||
Asset-backed
securities
|
12,985.8
|
12,859.6
|
7,706.0
|
7,788.2
|
|||||||||
Total
|
$
|
32,347.4
|
$
|
32,965.5
|
$
|
31,949.6
|
$
|
33,011.3
|
Notes
to Consolidated Financial Statements
|
Note
2. Investments -
(Continued)
|
Note
3.
|
Fair
Value of Financial
Instruments
|
December
31
|
2005
|
2004
|
|||||||||||
Carrying
Amount
|
Estimated
Fair
Value
|
Carrying
Amount
|
Estimated
Fair
Value
|
||||||||||
(In
millions)
|
|||||||||||||
Financial
assets:
|
|||||||||||||
Other
investments
|
$
|
3.0
|
$
|
3.0
|
$
|
7.0
|
$
|
8.0
|
|||||
Separate
account business:
|
|||||||||||||
Fixed
maturities securities
|
466.0
|
466.0
|
486.0
|
486.0
|
|||||||||
Equity
securities
|
44.0
|
44.0
|
55.0
|
55.0
|
|||||||||
Financial
liabilities:
|
|||||||||||||
Premium
deposits and annuity contracts
|
1,363.0
|
1,359.0
|
1,563.0
|
1,565.0
|
|||||||||
Short-term
debt
|
598.2
|
603.0
|
1,010.1
|
1,010.1
|
|||||||||
Long-term
debt
|
4,608.6
|
4,926.8
|
5,954.8
|
6,091.2
|
|||||||||
Financial
guarantee contracts
|
7.0
|
7.0
|
45.0
|
45.0
|
|||||||||
Separate
account business:
|
|||||||||||||
Variable
separate accounts
|
53.0
|
53.0
|
64.0
|
64.0
|
|||||||||
Other
|
491.0
|
491.0
|
499.0
|
499.0
|
Notes
to Consolidated Financial Statements
|
Note
3. Fair Value of Financial Instruments -
(Continued)
|
Note
4.
|
Derivative
Financial Instruments
|
Notes
to Consolidated Financial Statements
|
Note
4. Derivative Financial Instruments -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
4. Derivative Financial Instruments -
(Continued)
|
December
31, 2005
|
Contractual/
Notional
Value
|
Fair
Value
Asset
(Liability)
|
Recognized
Gain
(Loss)
|
|||||||
(In
millions)
|
||||||||||
Equity
markets:
|
||||||||||
Options
- purchased
|
$
|
180.3
|
$
|
33.5
|
$
|
2.3
|
||||
-
written
|
241.0
|
(9.1
|
)
|
4.9
|
||||||
Index
futures - long
|
1,019.7
|
24.0
|
||||||||
-
short
|
3.9
|
(0.6
|
)
|
|||||||
Equity
warrants
|
5.9
|
2.5
|
0.5
|
|||||||
Options
embedded in convertible debt securities
|
12.0
|
0.8
|
(32.9
|
)
|
||||||
Separate
accounts - options written
|
7.0
|
(0.3
|
)
|
0.1
|
||||||
Currency
forwards - long
|
456.4
|
(0.7
|
)
|
(22.3
|
)
|
|||||
-
short
|
217.2
|
1.8
|
12.0
|
|||||||
Interest
rate risk:
|
||||||||||
Commitments
to purchase government and municipal
|
||||||||||
securities
|
21.0
|
1.0
|
||||||||
Interest
rate swaps - long
|
1,076.7
|
(7.6
|
)
|
37.8
|
||||||
- short
|
15.2
|
(1.7
|
)
|
|||||||
Futures
- long
|
633.4
|
1.8
|
||||||||
- short
|
1,643.9
|
(6.9
|
)
|
|||||||
Gold
options - purchased
|
175.5
|
0.6
|
(3.3
|
)
|
||||||
-
written
|
342.4
|
(0.7
|
)
|
3.2
|
||||||
Other
|
44.0
|
0.5
|
||||||||
Total
|
$
|
6,095.5
|
$
|
20.8
|
$
|
20.4
|
Notes
to Consolidated Financial Statements
|
Note
4. Derivative Financial Instruments -
(Continued)
|
December
31, 2004
|
Contractual/
Notional
Value
|
Fair
Value
Asset
(Liability)
|
Recognized
Gain
(Loss)
|
|||||||
(In
millions)
|
||||||||||
Equity
markets:
|
||||||||||
Options
- purchased
|
$
|
240.2
|
$
|
20.5
|
$
|
(8.2
|
)
|
|||
- written
|
200.1
|
(2.9
|
)
|
10.7
|
||||||
Index
futures - long
|
1,155.7
|
99.0
|
||||||||
Equity
warrants
|
11.8
|
1.6
|
0.5
|
|||||||
Options
embedded in convertible debt securities
|
700.8
|
234.3
|
23.7
|
|||||||
Separate
accounts - options written
|
8.8
|
(0.1
|
)
|
0.8
|
||||||
Currency
forwards - long
|
497.2
|
6.0
|
32.9
|
|||||||
- short
|
140.6
|
(3.6
|
)
|
(0.2
|
)
|
|||||
Interest
rate risk:
|
||||||||||
Commitments
to purchase government and municipal
|
||||||||||
securities
|
25.0
|
(7.8
|
)
|
|||||||
Interest
rate swaps
|
989.2
|
(513.4
|
)
|
18.4
|
||||||
Futures
- long
|
715.0
|
(3.8
|
)
|
|||||||
- short
|
887.2
|
(107.3
|
)
|
|||||||
Gold
options - purchased
|
116.0
|
0.2
|
(6.6
|
)
|
||||||
- written
|
225.7
|
(0.1
|
)
|
5.8
|
||||||
Other
|
39.2
|
5.4
|
||||||||
Total
|
$
|
5,952.5
|
$
|
(257.5
|
)
|
$
|
63.3
|
December
31, 2003
|
||||||||||
Equity
markets:
|
||||||||||
Options
- purchased
|
$
|
175.6
|
$
|
22.3
|
$
|
(15.0
|
)
|
|||
- written
|
694.8
|
(6.0
|
)
|
19.5
|
||||||
Index
futures - long
|
0.5
|
3.0
|
||||||||
-
short
|
(1.7
|
)
|
||||||||
Equity
warrants
|
11.3
|
|||||||||
Options
embedded in convertible debt securities
|
680.7
|
201.3
|
36.0
|
|||||||
Separate
accounts - options purchased
|
(0.9
|
)
|
||||||||
- options written
|
11.5
|
(0.4
|
)
|
1.7
|
||||||
- equity index futures - long
|
1,106.2
|
2.9
|
208.1
|
|||||||
- euro dollar futures
|
2.2
|
|||||||||
Currency
forwards - long
|
46.8
|
|||||||||
- short
|
16.3
|
(0.9
|
)
|
(10.3
|
)
|
|||||
Interest
rate risk:
|
||||||||||
Commitments
to purchase government and municipal securities
|
3,318.0
|
12.3
|
(1.2
|
)
|
||||||
Interest
rate swaps
|
931.4
|
18.6
|
61.4
|
|||||||
Interest
rate caps
|
225.0
|
0.2
|
0.5
|
|||||||
Collateralized
debt obligation liabilities
|
110.0
|
(14.0
|
)
|
(1.0
|
)
|
|||||
Synthetic
guaranteed investment contracts
|
280.0
|
|||||||||
Options
on government securities - short
|
(3.4
|
)
|
||||||||
Futures -
long
|
433.4
|
1.9
|
||||||||
- short
|
600.9
|
(1.1
|
)
|
|||||||
Separate
accounts - futures - short
|
10.0
|
(0.2
|
)
|
|||||||
Gold
options - purchased
|
107.8
|
1.4
|
(4.5
|
)
|
||||||
- written
|
208.8
|
(0.8
|
)
|
5.0
|
||||||
Other
|
32.8
|
6.4
|
||||||||
Total
|
$
|
8,957.2
|
$
|
236.9
|
$
|
351.0
|
Notes
to Consolidated Financial Statements
|
Note
4. Derivative Financial Instruments -
(Continued)
|
Note
5.
|
Earnings
Per Share
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
Loews
common stock
|
19,954
|
43,616
|
(a
|
)
|
||||||
Carolina
Group stock
|
13,058
|
207,963
|
377,962
|
(a)
|
Had
the Company recognized net income in 2003, incremental shares
attributable
to the assumed exercise of outstanding options would have increased
diluted shares outstanding by
861,720.
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Loews
common stock:
|
||||||||||
Consolidated
net income (loss)
|
$
|
1,211.6
|
$
|
1,215.8
|
$
|
(597.2
|
)
|
|||
Less
income attributable to Carolina Group stock
|
251.3
|
184.5
|
115.2
|
|||||||
Income
(loss) attributable to Loews common stock
|
$
|
960.3
|
$
|
1,031.3
|
$
|
(712.4
|
)
|
|||
Carolina
Group stock:
|
||||||||||
Income
available to Carolina Group stock
|
$
|
623.1
|
$
|
545.9
|
$
|
468.3
|
||||
Weighted
average economic interest of the Carolina Group
|
40.34
|
%
|
33.80
|
%
|
24.59
|
%
|
||||
Income
attributable to Carolina Group stock
|
$
|
251.3
|
$
|
184.5
|
$
|
115.2
|
Notes
to Consolidated Financial Statements
|
Note
5. Earnings Per Share -
(Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Weighted
average shares outstanding-basic
|
185.70
|
185.50
|
185.45
|
|||||||
Stock
options
|
0.29
|
0.14
|
||||||||
Weighted
average shares outstanding-diluted
|
185.99
|
185.64
|
185.45
|
Note
6.
|
Loews
and Carolina Group Consolidating Condensed Financial
Information
|
Notes
to Consolidated Financial Statements
|
Note
6. Loews and Carolina Group Consolidating Condensed Financial
Information
-
(Continued)
|
Carolina
Group
|
Loews
|
Adjustments
and
|
|||||||||||||||||
December
31, 2005
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
|||||||||||||
(In
millions)
|
|||||||||||||||||||
Assets:
|
|||||||||||||||||||
Investments
|
$
|
1,747.7
|
$
|
101.0
|
$
|
1,848.7
|
$
|
43,547.3
|
$
|
45,396.0
|
|||||||||
Cash
|
2.4
|
0.1
|
2.5
|
150.6
|
153.1
|
||||||||||||||
Receivables
|
25.5
|
0.2
|
25.7
|
15,310.0
|
$
|
(22.0)
(a
|
)
|
15,313.7
|
|||||||||||
Property,
plant and
|
|||||||||||||||||||
equipment
|
213.9
|
213.9
|
4,737.7
|
4,951.6
|
|||||||||||||||
Deferred
income taxes
|
428.5
|
428.5
|
476.8
|
905.3
|
|||||||||||||||
Goodwill
and other intangible
|
|||||||||||||||||||
assets
|
297.4
|
297.4
|
|||||||||||||||||
Other
assets
|
377.5
|
377.5
|
1,532.1
|
1,909.6
|
|||||||||||||||
Investment
in combined
|
|||||||||||||||||||
attributed
net assets of the
|
|||||||||||||||||||
Carolina
Group
|
1,516.6
|
(1,626.9)
(a
|
)
|
||||||||||||||||
|
110.3 (b |
)
|
|||||||||||||||||
Deferred
acquisition costs of
|
|||||||||||||||||||
insurance
subsidiaries
|
1,197.4
|
1,197.4
|
|||||||||||||||||
Separate
account business
|
551.5
|
551.5
|
|||||||||||||||||
Total
assets
|
$
|
2,795.5
|
$
|
101.3
|
$
|
2,896.8
|
$
|
69,317.4
|
$
|
(1,538.6)
|
|
$
|
70,675.6
|
||||||
Liabilities
and Shareholders’ Equity:
|
|||||||||||||||||||
Insurance
reserves
|
$
|
42,436.2
|
$
|
42,436.2
|
|||||||||||||||
Payable
for securities
|
|||||||||||||||||||
purchased
|
401.7
|
401.7
|
|||||||||||||||||
Collateral
on loaned securities
|
|||||||||||||||||||
and
derivatives
|
767.4
|
767.4
|
|||||||||||||||||
Short-term
debt
|
598.2
|
598.2
|
|||||||||||||||||
Long-term
debt
|
$
|
1,626.9
|
$
|
1,626.9
|
4,608.6
|
$
|
(1,626.9)
(a
|
)
|
4,608.6
|
||||||||||
Reinsurance
balances payable
|
1,636.2
|
1,636.2
|
|||||||||||||||||
Other
liabilities
|
$
|
1,455.7
|
14.7
|
1,470.4
|
3,076.4
|
(22.0)
(a
|
)
|
4,524.8
|
|||||||||||
Separate
account business
|
551.5
|
551.5
|
|||||||||||||||||
Total
liabilities
|
1,455.7
|
1,641.6
|
3,097.3
|
54,076.2
|
(1,648.9)
|
|
55,524.6
|
||||||||||||
Minority
interest
|
2,058.9
|
2,058.9
|
|||||||||||||||||
Shareholders’
equity
|
1,339.8
|
(1,540.3
|
)
|
(200.5
|
)
|
13,182.3
|
110.3
(b
|
)
|
13,092.1
|
||||||||||
Total
liabilities and
|
|||||||||||||||||||
shareholders’
equity
|
$
|
2,795.5
|
$
|
101.3
|
$
|
2,896.8
|
$
|
69,317.4
|
$
|
(1,538.6)
|
|
$
|
70,675.6
|
(a)
|
To
eliminate the intergroup notional debt and interest
payable/receivable.
|
(b)
|
To
eliminate the Loews Group’s 54.97% equity interest in the combined
attributed net assets of the Carolina
Group.
|
Notes
to Consolidated Financial Statements
|
Note
6. Loews and Carolina Group Consolidating Condensed Financial
Information
-
(Continued)
|
Carolina
Group
|
Loews
|
Adjustments
and
|
|||||||||||||||||
December
31, 2004
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
|||||||||||||
(In
millions)
|
|||||||||||||||||||
Assets:
|
|||||||||||||||||||
Investments
|
$
|
1,545.6
|
$
|
100.0
|
$
|
1,645.6
|
$
|
42,652.9
|
$
|
44,298.5
|
|||||||||
Cash
|
35.5
|
0.5
|
36.0
|
183.9
|
219.9
|
||||||||||||||
Receivables
|
32.1
|
32.1
|
18,826.6
|
$
|
(25.2)
(a
|
)
|
18,833.5
|
||||||||||||
Property,
plant and
|
|||||||||||||||||||
equipment
|
231.5
|
231.5
|
4,609.2
|
4,840.7
|
|||||||||||||||
Deferred
income taxes
|
436.5
|
436.5
|
208.8
|
645.3
|
|||||||||||||||
Goodwill
and other intangible
|
|||||||||||||||||||
assets
|
299.1
|
299.1
|
|||||||||||||||||
Other
assets
|
396.5
|
396.5
|
2,350.9
|
2,747.4
|
|||||||||||||||
Investment
in combined
|
|||||||||||||||||||
attributed
net assets of the
|
|||||||||||||||||||
Carolina
Group
|
1,566.0
|
(1,871.2)
(a
|
)
|
||||||||||||||||
|
305.2 (b |
)
|
|||||||||||||||||
Deferred
acquisition costs of
|
|||||||||||||||||||
insurance
subsidiaries
|
1,268.1
|
1,268.1
|
|||||||||||||||||
Separate
account business
|
567.8
|
567.8
|
|||||||||||||||||
Total
assets
|
$
|
2,677.7
|
$
|
100.5
|
$
|
2,778.2
|
$
|
72,533.3
|
$
|
(1,591.2)
|
|
$
|
73,720.3
|
||||||
Liabilities
and Shareholders’ Equity:
|
|||||||||||||||||||
Insurance
reserves
|
$
|
43,652.2
|
$
|
43,652.2
|
|||||||||||||||
Payable
for securities
|
|||||||||||||||||||
purchased
|
595.5
|
595.5
|
|||||||||||||||||
Collateral
on loaned securities
|
|||||||||||||||||||
and
derivatives
|
918.0
|
918.0
|
|||||||||||||||||
Short-term
debt
|
1,010.1
|
1,010.1
|
|||||||||||||||||
Long-term
debt
|
$
|
1,871.2
|
$
|
1,871.2
|
5,980.2
|
$
|
(1,871.2)
(a
|
)
|
5,980.2
|
||||||||||
Reinsurance
balances payable
|
2,980.8
|
2,980.8
|
|||||||||||||||||
Other
liabilities
|
$
|
1,392.6
|
16.4
|
1,409.0
|
3,000.0
|
(25.2)
(a
|
)
|
4,383.8
|
|||||||||||
Separate
account business
|
567.8
|
567.8
|
|||||||||||||||||
Total
liabilities
|
1,392.6
|
1,887.6
|
3,280.2
|
58,704.6
|
(1,896.4)
|
|
60,088.4
|
||||||||||||
Minority
interest
|
1,662.0
|
1,662.0
|
|||||||||||||||||
Shareholders’
equity
|
1,285.1
|
(1,787.1
|
)
|
(502.0
|
)
|
12,166.7
|
305.2
(b
|
)
|
11,969.9
|
||||||||||
Total
liabilities and
|
|||||||||||||||||||
shareholders’
equity
|
$
|
2,677.7
|
$
|
100.5
|
$
|
2,778.2
|
$
|
72,533.3
|
$
|
(1,591.2)
|
|
$
|
73,720.3
|
(a)
|
To
eliminate the intergroup notional debt and interest
payable/receivable.
|
(b)
|
To
eliminate the Loews Group’s 60.81% equity interest in the combined
attributed net assets of the Carolina
Group.
|
Notes
to Consolidated Financial Statements
|
Note
6. Loews and Carolina Group Consolidating Condensed Financial
Information
-
(Continued)
|
Carolina
Group
|
Loews
|
Adjustments
and
|
|||||||||||||||||
Year
Ended December 31, 2005
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
|||||||||||||
(In
millions)
|
|||||||||||||||||||
Revenues:
|
|||||||||||||||||||
Insurance
premiums
|
$
|
7,568.6
|
$
|
7,568.6
|
|||||||||||||||
Net
investment income
|
$
|
63.6
|
$
|
5.0
|
$
|
68.6
|
2,170.6
|
$
|
(140.4) (a
|
)
|
2,098.8
|
||||||||
Investment
losses
|
(2.1
|
)
|
(2.1
|
)
|
(11.1
|
)
|
(13.2
|
)
|
|||||||||||
Manufactured
products
|
3,567.8
|
3,567.8
|
184.6
|
3,752.4
|
|||||||||||||||
Other
|
6.0
|
6.0
|
2,605.2
|
2,611.2
|
|||||||||||||||
Total
|
3,635.3
|
5.0
|
3,640.3
|
12,517.9
|
(140.4)
|
|
16,017.8
|
||||||||||||
Expenses:
|
|||||||||||||||||||
Insurance
claims and
|
|||||||||||||||||||
policyholders’
benefits
|
6,998.7
|
6,998.7
|
|||||||||||||||||
Amortization
of deferred
|
|||||||||||||||||||
acquisition
costs
|
1,542.6
|
1,542.6
|
|||||||||||||||||
Cost
of manufactured products
|
|||||||||||||||||||
sold
|
2,114.4
|
2,114.4
|
87.9
|
2,202.3
|
|||||||||||||||
Other
operating expenses
|
369.1
|
0.4
|
369.5
|
2,694.0
|
3,063.5
|
||||||||||||||
Interest
|
0.5
|
140.4
|
140.9
|
363.7
|
(140.4)
(a
|
)
|
364.2
|
||||||||||||
Total
|
2,484.0
|
140.8
|
2,624.8
|
11,686.9
|
(140.4)
|
|
14,171.3
|
||||||||||||
1,151.3
|
(135.8
|
)
|
1,015.5
|
831.0
|
-
|
1,846.5
|
|||||||||||||
Income
tax expense (benefit)
|
444.9
|
(52.5
|
)
|
392.4
|
98.0
|
490.4
|
|||||||||||||
Minority
interest
|
163.2
|
163.2
|
|||||||||||||||||
Total
|
444.9
|
(52.5
|
)
|
392.4
|
261.2
|
-
|
653.6
|
||||||||||||
Income
from operations
|
706.4
|
(83.3
|
)
|
623.1
|
569.8
|
-
|
1,192.9
|
||||||||||||
Equity
in earnings of the
|
|||||||||||||||||||
Carolina
Group
|
371.8
|
(371.8) (b
|
)
|
||||||||||||||||
Income
from continuing
|
|||||||||||||||||||
operations
|
706.4
|
(83.3
|
)
|
623.1
|
941.6
|
(371.8)
|
|
1,192.9
|
|||||||||||
Discontinued
operations, net
|
18.7
|
18.7
|
|||||||||||||||||
Net
income (loss)
|
$
|
706.4
|
$
|
(83.3
|
)
|
$
|
623.1
|
$
|
960.3
|
$
|
(371.8)
|
|
$
|
1,211.6
|
(a)
|
To
eliminate interest on the intergroup notional
debt.
|
(b)
|
To
eliminate the Loews Group’s intergroup interest in the earnings of the
Carolina Group.
|
Notes
to Consolidated Financial Statements
|
Note
6. Loews and Carolina Group Consolidating Condensed Financial
Information
-
(Continued)
|
Carolina
Group
|
Loews
|
Adjustments
and
|
|||||||||||||||||
Year
Ended December 31, 2004
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
|||||||||||||
(In
millions)
|
|||||||||||||||||||
Revenues:
|
|||||||||||||||||||
Insurance
premiums
|
$
|
8,205.2
|
$
|
8,205.2
|
|||||||||||||||
Net
investment income
|
$
|
36.6
|
$
|
2.0
|
$
|
38.6
|
1,994.2
|
$
|
(157.5)
(a
|
)
|
1,875.3
|
||||||||
Investment
gains (losses)
|
1.4
|
1.4
|
(257.4
|
)
|
(256.0
|
)
|
|||||||||||||
Manufactured
products
|
3,347.8
|
3,347.8
|
167.4
|
3,515.2
|
|||||||||||||||
Other
|
1,897.2
|
1,897.2
|
|||||||||||||||||
Total
|
3,385.8
|
2.0
|
3,387.8
|
12,006.6
|
(157.5)
|
|
15,236.9
|
||||||||||||
Expenses:
|
|||||||||||||||||||
Insurance
claims and
|
|||||||||||||||||||
policyholders’
benefits
|
6,445.0
|
6,445.0
|
|||||||||||||||||
Amortization
of deferred
|
|||||||||||||||||||
acquisition
costs
|
1,679.8
|
1,679.8
|
|||||||||||||||||
Cost
of manufactured products
|
|||||||||||||||||||
sold
|
1,965.6
|
1,965.6
|
79.8
|
2,045.4
|
|||||||||||||||
Other
operating expenses
|
380.6
|
0.5
|
381.1
|
2,532.7
|
2,913.8
|
||||||||||||||
Interest
|
157.5
|
157.5
|
324.1
|
(157.5)
(a
|
)
|
324.1
|
|||||||||||||
Total
|
2,346.2
|
158.0
|
2,504.2
|
11,061.4
|
(157.5)
|
|
13,408.1
|
||||||||||||
1,039.6
|
(156.0
|
)
|
883.6
|
945.2
|
-
|
1,828.8
|
|||||||||||||
Income
tax expense (benefit)
|
397.3
|
(59.6
|
)
|
337.7
|
198.5
|
536.2
|
|||||||||||||
Minority
interest
|
57.3
|
57.3
|
|||||||||||||||||
Total
|
397.3
|
(59.6
|
)
|
337.7
|
255.8
|
-
|
593.5
|
||||||||||||
Income
from operations
|
642.3
|
(96.4
|
)
|
545.9
|
689.4
|
-
|
1,235.3
|
||||||||||||
Equity
in earnings of the
|
|||||||||||||||||||
Carolina
Group
|
361.4
|
(361.4) (b
|
)
|
||||||||||||||||
Income
(loss) from continuing
|
|||||||||||||||||||
operations
|
642.3
|
(96.4
|
)
|
545.9
|
1,050.8
|
(361.4)
|
|
1,235.3
|
|||||||||||
Discontinued
operations, net
|
(19.5
|
)
|
(19.5
|
)
|
|||||||||||||||
Net
income (loss)
|
$
|
642.3
|
$
|
(96.4
|
)
|
$
|
545.9
|
$
|
1,031.3
|
$
|
(361.4)
|
|
$
|
1,215.8
|
(a)
|
To
eliminate interest on the intergroup notional
debt.
|
(b)
|
To
eliminate the Loews Group’s intergroup interest in the earnings of the
Carolina Group.
|
Notes
to Consolidated Financial Statements
|
Note
6. Loews and Carolina Group Consolidating Condensed Financial
Information
-
(Continued)
|
Carolina
Group
|
Loews
|
Adjustments
and
|
|||||||||||||||||
Year
Ended December 31, 2003
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
|||||||||||||
(In
millions)
|
|||||||||||||||||||
Revenues:
|
|||||||||||||||||||
Insurance
premiums
|
$
|
9,211.6
|
$
|
9,211.6
|
|||||||||||||||
Net
investment income
|
$
|
39.9
|
$
|
2.1
|
$
|
42.0
|
1,999.9
|
$
|
(182.8)
(a
|
)
|
1,859.1
|
||||||||
Investment
gains (losses)
|
(9.7
|
)
|
(9.7
|
)
|
473.8
|
464.1
|
|||||||||||||
Manufactured
products
|
3,255.6
|
3,255.6
|
163.2
|
3,418.8
|
|||||||||||||||
Other
|
(0.1
|
)
|
(0.1
|
)
|
1,506.2
|
1,506.1
|
|||||||||||||
Total
|
3,285.7
|
2.1
|
3,287.8
|
13,354.7
|
(182.8)
|
|
16,459.7
|
||||||||||||
Expenses:
|
|||||||||||||||||||
Insurance
claims and
|
|||||||||||||||||||
policyholders’
benefits
|
10,276.2
|
10,276.2
|
|||||||||||||||||
Amortization
of deferred
|
|||||||||||||||||||
acquisition
costs
|
1,964.6
|
1,964.6
|
|||||||||||||||||
Cost
of manufactured products
|
|||||||||||||||||||
sold
|
1,893.1
|
1,893.1
|
79.7
|
1,972.8
|
|||||||||||||||
Other
operating expenses
|
460.0
|
0.6
|
460.6
|
2,834.2
|
3,294.8
|
||||||||||||||
Interest
|
0.1
|
182.8
|
182.9
|
308.3
|
(182.8)
(a
|
)
|
308.4
|
||||||||||||
Total
|
2,353.2
|
183.4
|
2,536.6
|
15,463.0
|
(182.8)
|
|
17,816.8
|
||||||||||||
932.5
|
(181.3
|
)
|
751.2
|
(2,108.3
|
)
|
-
|
(1,357.1
|
)
|
|||||||||||
Income
tax expense (benefit)
|
351.2
|
(68.3
|
)
|
282.9
|
(809.5
|
)
|
(526.6
|
)
|
|||||||||||
Minority
interest
|
(176.5
|
)
|
(176.5
|
)
|
|||||||||||||||
Total
|
351.2
|
(68.3
|
)
|
282.9
|
(986.0
|
)
|
-
|
(703.1
|
)
|
||||||||||
Income
(loss) from operations
|
581.3
|
(113.0
|
)
|
468.3
|
(1,122.3
|
)
|
-
|
(654.0
|
)
|
||||||||||
Equity
in earnings of the
|
|||||||||||||||||||
Carolina
Group
|
353.1
|
(353.1)
(b
|
)
|
||||||||||||||||
Income
(loss) from continuing
|
|||||||||||||||||||
operations
|
581.3
|
(113.0
|
)
|
468.3
|
(769.2
|
)
|
(353.1)
|
|
(654.0
|
)
|
|||||||||
Discontinued
operations, net
|
56.8
|
56.8
|
|||||||||||||||||
Net
income (loss)
|
$
|
581.3
|
$
|
(113.0
|
)
|
$
|
468.3
|
$
|
(712.4
|
)
|
$
|
(353.1)
|
|
$
|
(597.2
|
)
|
(a)
|
To
eliminate interest on the intergroup notional
debt.
|
(b)
|
To
eliminate the Loews Group’s intergroup interest in the earnings of the
Carolina Group.
|
Notes
to Consolidated Financial Statements
|
Note
6. Loews and Carolina Group Consolidating Condensed Financial
Information
-
(Continued)
|
Carolina
Group
|
Loews
|
Adjustments
and
|
|||||||||||||||||
Year
Ended December 31, 2005
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
|||||||||||||
(In
millions)
|
|||||||||||||||||||
Net
cash provided by
|
|||||||||||||||||||
operating
activities
|
$
|
820.3
|
$
|
(85.2
|
)
|
$
|
735.1
|
$
|
2,819.4
|
$
|
(187.4
|
)
|
$
|
3,367.1
|
|||||
Investing
activities:
|
|||||||||||||||||||
Purchases
of property and
|
|||||||||||||||||||
equipment
|
(31.2
|
)
|
(31.2
|
)
|
(446.6
|
)
|
(477.8
|
)
|
|||||||||||
Change
in short-term
|
|||||||||||||||||||
investments
|
(176.6
|
)
|
(0.9
|
)
|
(177.5
|
)
|
(468.9
|
)
|
(646.4
|
)
|
|||||||||
Other
investing activities
|
0.4
|
0.4
|
(406.3
|
)
|
(244.4
|
)
|
(650.3
|
)
|
|||||||||||
(207.4
|
)
|
(0.9
|
)
|
(208.3
|
)
|
(1,321.8
|
)
|
(244.4
|
)
|
(1,774.5
|
)
|
||||||||
Financing
activities:
|
|||||||||||||||||||
Dividends
paid to shareholders
|
(646.0
|
)
|
330.1
|
(315.9
|
)
|
(111.4
|
)
|
187.4
|
(239.9
|
)
|
|||||||||
Reduction
of intergroup
|
|||||||||||||||||||
notional
debt
|
(244.4
|
)
|
(244.4
|
)
|
244.4
|
||||||||||||||
Other
financing activities
|
(1,404.7
|
)
|
(1,404.7
|
)
|
|||||||||||||||
(646.0
|
)
|
85.7
|
(560.3
|
)
|
(1,516.1
|
)
|
431.8
|
(1,644.6
|
)
|
||||||||||
Net change in cash |
(33.1
|
)
|
(0.4
|
)
|
(33.5
|
)
|
(18.5
|
)
|
-
|
(52.0
|
)
|
||||||||
Net
cash transactions from:
|
|||||||||||||||||||
Continuing
operations to
|
|||||||||||||||||||
discontinued operations | (34.3 | ) | (34.3 | ) | |||||||||||||||
Discontinued operations to | |||||||||||||||||||
continuing
operations
|
34.3
|
|
34.3
|
|
|||||||||||||||
Cash,
beginning of year
|
35.5
|
0.5
|
36.0
|
198.0
|
234.0
|
||||||||||||||
Cash,
end of year
|
$
|
2.4
|
$
|
0.1
|
$
|
2.5
|
$
|
179.5
|
$
|
-
|
$
|
182.0
|
Notes
to Consolidated Financial Statements
|
Note
6. Loews and Carolina Group Consolidating Condensed Financial
Information
-
(Continued)
|
Carolina
Group
|
Loews
|
Adjustments
and
|
|||||||||||||||||
Year
Ended December 31, 2004
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
|||||||||||||
(In
millions)
|
|||||||||||||||||||
Net
cash provided by operating
|
|||||||||||||||||||
activities
|
$
|
631.9
|
$
|
(97.4
|
)
|
$
|
534.5
|
$
|
2,857.1
|
$
|
(210.1
|
)
|
$
|
3,181.5
|
|||||
Investing
activities:
|
|||||||||||||||||||
Purchases
of property and
|
|||||||||||||||||||
equipment
|
(50.8
|
)
|
(50.8
|
)
|
(216.2
|
)
|
(267.0
|
)
|
|||||||||||
Change
in short-term investments
|
26.3
|
26.3
|
3,281.1
|
3,307.4
|
|||||||||||||||
Other
investing activities
|
0.6
|
0.6
|
(6,921.9
|
)
|
(160.9
|
)
|
(7,082.2
|
)
|
|||||||||||
(23.9
|
)
|
-
|
(23.9
|
)
|
(3,857.0
|
)
|
(160.9
|
)
|
(4,041.8
|
)
|
|||||||||
Financing
activities:
|
|||||||||||||||||||
Dividends
paid to shareholders
|
(574.0
|
)
|
258.4
|
(315.6
|
)
|
(111.3
|
)
|
210.1
|
(216.8
|
)
|
|||||||||
Reduction
of intergroup notional
|
|||||||||||||||||||
debt
|
(160.9
|
)
|
(160.9
|
)
|
160.9
|
||||||||||||||
Other
financing activities
|
1,105.2
|
1,105.2
|
|||||||||||||||||
(574.0
|
)
|
97.5
|
(476.5
|
)
|
993.9
|
371.0
|
888.4
|
||||||||||||
Net
change in cash
|
34.0
|
0.1
|
34.1
|
(6.0
|
)
|
-
|
28.1
|
||||||||||||
Net
cash transactions from:
|
|||||||||||||||||||
Continuing
operations to
|
|||||||||||||||||||
discontinued operations | 12.2 | 12.2 | |||||||||||||||||
Discontinued operations to | |||||||||||||||||||
continuing operations
|
(12.2
|
) |
(12.2
|
) | |||||||||||||||
Cash,
beginning of year
|
1.5
|
0.4
|
1.9
|
204.0
|
205.9
|
||||||||||||||
Cash,
end of year
|
$
|
35.5
|
$
|
0.5
|
$
|
36.0
|
$
|
198.0
|
$
|
-
|
$
|
234.0
|
Notes
to Consolidated Financial Statements
|
Note
6. Loews and Carolina Group Consolidating Condensed Financial
Information
-
(Continued)
|
Carolina
Group
|
Loews
|
Adjustments
and
|
|||||||||||||||||
Year
Ended December 31, 2003
|
Lorillard
|
Other
|
Consolidated
|
Group
|
Eliminations
|
Total
|
|||||||||||||
(In
millions)
|
|||||||||||||||||||
Net
cash provided by operating
|
|||||||||||||||||||
activities
|
$
|
711.6
|
$
|
(116.1
|
)
|
$
|
595.5
|
$
|
2,698.4
|
$
|
(233.4
|
)
|
$
|
3,060.5
|
|||||
Investing
activities:
|
|||||||||||||||||||
Purchases
of property and
|
|||||||||||||||||||
equipment
|
(56.4
|
)
|
(56.4
|
)
|
(390.0
|
)
|
(446.4
|
)
|
|||||||||||
Change
in short-term investments
|
128.2
|
50.2
|
178.4
|
(1,673.7
|
)
|
(1,495.3
|
)
|
||||||||||||
Other
investing activities
|
2.1
|
2.1
|
(783.4
|
)
|
(406.0
|
)
|
(1,187.3
|
)
|
|||||||||||
73.9
|
50.2
|
124.1
|
(2,847.1
|
)
|
(406.0
|
)
|
(3,129.0
|
)
|
|||||||||||
Financing
activities:
|
|||||||||||||||||||
Dividends
paid to shareholders
|
(786.0
|
)
|
472.1
|
(313.9
|
)
|
(111.3
|
)
|
233.4
|
(191.8
|
)
|
|||||||||
Reduction
of intergroup notional
|
|||||||||||||||||||
debt
|
(406.0
|
)
|
(406.0
|
)
|
406.0
|
||||||||||||||
Other
financing activities
|
212.7
|
212.7
|
|||||||||||||||||
(786.0
|
)
|
66.1
|
(719.9
|
)
|
101.4
|
639.4
|
20.9
|
||||||||||||
Net
change in cash
|
(0.5
|
)
|
0.2
|
(0.3
|
)
|
(47.3
|
)
|
-
|
(47.6
|
)
|
|||||||||
Net
cash transactions from:
|
|||||||||||||||||||
Continuing
operations to
|
|||||||||||||||||||
discontinued operations | 12.3 | 12.3 | |||||||||||||||||
Discontinued
operations to
|
|
|
|||||||||||||||||
continuing operations | (12.3 | ) | (12.3 | ) | |||||||||||||||
Cash,
beginning of year
|
2.0
|
0.2
|
2.2
|
251.3
|
253.5
|
||||||||||||||
Cash,
end of year
|
$
|
1.5
|
$
|
0.4
|
$
|
1.9
|
$
|
204.0
|
$
|
-
|
$
|
205.9
|
Note
7.
|
Receivables
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Reinsurance
|
$
|
12,436.7
|
$
|
15,888.0
|
|||
Other
insurance
|
2,310.6
|
2,704.5
|
|||||
Security
sales
|
604.9
|
540.3
|
|||||
Accrued
investment income
|
322.2
|
304.9
|
|||||
Other
|
612.6
|
453.0
|
|||||
Total
|
16,287.0
|
19,890.7
|
|||||
Less:
allowance for doubtful accounts on reinsurance receivables
|
519.3
|
546.3
|
|||||
allowance
for other doubtful accounts and cash discounts
|
454.0
|
510.9
|
|||||
Receivables
|
$
|
15,313.7
|
$
|
18,833.5
|
Notes
to Consolidated Financial
Statements
|
Note
8.
|
Property,
Plant and Equipment
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Land
|
$
|
77.9
|
$
|
77.9
|
|||
Buildings
and building equipment
|
609.6
|
629.1
|
|||||
Offshore
drilling rigs and equipment
|
3,903.0
|
3,598.2
|
|||||
Machinery
and equipment
|
1,268.0
|
1,180.9
|
|||||
Pipeline
equipment
|
1,829.9
|
1,778.4
|
|||||
Leaseholds
and leasehold improvements
|
66.3
|
74.9
|
|||||
Total
|
7,754.7
|
7,339.4
|
|||||
Less
accumulated depreciation and amortization
|
2,803.1
|
2,498.7
|
|||||
Property,
plant and equipment
|
$
|
4,951.6
|
$
|
4,840.7
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
||||||||||||||||
Depr.
&
Amort.
|
Capital
Expend.
|
Depr.
&
Amort.
|
Capital
Expend.
|
Depr.
&
Amort.
|
Capital
Expend.
|
||||||||||||||
(In
millions)
|
|||||||||||||||||||
CNA
Financial
|
$
|
41.7
|
$
|
45.4
|
$
|
61.1
|
$
|
40.9
|
$
|
62.5
|
$
|
65.7
|
|||||||
Lorillard
|
48.3
|
31.3
|
39.7
|
50.8
|
31.1
|
56.4
|
|||||||||||||
Loews
Hotels
|
26.6
|
16.0
|
27.3
|
35.0
|
25.2
|
15.1
|
|||||||||||||
Diamond
Offshore
|
190.1
|
297.5
|
184.9
|
93.7
|
181.3
|
272.0
|
|||||||||||||
Boardwalk
Pipeline
|
72.1
|
84.5
|
34.0
|
41.2
|
20.5
|
34.7
|
|||||||||||||
Corporate
and other
|
3.3
|
3.1
|
3.8
|
5.4
|
4.5
|
2.5
|
|||||||||||||
Total
|
$
|
382.1
|
$
|
477.8
|
$
|
350.8
|
$
|
267.0
|
$
|
325.1
|
$
|
446.4
|
Note
9.
|
Claim
and Claim Adjustment Expense
Reserves
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Reserves,
beginning of year:
|
||||||||||
Gross
|
$
|
31,523.0
|
$
|
31,732.0
|
$
|
27,441.0
|
||||
Ceded
|
13,879.0
|
14,066.0
|
10,634.0
|
|||||||
Net
reserves, beginning of year
|
17,644.0
|
17,666.0
|
16,807.0
|
|||||||
Reduction
of net reserves (a)
(b)
|
(42.0
|
)
|
(1,309.0
|
)
|
||||||
Net
incurred claim and claim adjustment expenses:
|
||||||||||
Provision
for insured events of current year
|
5,516.0
|
6,062.0
|
6,745.0
|
|||||||
Increase
in provision for insured events of prior years
|
1,100.0
|
240.0
|
2,398.0
|
|||||||
Amortization
of discount
|
115.0
|
135.0
|
115.0
|
|||||||
Total
net incurred (c)
|
6,731.0
|
6,437.0
|
9,258.0
|
|||||||
Net
payments attributable to:
|
||||||||||
Current
year events (d)
|
1,341.0
|
1,936.0
|
2,192.0
|
|||||||
Prior
year events
|
2,711.0
|
4,522.0
|
4,937.0
|
|||||||
Reinsurance
recoverable against net reserve transferred
|
||||||||||
under
retroactive reinsurance agreements
|
(10.0
|
)
|
(41.0
|
)
|
(39.0
|
)
|
||||
Total
net payments
|
4,042.0
|
6,417.0
|
7,090.0
|
|||||||
Net
reserves, end of year
|
20,333.0
|
17,644.0
|
17,666.0
|
|||||||
Ceded
reserves, end of year
|
10,605.0
|
13,879.0
|
14,066.0
|
|||||||
Gross
reserves, end of year
|
$
|
30,938.0
|
$
|
31,523.0
|
$
|
31,732.0
|
(a)
|
In
2003, net reserves were reduced by $1,309.0 as a result of
the sale of CNA
Group Life Assurance Company (“CNAGLA”). See Note 14 for further
discussion of this sale.
|
(b)
|
In
2004, the net reserves were reduced by $42.0 as a result of
the sale of
the individual life insurance business. See Note 14 for further
discussion
of this sale.
|
(c)
|
Total
net incurred above does not agree to insurance claims and policyholders’
benefits as reflected in the Consolidated Statements of Operations
due to
expenses incurred related to uncollectible reinsurance receivables
and
benefit expenses related to future policy benefits and policyholders’
funds which are not reflected in the table
above.
|
(d)
|
In
2005, net payments were decreased by $1,581.0 due to the impact
of three
significant commutations. See Note 18 for further discussion
related to
commutations.
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Environmental
pollution and mass tort
|
$
|
53.0
|
$
|
1.0
|
$
|
153.0
|
||||
Asbestos
|
10.0
|
54.0
|
642.0
|
|||||||
Other
|
1,037.0
|
185.0
|
1,603.0
|
|||||||
Total
|
$
|
1,100.0
|
$
|
240.0
|
$
|
2,398.0
|
December
31, 2005
|
Standard
Lines
|
Specialty
Lines
|
Life
and
Group
Non-Core
|
Other
Insurance
|
Total
|
|||||||||||
(In
millions)
|
||||||||||||||||
Gross
Case Reserves
|
$
|
7,033.0
|
$
|
1,907.0
|
$
|
2,542.0
|
$
|
3,297.0
|
$
|
14,779.0
|
||||||
Gross
IBNR Reserves
|
8,051.0
|
3,298.0
|
735.0
|
4,075.0
|
16,159.0
|
|||||||||||
Total
Gross Carried Claim and Claim
|
||||||||||||||||
Adjustment
Expense Reserves
|
$
|
15,084.0
|
$
|
5,205.0
|
$
|
3,277.0
|
$
|
7,372.0
|
$
|
30,938.0
|
||||||
Net
Case Reserves
|
$
|
5,165.0
|
$
|
1,442.0
|
$
|
1,456.0
|
$
|
1,554.0
|
$
|
9,617.0
|
||||||
Net
IBNR Reserves
|
6,081.0
|
2,352.0
|
381.0
|
1,902.0
|
10,716.0
|
|||||||||||
Total
Net Carried Claim and Claim
|
||||||||||||||||
Adjustment
Expense Reserves
|
$
|
11,246.0
|
$
|
3,794.0
|
$
|
1,837.0
|
$
|
3,456.0
|
$
|
20,333.0
|
December
31, 2004
|
||||||||||||||||
Gross
Case Reserves
|
$
|
6,904.0
|
$
|
1,659.0
|
$
|
2,800.0
|
$
|
3,806.0
|
$
|
15,169.0
|
||||||
Gross
IBNR Reserves
|
7,398.0
|
3,201.0
|
880.0
|
4,875.0
|
16,354.0
|
|||||||||||
Total
Gross Carried Claim and Claim
|
||||||||||||||||
Adjustment
Expense Reserves
|
$
|
14,302.0
|
$
|
4,860.0
|
$
|
3,680.0
|
$
|
8,681.0
|
$
|
31,523.0
|
||||||
Net
Case Reserves
|
$
|
4,761.0
|
$
|
1,191.0
|
$
|
1,394.0
|
$
|
1,588.0
|
$
|
8,934.0
|
||||||
Net
IBNR Reserves
|
4,547.0
|
2,042.0
|
430.0
|
1,691.0
|
8,710.0
|
|||||||||||
Total
Net Carried Claim and Claim
|
||||||||||||||||
Adjustment
Expense Reserves
|
$
|
9,308.0
|
$
|
3,233.0
|
$
|
1,824.0
|
$
|
3,279.0
|
$
|
17,644.0
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
December
31
|
2005
|
2004
|
|||||||||||
Asbestos
|
Environmental
Pollution
and
Mass
Tort
|
Asbestos
|
Environmental
Pollution
and
Mass
Tort
|
||||||||||
(In
millions)
|
|||||||||||||
Gross
reserves
|
$
|
2,992.0
|
$
|
680.0
|
$
|
3,218.0
|
$
|
755.0
|
|||||
Ceded
reserves
|
(1,438.0
|
)
|
(257.0
|
)
|
(1,532.0
|
)
|
(258.0
|
)
|
|||||
Net
reserves
|
$
|
1,554.0
|
$
|
423.0
|
$
|
1,686.0
|
$
|
497.0
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Year
Ended December 31, 2005
|
Standard
Lines
|
Specialty
Lines
|
Other
Insurance
|
Total
|
|||||||||
(In
millions)
|
|||||||||||||
Pretax
unfavorable net prior year claim and
|
|||||||||||||
allocated
claim adjustment expense development,
|
|||||||||||||
excluding
the impact of corporate aggregate
|
|||||||||||||
reinsurance
treaties:
|
|||||||||||||
Core
(Non-APMT)
|
$
|
376.0
|
$
|
42.0
|
$
|
171.0
|
$
|
589.0
|
|||||
APMT
|
63.0
|
63.0
|
|||||||||||
Total
|
376.0
|
42.0
|
234.0
|
652.0
|
|||||||||
Ceded
losses related to corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
183.0
|
5.0
|
57.0
|
245.0
|
|||||||||
Pretax
unfavorable net prior year development
|
|||||||||||||
before
impact of premium development
|
559.0
|
47.0
|
291.0
|
897.0
|
|||||||||
Unfavorable
(favorable) premium
|
|||||||||||||
development,
excluding impact of corporate
|
|||||||||||||
aggregate
reinsurance treaties
|
(101.0
|
)
|
(12.0
|
)
|
11.0
|
(102.0
|
)
|
||||||
Ceded
premiums related to corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
(6.0
|
)
|
19.0
|
4.0
|
17.0
|
||||||||
Total
premium development
|
(107.0
|
)
|
7.0
|
15.0
|
(85.0
|
)
|
|||||||
Total
2005 unfavorable net prior year development
|
|||||||||||||
(pretax)
|
$
|
452.0
|
$
|
54.0
|
$
|
306.0
|
$
|
812.0
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Year
Ended December 31, 2004
|
Standard
Lines
|
Specialty
Lines
|
Other
Insurance
|
Total
|
|||||||||
(In
millions)
|
|||||||||||||
Pretax
unfavorable net prior year claim and
|
|||||||||||||
allocated
claim adjustment expense development
|
|||||||||||||
excluding
the impact of corporate aggregate
|
|||||||||||||
reinsurance
treaties:
|
|||||||||||||
Core
(Non-APMT)
|
$
|
107.0
|
$
|
75.0
|
$
|
20.0
|
$
|
202.0
|
|||||
APMT
|
55.0
|
55.0
|
|||||||||||
Total
|
107.0
|
75.0
|
75.0
|
257.0
|
|||||||||
Ceded
losses related to corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
8.0
|
(17.0
|
)
|
9.0
|
|||||||||
Pretax
unfavorable net prior year development
|
|||||||||||||
before
impact of premium development
|
115.0
|
58.0
|
84.0
|
257.0
|
|||||||||
Unfavorable
(favorable) premium
|
|||||||||||||
development,
excluding impact of corporate
|
|||||||||||||
aggregate
reinsurance treaties
|
(96.0
|
)
|
(33.0
|
)
|
12.0
|
(117.0
|
)
|
||||||
Ceded
premiums related to corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
(1.0
|
)
|
5.0
|
(3.0
|
)
|
1.0
|
|||||||
Total
premium development
|
(97.0
|
)
|
(28.0
|
)
|
9.0
|
(116.0
|
)
|
||||||
Total
2004 unfavorable net prior year development
|
|||||||||||||
(pretax)
|
$
|
18.0
|
$
|
30.0
|
$
|
93.0
|
$
|
141.0
|
Year
Ended December 31, 2003
|
|||||||||||||
Pretax
unfavorable net prior year claim and allocated
|
|||||||||||||
claim
adjustment expense development excluding
|
|||||||||||||
the
impact of corporate aggregate reinsurance
|
|||||||||||||
treaties:
|
|||||||||||||
Core
(Non-APMT)
|
$
|
1,423.0
|
$
|
313.0
|
$
|
346.0
|
$
|
2,082.0
|
|||||
APMT
|
795.0
|
795.0
|
|||||||||||
Total
|
1,423.0
|
313.0
|
1,141.0
|
2,877.0
|
|||||||||
Ceded
losses related to corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
(485.0
|
)
|
(56.0
|
)
|
(102.0
|
)
|
(643.0
|
)
|
|||||
Pretax
unfavorable net prior year development before
|
|||||||||||||
impact
of premium development
|
938.0
|
257.0
|
1,039.0
|
2,234.0
|
|||||||||
Unfavorable
(favorable) premium development,
|
|||||||||||||
excluding
impact of corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
209.0
|
6.0
|
(32.0
|
)
|
183.0
|
||||||||
Ceded
premiums related to corporate aggregate
|
|||||||||||||
reinsurance
treaties
|
269.0
|
31.0
|
58.0
|
358.0
|
|||||||||
Pretax
unfavorable premium development
|
478.0
|
37.0
|
26.0
|
541.0
|
|||||||||
Total
2003 unfavorable net prior year development
|
|||||||||||||
(pretax)
|
$
|
1,416.0
|
$
|
294.0
|
$
|
1,065.0
|
$
|
2,775.0
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Notes
to Consolidated Financial Statements
|
Note
9. Claim and Claim Adjustment Expense Reserves -
(Continued)
|
Notes
to Consolidated Financial
Statements
|
Note
10.
|
Leases
|
Future
Minimum Lease
|
|||||||
Year
Ended December 31
|
Payments
|
Receipts
|
|||||
(In
millions)
|
|||||||
2006
|
$
|
71.9
|
$
|
3.3
|
|||
2007
|
60.7
|
2.1
|
|||||
2008
|
52.4
|
1.4
|
|||||
2009
|
43.0
|
1.1
|
|||||
2010
|
38.8
|
1.1
|
|||||
Thereafter
|
124.9
|
3.4
|
|||||
Total
|
$
|
391.7
|
$
|
12.4
|
Note
11.
|
Income
Taxes
|
Notes
to Consolidated Financial Statements
|
Note
11. Income Taxes -
(Continued)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
Statutory
rate
|
35
|
%
|
35
|
%
|
(35
|
)%
|
||||
Increase
(decrease) in income tax rate resulting from:
|
||||||||||
Exempt
interest and dividends received deduction
|
(6
|
)
|
(6
|
)
|
(7
|
)
|
||||
State
and city income taxes
|
3
|
3
|
1
|
|||||||
Prior
year tax settlements
|
(3
|
)
|
||||||||
Other
|
(2
|
)
|
(3
|
)
|
2
|
|||||
Effective
income tax rate
|
27
|
%
|
29
|
%
|
(39
|
)%
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Income
tax expense (benefit):
|
||||||||||
Federal:
|
||||||||||
Current
|
$
|
521.6
|
$
|
425.8
|
$
|
(747.0
|
)
|
|||
Deferred
|
(117.3
|
)
|
43.3
|
175.2
|
||||||
State
and city:
|
||||||||||
Current
|
72.6
|
54.7
|
59.1
|
|||||||
Deferred
|
7.7
|
11.8
|
(21.2
|
)
|
||||||
Foreign
|
5.8
|
0.6
|
7.3
|
|||||||
Total
|
$
|
490.4
|
$
|
536.2
|
$
|
(526.6
|
)
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Deferred
tax assets:
|
|||||||
Insurance
reserves:
|
|||||||
Property
and casualty claim and claim adjustment expense reserves
|
$
|
807.4
|
$
|
716.6
|
|||
Unearned
premium reserves
|
232.4
|
233.1
|
|||||
Life
reserve differences
|
186.6
|
192.4
|
|||||
Other
insurance reserves
|
24.3
|
28.1
|
|||||
Receivables
|
292.2
|
309.0
|
|||||
Tobacco
settlements
|
421.5
|
414.8
|
|||||
Employee
benefits
|
293.6
|
294.4
|
|||||
Life
settlement contracts
|
102.2
|
100.3
|
|||||
Investment
valuation differences
|
130.2
|
149.3
|
|||||
Net
operating loss carried forward
|
56.9
|
165.6
|
|||||
Basis
differential in investment in subsidiary
|
42.2
|
49.4
|
|||||
Other
|
373.7
|
391.6
|
|||||
Gross
deferred tax assets
|
2,963.2
|
3,044.6
|
|||||
Valuation
allowance
|
(31.2
|
)
|
(43.4
|
)
|
|||
Deferred
tax assets after valuation allowance
|
$
|
2,932.0
|
$
|
3,001.2
|
Notes
to Consolidated Financial Statements
|
Note
11. Income Taxes -
(Continued)
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Deferred
tax liabilities:
|
|||||||
Deferred
acquisition costs
|
$
|
(651.3
|
)
|
$
|
(691.0
|
)
|
|
Net
unrealized gains
|
(276.6
|
)
|
(443.0
|
)
|
|||
Property,
plant and equipment
|
(545.9
|
)
|
(517.7
|
)
|
|||
Foreign
and other affiliates
|
(15.4
|
)
|
(232.0
|
)
|
|||
Basis
differential in investment in subsidiary
|
(210.4
|
)
|
(143.8
|
)
|
|||
Other
liabilities
|
(327.1
|
)
|
(328.4
|
)
|
|||
Gross
deferred tax liabilities
|
(2,026.7
|
)
|
(2,355.9
|
)
|
|||
Net
deferred tax assets
|
$
|
905.3
|
$
|
645.3
|
Note
12.
|
Debt
|
December
31, 2005
|
Principal
|
Unamortized
Discount
|
Net
|
Short-Term
Debt
|
Long-Term
Debt
|
|||||||||||
(In
millions)
|
||||||||||||||||
Loews
Corporation
|
$
|
1,175.0
|
$
|
10.3
|
$
|
1,164.7
|
$
|
299.8
|
$
|
864.9
|
||||||
CNA
Financial
|
1,699.4
|
9.1
|
1,690.3
|
252.4
|
1,437.9
|
|||||||||||
Diamond
Offshore
|
978.7
|
10.4
|
968.3
|
968.3
|
||||||||||||
Boardwalk
Pipeline
|
1,152.1
|
8.7
|
1,143.4
|
42.1
|
1,101.3
|
|||||||||||
Loews
Hotels
|
240.1
|
240.1
|
3.9
|
236.2
|
||||||||||||
Total
|
$
|
5,245.3
|
$
|
38.5
|
$
|
5,206.8
|
$
|
598.2
|
$
|
4,608.6
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Loews
Corporation (Parent Company):
|
|||||||
Senior:
|
|||||||
6.8%
notes due 2006 (effective interest rate of 6.8%) (authorized,
$300)
|
$
|
300.0
|
$
|
300.0
|
|||
8.9%
debentures due 2011 (effective interest rate of 9.0%) (authorized,
$175)
|
175.0
|
175.0
|
|||||
5.3%
notes due 2016 (effective interest rate of 5.4%) (authorized,
$400
|
|||||||
and
$300) (a)
|
400.0
|
300.0
|
|||||
7.0%
notes due 2023 (effective interest rate of 7.2%) (authorized, $400)
|
400.0
|
||||||
6.0%
notes due 2035 (effective interest rate of 6.2%) (authorized, $300)
(a)
|
300.0
|
||||||
Subordinated:
|
|||||||
3.1%
exchangeable subordinated notes due 2007 (effective interest
rate
|
|||||||
of
3.4%) (authorized, $1,150)
|
1,150.0
|
||||||
CNA
Financial:
|
|||||||
Senior:
|
|||||||
6.5%
notes due 2005 (effective interest rate of 6.6%) (authorized,
$500)
|
492.8
|
||||||
6.8%
notes due 2006 (effective interest rate of 6.8%) (authorized,
$250)
|
250.0
|
250.0
|
|||||
6.5%
notes due 2008 (effective interest rate of 6.6%) (authorized,
$150)
|
150.0
|
150.0
|
|||||
6.6%
notes due 2008 (effective interest rate of 6.7%) (authorized,
$200)
|
200.0
|
200.0
|
|||||
8.4%
notes due 2012 (effective interest rate of 8.6%) (authorized,
$100)
|
69.6
|
69.6
|
|||||
5.9%
notes due 2014 (effective interest rate of 6.0%) (authorized
$549)
|
549.0
|
549.0
|
|||||
7.0%
notes due 2018 (effective interest rate of 7.1%) (authorized,
$150)
|
150.0
|
150.0
|
|||||
7.3%
debentures due 2023 (effective interest rate of 7.3%) (authorized,
$250)
|
243.0
|
243.0
|
|||||
5.1%
debentures due 2034 (effective interest rate of 5.1%) (authorized,
$31)
|
30.9
|
30.9
|
|||||
Term
loan due 2005 (effective interest rate of 2.8% )
|
10.0
|
||||||
Revolving
credit facility due 2005 (effective interest rate of 3.5%)
|
25.0
|
||||||
Revolving
credit facility due 2008 (effective interest rate of 5.0%)
|
20.0
|
||||||
2.5%
Corporate note due 2006 (effective interest rate of 2.5%)
|
50.0
|
||||||
Other
senior debt (effective interest rates approximate 5.8% and
7.5%)
|
36.9
|
47.5
|
|||||
Diamond
Offshore:
|
|||||||
Senior:
|
|||||||
5.2%
notes, due 2014 (effective interest rate of 5.2%) (authorized,
$250)
(a)
|
250.0
|
250.0
|
|||||
4.9%
notes, due 2015 (effective interest rate of 5.0%) (authorized,
$250)
(a)
|
250.0
|
||||||
Zero
coupon convertible debentures due 2020, net of discount of
$12.2
|
|||||||
and
$333.8 (effective interest rate of 3.6%) (b)
|
18.7
|
471.2
|
|||||
1.5%
convertible senior debentures due 2031 (effective interest rate
of
1.6%)
|
|||||||
(authorized
$460) (c)
|
460.0
|
460.0
|
|||||
Subordinated
debt due 2005 (effective interest rate of 7.1%)
|
12.8
|
||||||
Boardwalk
Pipeline:
|
|||||||
Senior:
|
|||||||
Term
loan due 2005 (effective interest rate of 3.3%)
|
575.0
|
||||||
5.5%
notes due 2017 (effective interest rate of 5.6%) (authorized, $300)
(a)
|
300.0
|
||||||
5.2%
notes due 2018 (effective interest rate of 5.4%) (authorized, $185)
(a)
|
185.0
|
185.0
|
|||||
Revolving
credit facility due 2010 (effective interest rate of 5.2%)
|
42.1
|
||||||
Texas
Gas:
|
|||||||
Senior:
|
|||||||
4.6%
notes due 2015 (effective interest rate of 5.1%) (authorized, $250)
(a)
|
250.0
|
250.0
|
|||||
7.3%
debentures due 2027 (effective interest rate of 8.1%)
|
|||||||
(authorized,
$100)
|
100.0
|
100.0
|
|||||
Gulf
South:
|
|||||||
Senior:
|
|||||||
5.1%
notes due 2015 (effective interest rate of 5.2%) (authorized,
$275) (a)
|
275.0
|
||||||
Loews
Hotels:
|
|||||||
Senior
debt, principally mortgages (effective interest rates
approximate
|
|||||||
4.8%
and 4.1%)
|
240.1
|
144.4
|
|||||
5,245.3
|
7,041.2
|
||||||
Less
unamortized discount
|
38.5
|
50.9
|
|||||
Debt
|
$
|
5,206.8
|
$
|
6,990.3
|
(a)
|
Redeemable
in whole or in part at the greater of the principal amount or the
net
present value of scheduled payments discounted at the specified
treasury
rate plus a margin.
|
(b)
|
The
debentures are convertible into Diamond Offshore’s common stock at the
rate of 8.6075 shares per one thousand dollars principal amount,
subject
to adjustment. Each debenture will be purchased by Diamond Offshore
at the
option of the holder on the tenth and fifteenth anniversaries of
issuance
at the accreted value through the date of repurchase. The debentures
were
issued on June 6, 2000. Diamond Offshore, at its option, may elect
to pay
the purchase price in cash or shares of common stock, or in certain
combinations thereof. The debentures are redeemable at the option
of
Diamond Offshore at any time at prices which reflect a yield of
3.5% to
the holder.
|
(c)
|
The
debentures are convertible into Diamond Offshore’s common stock at the
rate of 20.3978 shares per one thousand dollars principal amount,
subject
to adjustment in certain circumstances. Upon conversion, Diamond
Offshore
has the right to deliver cash in lieu of shares of its common stock.
Diamond Offshore may redeem all or a portion of the debentures
at any time
on or after April 15, 2008 at a price equal to 100% of the principal
amount. Holders may require Diamond Offshore to purchase all or
a portion
of the debentures on April 15, 2008, at a price equal to 100% of
the
principal amount. Diamond Offshore, at its option, may elect to
pay the
purchase price in cash or shares of common stock, or in certain
combinations thereof.
|
Note
13.
|
Comprehensive
Income (Loss)
|
Unrealized
Gains
(Losses)
on
Investments
|
Foreign
Currency
|
Minimum
Pension
Liability
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
||||||||||
(In
millions)
|
|||||||||||||
Balance, January 1, 2003 - as previously reported |
$
|
567.6 | $ | (11.6 | ) | $ | (17.7 | ) | $ | 538.3 | |||
Prior period adjustment (Note 25) | (17.9 | ) | (17.9 | ) | |||||||||
Balance,
January 1, 2003-restated
|
|
567.6
|
|
(29.5
|
)
|
|
(17.7
|
)
|
|
520.4
|
|||
Unrealized
holding gains, net of tax of $88.4
|
173.1
|
173.1
|
|||||||||||
Adjustment
for items included in net loss,
|
|||||||||||||
net
of tax of $65.5
|
105.3
|
105.3
|
|||||||||||
Foreign
currency translation adjustment, net of
|
|||||||||||||
tax
of $1.8
|
75.5
|
75.5
|
|||||||||||
Minimum
pension liability adjustment, net of tax
|
|||||||||||||
of
$61.2
|
(104.8
|
)
|
(104.8
|
)
|
|||||||||
Balance,
December 31, 2003
|
846.0
|
46.0
|
(122.5
|
)
|
769.5
|
||||||||
Unrealized
holding gains, net of tax of $169.0
|
244.0
|
244.0
|
|||||||||||
Adjustment
for items included in net income,
|
|||||||||||||
net
of tax of $222.6
|
(377.2
|
)
|
(377.2
|
)
|
|||||||||
Foreign
currency translation adjustment, net of
|
|||||||||||||
tax
of $1.6
|
23.3
|
23.3
|
|||||||||||
Minimum
pension liability adjustment, net of tax
|
|||||||||||||
of
$37.4
|
(62.2
|
)
|
(62.2
|
)
|
|||||||||
Balance,
December 31, 2004
|
712.8
|
69.3
|
(184.7
|
)
|
597.4
|
||||||||
Unrealized
holding gains, net of tax of $87.7
|
(102.9
|
)
|
(102.9
|
)
|
|||||||||
Adjustment
for items included in net income,
|
|||||||||||||
net
of tax of $71.1
|
(120.5
|
)
|
(120.5
|
)
|
|||||||||
Foreign
currency translation adjustment, net of
|
|||||||||||||
tax
of $1.8
|
(20.8
|
)
|
(20.8
|
)
|
|||||||||
Minimum
pension liability adjustment, net of tax
|
|||||||||||||
of
$24.2
|
(42.1
|
)
|
(42.1
|
)
|
|||||||||
Balance,
December 31, 2005
|
$
|
489.4
|
$
|
48.5
|
$
|
(226.8
|
)
|
$
|
311.1
|
Note
14.
|
Significant
Transactions
|
Gulf
South
|
Texas
Gas
|
||||||
(In
millions)
|
|||||||
Current
assets
|
$
|
77.4
|
$
|
81.6
|
|||
Property,
plant and equipment
|
1,159.0
|
691.4
|
|||||
Goodwill
|
169.3
|
||||||
Other
non-current assets
|
28.3
|
243.9
|
|||||
Current
liabilities
|
(108.7
|
)
|
(58.9
|
)
|
|||
Short-term
debt
|
(149.8
|
)
|
|||||
Long-term
debt
|
(99.2
|
)
|
|||||
Other
liabilities and deferred credits
|
(34.8
|
)
|
(74.6
|
)
|
|||
$
|
1,121.2
|
$
|
803.7
|
Year
Ended December 31
|
2004
|
2003
|
|||||
(In
millions, except per share data)
|
|||||||
Total
revenues
|
$
|
15,477.8
|
$
|
16,786.6
|
|||
Income
(loss) from continuing operations
|
1,260.0
|
(631.0
|
)
|
||||
Net
income (loss)
|
1,240.5
|
(574.2
|
)
|
||||
Basic
income (loss) per share of Loews common stock:
|
|||||||
Income
(loss) from continuing operations
|
$
|
5.80
|
$
|
(4.02
|
)
|
||
Net
income (loss)
|
5.69
|
(3.72
|
)
|
||||
Diluted
income (loss) per share of Loews common stock:
|
|||||||
Income
(loss) from continuing operations
|
$
|
5.79
|
$
|
(4.02
|
)
|
||
Net
income (loss)
|
5.69
|
(3.72
|
)
|
Note
15.
|
Restructuring
and Other Related Charges
|
Note
16.
|
Statutory
Accounting Practices
(Unaudited)
|
Statutory
Capital and Surplus
|
Statutory
Net Income (Loss)
|
|||||||||||||||
December
31 (a)
|
Year
Ended December 31
|
|||||||||||||||
Unaudited
|
2005
|
2004
|
2005
|
2004
|
2003
|
|||||||||||
(In
millions)
|
||||||||||||||||
Property
and casualty companies
|
$
|
6,940.0
|
$
|
6,998.0
|
$
|
550.0
|
$
|
694.0
|
$
|
(1,484.0
|
)
|
|||||
Life
and group insurance companies
|
627.0
|
1,177.0
|
65.0
|
334.0
|
115.0
|
(a)
|
Surplus
includes the property and casualty companies’ equity ownership of the life
and group companies’ capital and
surplus.
|
Note
17.
|
Benefit
Plans
|
Pension
Benefits
|
Other
Postretirement Benefits
|
||||||||||||||||||
December
31
|
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
|||||||||||||
Discount
rate
|
5.6
|
%
|
5.9
|
%
|
6.3
|
%
|
5.5
|
%
|
5.9
|
%
|
6.3
|
%
|
|||||||
Rate
of compensation increase
|
4.0%
to 7.0
|
%
|
4.0%
to 7.0
|
%
|
4.0%
to 7.0
|
%
|
Pension
Benefits
|
Other
Postretirement Benefits
|
||||||||||||||||||
Year
Ended December 31
|
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
|||||||||||||
Discount
rate
|
5.9
|
%
|
6.2%
to 6.3
|
%
|
6.8
|
%
|
5.9
|
%
|
5.9%
to 6.2
|
%
|
6.8
|
%
|
|||||||
Expected
long-term rate of return on
|
|||||||||||||||||||
plan
assets
|
7.5%
to 8.0
|
%
|
7.5%
to 8.0
|
%
|
7.5%
to 8.0
|
%
|
|||||||||||||
Rate
of compensation increase
|
4.0%
to 7.0
|
%
|
4.0%
to 7.0
|
%
|
5.3%
to 5.8
|
%
|
December
31
|
2005
|
2004
|
2003
|
|||||||
Health
care cost trend rate assumed for next year
|
4%
to 11%
|
|
4%
to 11.5%
|
|
4%
to 12%
|
|
||||
Rate
to which the cost trend rate is assumed to decline (the
ultimate
|
||||||||||
trend
rate)
|
4%
to 5%
|
|
4%
to 5%
|
|
4%
to 5%
|
|
||||
Year
that the rate reaches the ultimate trend rate
|
2006-2018
|
2005-2018
|
2004-2018
|
One
Percentage Point
|
|||||||
Increase
|
Decrease
|
||||||
(In
millions)
|
|||||||
Effect
on total of service and interest cost
|
$
|
4.4
|
$
|
(3.8
|
)
|
||
Effect
on postretirement benefit obligation
|
37.2
|
(43.0
|
)
|
Pension
Benefits
|
Other
Postretirement Benefits
|
||||||||||||||||||
Year
Ended December 31
|
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
|||||||||||||
(In
millions)
|
|||||||||||||||||||
Service
cost
|
$
|
54.5
|
$
|
58.2
|
$
|
55.4
|
$
|
10.6
|
$
|
11.3
|
$
|
12.8
|
|||||||
Interest
cost
|
212.3
|
211.7
|
209.1
|
30.7
|
35.7
|
37.8
|
|||||||||||||
Expected
return on plan assets
|
(236.6
|
)
|
(230.7
|
)
|
(218.5
|
)
|
(4.6
|
)
|
(5.3
|
)
|
(3.0
|
)
|
|||||||
Amortization
of unrecognized
|
|||||||||||||||||||
net
loss
|
27.5
|
16.3
|
8.6
|
5.1
|
2.1
|
0.7
|
|||||||||||||
Amortization
of unrecognized prior
|
|||||||||||||||||||
service
cost
|
7.5
|
7.5
|
8.9
|
(29.8
|
)
|
(21.6
|
)
|
(17.9
|
)
|
||||||||||
Special
termination benefit
|
0.4
|
0.2
|
|||||||||||||||||
Settlement
loss
|
4.5
|
7.9
|
|||||||||||||||||
Net
periodic benefit cost
|
$
|
65.6
|
$
|
67.5
|
$
|
71.6
|
$
|
12.0
|
$
|
22.2
|
$
|
30.4
|
Pension
Benefits
|
Other
Postretirement Benefits
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
(In
millions)
|
|||||||||||||
Increase
in minimum liability included in Other
|
|||||||||||||
comprehensive
income
|
$
|
67.2
|
$
|
106.6
|
N/A
|
N/A
|
Pension
Benefits
|
Other
Postretirement Benefits
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
(In
millions)
|
|||||||||||||
Change
in benefit obligation:
|
|||||||||||||
Benefit
obligation at January 1
|
$
|
3,700.8
|
$
|
3,492.7
|
$
|
535.9
|
$
|
664.9
|
|||||
Service
cost
|
54.5
|
58.2
|
10.6
|
11.3
|
|||||||||
Interest
cost
|
212.3
|
211.7
|
30.7
|
35.7
|
|||||||||
Plan
participants’ contributions
|
0.2
|
14.7
|
16.4
|
||||||||||
Amendments
|
1.0
|
0.1
|
(3.8
|
)
|
(143.2
|
)
|
|||||||
Actuarial
loss
|
134.9
|
157.3
|
27.7
|
7.9
|
|||||||||
Benefits
paid from plan assets
|
(213.5
|
)
|
(227.4
|
)
|
(40.5
|
)
|
(57.1
|
)
|
|||||
Curtailment
|
2.3
|
||||||||||||
Special
termination benefit
|
0.4
|
0.1
|
|||||||||||
Foreign
exchange
|
(5.5
|
)
|
5.8
|
||||||||||
Benefit
obligation at December 31
|
3,885.1
|
3,700.8
|
575.3
|
535.9
|
Pension
Benefits
|
Other
Postretirement Benefits
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
(In
millions)
|
|||||||||||||
Change
in plan assets:
|
|||||||||||||
Fair
value of plan assets at January 1
|
3,132.6
|
3,063.0
|
76.5
|
71.7
|
|||||||||
Actual
return on plan assets
|
247.8
|
248.2
|
5.2
|
4.8
|
|||||||||
Company
contributions
|
73.1
|
45.0
|
23.6
|
40.7
|
|||||||||
Plan
participants’ contributions
|
0.3
|
14.7
|
16.4
|
||||||||||
Curtailment
|
(0.7
|
)
|
|||||||||||
Benefits
paid from plan assets
|
(213.5
|
)
|
(227.4
|
)
|
(40.5
|
)
|
(57.1
|
)
|
|||||
Foreign
exchange
|
(4.5
|
)
|
4.5
|
||||||||||
Fair
value of plan assets at December 31
|
3,235.8
|
3,132.6
|
79.5
|
76.5
|
|||||||||
Benefit
obligation over plan assets
|
(649.3
|
)
|
(568.2
|
)
|
(495.8
|
)
|
(459.4
|
)
|
|||||
Unrecognized
net actuarial loss
|
753.1
|
658.4
|
116.5
|
94.5
|
|||||||||
Unrecognized
prior service cost (benefit)
|
36.5
|
42.9
|
(183.0
|
)
|
(209.1
|
)
|
|||||||
Accrued
benefit cost
|
$
|
140.3
|
$
|
133.1
|
$
|
(562.3
|
)
|
$
|
(574.0
|
)
|
|||
Amounts
recognized in the Consolidated Balance
|
|||||||||||||
Sheets
consist of:
|
|||||||||||||
Prepaid
benefit cost
|
$
|
204.0
|
$
|
205.8
|
|||||||||
Accrued
benefit liability
|
(454.5
|
)
|
(400.6
|
)
|
$
|
(562.3
|
)
|
$
|
(574.0
|
)
|
|||
Intangible
asset
|
12.5
|
15.1
|
|||||||||||
Accumulated
other comprehensive income
|
378.3
|
312.8
|
|||||||||||
Net
amount recognized
|
$
|
140.3
|
$
|
133.1
|
$
|
(562.3
|
)
|
$
|
(574.0
|
)
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Projected
benefit obligation
|
$
|
3,294.4
|
$
|
3,135.5
|
|||
Accumulated
benefit obligation
|
3,038.4
|
2,898.2
|
|||||
Fair
value of plan assets
|
2,599.0
|
2,507.7
|
Percentage
of
|
|||||||||||||
Percentage
of
|
Other
Postretirement Benefits
|
||||||||||||
Pension
Plan Assets
|
Plan
Assets
|
||||||||||||
December
31
|
2005
|
2004
|
2005
|
2004
|
|||||||||
Asset
Category:
|
|||||||||||||
Equity
securities
|
27.4
|
%
|
19.0
|
%
|
|||||||||
Debt
securities
|
37.1
|
55.5
|
100.0
|
%
|
100.0
|
%
|
|||||||
Limited
Partnerships
|
12.1
|
11.8
|
|||||||||||
Other
|
23.4
|
13.7
|
|||||||||||
Total
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
Less
|
|||||||||||||
Pension
|
Postretirement
|
Medicare
|
|||||||||||
Expected
future benefit payments
|
Benefits
|
Benefits
|
Subsidy
|
Net
|
|||||||||
2006
|
$
|
212.5
|
$
|
36.7
|
$
|
2.2
|
$
|
34.5
|
|||||
2007
|
212.1
|
38.4
|
2.4
|
36.0
|
|||||||||
2008
|
218.1
|
40.2
|
2.6
|
37.6
|
|||||||||
2009
|
229.0
|
42.2
|
2.9
|
39.3
|
|||||||||
2010
|
232.3
|
44.1
|
3.1
|
41.0
|
|||||||||
Thereafter
|
1,286.1
|
244.4
|
18.9
|
225.5
|
|||||||||
$
|
2,390.1
|
$
|
446.0
|
$
|
32.1
|
$
|
413.9
|
2005
|
2004
|
2003
|
|||||||||||||||||
Number
of
Shares
|
Weighted
Average
Exercise
Price
|
Number
of
Shares
|
Weighted
Average
Exercise
Price
|
Number
of
Shares
|
Weighted
Average
Exercise
Price
|
||||||||||||||
Options
outstanding, January 1
|
1,257,775
|
$
|
50.302
|
1,127,450
|
$
|
46.678
|
827,000
|
$
|
46.535
|
||||||||||
Granted
|
319,275
|
78.540
|
306,625
|
57.523
|
306,300
|
46.748
|
|||||||||||||
Exercised
|
(262,314
|
)
|
45.760
|
(137,525
|
)
|
36.358
|
(5,850
|
)
|
30.140
|
||||||||||
Canceled
|
(29,078
|
)
|
60.053
|
(38,775
|
)
|
51.495
|
|||||||||||||
Options
outstanding, December 31
|
1,285,658
|
58.020
|
1,257,775
|
50.302
|
1,127,450
|
46.678
|
|||||||||||||
Options
exercisable, December 31
|
582,361
|
$
|
50.373
|
557,025
|
$
|
46.251
|
430,625
|
$
|
42.657
|
||||||||||
Shares
available for grant,
|
|||||||||||||||||||
December
31
|
2,283,253
|
573,450
|
841,300
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||
Range
of exercise prices
|
Number
of
Shares
|
Weighted
Average
Remaining
Contractual
Life
|
Weighted
Average
Exercise
Price
|
Number
of
Shares
|
Weighted
Average
Exercise
Price
|
|||||||||||
$30.140
|
69,000
|
4.0
|
$
|
30.140
|
69,000
|
$
|
30.140
|
|||||||||
30.141 - 47.370
|
398,850
|
6.3
|
46.629
|
262,575
|
46.532
|
|||||||||||
47.371 - 56.840
|
75,958
|
7.9
|
52.040
|
24,909
|
51.958
|
|||||||||||
56.841 - 64.140
|
427,750
|
7.0
|
59.106
|
208,377
|
59.111
|
|||||||||||
64.141 - 94.740
|
314,100
|
9.1
|
78.578
|
17,500
|
81.480
|
2005
|
2004
|
2003
|
|||||||||||||||||
Number
of
Shares
|
Weighted
Average
Exercise
Price
|
Number
of
Shares
|
Weighted
Average
Exercise
Price
|
Number
of
Shares
|
Weighted
Average
Exercise
Price
|
||||||||||||||
Options
outstanding, January 1
|
560,000
|
$
|
25.230
|
389,250
|
$
|
25.216
|
195,000
|
$
|
28.000
|
||||||||||
Granted
|
212,000
|
34.164
|
209,500
|
25.181
|
209,000
|
22.740
|
|||||||||||||
Exercised
|
(224,428
|
)
|
25.684
|
(2,250
|
)
|
22.740
|
|||||||||||||
Canceled
|
(11,000
|
)
|
27.403
|
(36,500
|
)
|
24.947
|
(14,750
|
)
|
26.930
|
||||||||||
Options
outstanding, December 31
|
536,572
|
28.526
|
560,000
|
25.230
|
389,250
|
25.216
|
|||||||||||||
Options
exercisable, December 31
|
45,310
|
$
|
25.697
|
135,750
|
$
|
26.276
|
52,750
|
$
|
28.000
|
||||||||||
Shares
available for grant,
|
|||||||||||||||||||
December
31
|
736,750
|
937,750
|
1,110,750
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||
Range
of exercise prices
|
Number
of
Shares
|
Weighted
Average
Remaining
Contractual
Life
|
Weighted
Average
Exercise
Price
|
Number
of
Shares
|
Weighted
Average
Exercise
Price
|
|||||||||||
$22.740
|
102,500
|
7.0
|
$
|
22.740
|
12,000
|
$
|
22.740
|
|||||||||
22.741
- 27.999
|
166,822
|
8.0
|
25.164
|
13,810
|
25.015
|
|||||||||||
28.000
- 31.400
|
57,250
|
5.8
|
28.000
|
19,500
|
28.000
|
|||||||||||
31.401
- 39.250
|
210,000
|
9.1
|
34.164
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
Loews
Plan:
|
||||||||||
Expected
dividend yield
|
0.8
|
%
|
1.0
|
%
|
1.3
|
%
|
||||
Expected
volatility
|
19.6
|
%
|
23.1
|
%
|
35.3
|
%
|
||||
Weighted
average risk-free interest rate
|
3.9
|
%
|
3.4
|
%
|
4.5
|
%
|
||||
Expected
holding period (in years)
|
5.0
|
5.0
|
5.0
|
|||||||
Weighted
average fair value of options
|
$
|
19.18
|
$
|
14.19
|
$
|
15.92
|
||||
Carolina
Group Plan:
|
||||||||||
Expected
dividend yield
|
5.4
|
%
|
7.1
|
%
|
8.1
|
%
|
||||
Expected
volatility
|
31.2
|
%
|
30.1
|
%
|
36.4
|
%
|
||||
Weighted
average risk-free interest rate
|
3.9
|
%
|
3.4
|
%
|
4.5
|
%
|
||||
Expected
holding period (in years)
|
5.0
|
5.0
|
5.0
|
|||||||
Weighted
average fair value of options
|
$
|
6.57
|
$
|
3.75
|
$
|
3.89
|
Note
18.
|
Reinsurance
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Reinsurance
receivables related to insurance reserves:
|
|||||||
Ceded
claim and claim adjustment expense
|
$
|
10,605.2
|
$
|
13,878.4
|
|||
Ceded
future policy benefits
|
1,192.9
|
1,259.6
|
|||||
Ceded
policyholders’ funds
|
56.3
|
64.8
|
|||||
Billed
reinsurance receivables
|
582.3
|
685.2
|
|||||
Reinsurance
receivables
|
12,436.7
|
15,888.0
|
|||||
Allowance
for uncollectible reinsurance
|
(519.3
|
)
|
(546.3
|
)
|
|||
Reinsurance
receivables, net of allowance for uncollectible
reinsurance
|
$
|
11,917.4
|
$
|
15,341.7
|
Direct
|
Assumed
|
Ceded
|
Net
|
Assumed/
Net
%
|
||||||||||||
(In
millions)
|
||||||||||||||||
Year
Ended December 31, 2005
|
||||||||||||||||
Property
and casualty
|
$
|
10,354.0
|
$
|
186.0
|
$
|
3,675.0
|
$
|
6,865.0
|
2.7
|
%
|
||||||
Accident
and health
|
1,040.0
|
60.0
|
400.0
|
700.0
|
8.6
|
|||||||||||
Life
|
140.0
|
136.0
|
4.0
|
|||||||||||||
Total
|
$
|
11,534.0
|
$
|
246.0
|
$
|
4,211.0
|
$
|
7,569.0
|
3.3
|
%
|
||||||
Year
Ended December 31, 2004
|
||||||||||||||||
Property
and casualty
|
$
|
10,739.0
|
$
|
199.0
|
$
|
3,634.0
|
$
|
7,304.0
|
2.7
|
%
|
||||||
Accident
and health
|
1,224.0
|
63.0
|
507.0
|
780.0
|
8.1
|
|||||||||||
Life
|
419.0
|
298.0
|
121.0
|
|||||||||||||
Total
|
$
|
12,382.0
|
$
|
262.0
|
$
|
4,439.0
|
$
|
8,205.0
|
3.2
|
%
|
||||||
Year
Ended December 31, 2003
|
||||||||||||||||
Property
and casualty
|
$
|
10,661.0
|
$
|
726.0
|
$
|
4,450.0
|
$
|
6,937.0
|
10.5
|
%
|
||||||
Accident
and health
|
1,598.0
|
92.0
|
59.0
|
1,631.0
|
5.6
|
|||||||||||
Life
|
1,102.0
|
7.0
|
465.0
|
644.0
|
1.1
|
|||||||||||
Total
|
$
|
13,361.0
|
$
|
825.0
|
$
|
4,974.0
|
$
|
9,212.0
|
9.0
|
%
|
December
31
|
Direct
|
Assumed
|
Ceded
|
Net
|
|||||||||
(In
millions)
|
|||||||||||||
2005
|
$
|
20,548.0
|
$
|
1.0
|
$
|
20,528.0
|
$
|
21.0
|
|||||
2004
(a)
|
56,610.0
|
35.0
|
54,486.0
|
2,159.0
|
|||||||||
2003
|
388,380.0
|
588.0
|
295,659.0
|
93,309.0
|
(a)
|
The
decline in gross inforce is attributable to the sales of the group
benefits and the individual life
businesses.
|
Year
Ended December 31, 2005
|
Aggregate
Cover
|
CCC
Cover
|
All
Other
|
Total
|
|||||||||
(In
millions)
|
|||||||||||||
Ceded
earned premium
|
$
|
(17.0
|
)
|
$
|
48.0
|
$
|
31.0
|
||||||
Ceded
claim and claim adjustment expense
|
(244.0
|
)
|
(154.0
|
)
|
(398.0
|
)
|
|||||||
Ceding
commissions
|
(27.0
|
)
|
(27.0
|
)
|
|||||||||
Interest
charges
|
(57.0
|
)
|
$
|
(66.0
|
)
|
(34.0
|
)
|
(157.0
|
)
|
||||
Pretax
(expense) benefit
|
$
|
(318.0
|
)
|
$
|
(66.0
|
)
|
$
|
(167.0
|
)
|
$
|
(551.0
|
)
|
|
Year
Ended December 31, 2004
|
|||||||||||||
Ceded
earned premium
|
$
|
(1.0
|
)
|
$
|
(19.0
|
)
|
$
|
(20.0
|
)
|
||||
Ceded
claim and claim adjustment expense
|
15.0
|
15.0
|
|||||||||||
Ceding
commissions
|
2.0
|
2.0
|
|||||||||||
Interest
charges
|
(82.0
|
)
|
$
|
(91.0
|
)
|
(72.0
|
)
|
(245.0
|
)
|
||||
Pretax
(expense) benefit
|
$
|
(83.0
|
)
|
$
|
(91.0
|
)
|
$
|
(74.0
|
)
|
$
|
(248.0
|
)
|
|
Year
Ended December 31, 2003
|
|||||||||||||
Ceded
earned premium
|
$
|
(258.0
|
)
|
$
|
(100.0
|
)
|
$
|
(172.0
|
)
|
$
|
(530.0
|
)
|
|
Ceded
claim and claim adjustment expense
|
500.0
|
143.0
|
222.0
|
865.0
|
|||||||||
Ceding
commissions
|
18.0
|
18.0
|
|||||||||||
Interest
charges
|
(147.0
|
)
|
(59.0
|
)
|
(127.0
|
)
|
(333.0
|
)
|
|||||
Pretax
(expense) benefit
|
$
|
95.0
|
$
|
(16.0
|
)
|
$
|
(59.0
|
)
|
$
|
20.0
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Standard
Lines
|
$
|
(399.0
|
)
|
$
|
(185.0
|
)
|
$
|
10.0
|
||
Specialty
Lines
|
(41.0
|
)
|
(1.0
|
)
|
6.0
|
|||||
Other
Insurance
|
(111.0
|
)
|
(62.0
|
)
|
4.0
|
|||||
Pretax
(expense) benefit
|
$
|
(551.0
|
)
|
$
|
(248.0
|
)
|
$
|
20.0
|
Note
19.
|
Quarterly
Financial Data (Unaudited)
|
2005
Quarter Ended
|
Dec.
31
|
Sept.
30
|
June
30
|
March
31
|
|||||||||
(In
millions, except per share data)
|
(Restated)
|
(Restated)
|
(Restated)
|
||||||||||
Total
revenues
|
$
|
4,108.0
|
$
|
4,137.9
|
$
|
4,030.7
|
$
|
3,741.2
|
|||||
Income
(loss) attributable to:
|
|||||||||||||
Loews
common stock:
|
|||||||||||||
Income
(loss) from continuing operations
|
37.8
|
232.5
|
378.1
|
293.2
|
|||||||||
Per
share-basic
|
0.20
|
1.25
|
2.04
|
1.58
|
|||||||||
Per
share-diluted
|
0.20
|
1.25
|
2.03
|
1.58
|
|||||||||
Discontinued
operations, net
|
8.1
|
2.2
|
1.8
|
6.6
|
|||||||||
Per
share-basic
|
0.04
|
0.01
|
0.01
|
0.04
|
|||||||||
Per
share-diluted
|
0.04
|
0.01
|
0.01
|
0.04
|
|||||||||
Net
income (loss)
|
45.9
|
234.7
|
379.9
|
299.8
|
|||||||||
Per
share-basic
|
0.25
|
1.26
|
2.05
|
1.62
|
|||||||||
Per
share-diluted
|
0.25
|
1.26
|
2.04
|
1.62
|
|||||||||
Carolina
Group stock:
|
|||||||||||||
Net
income
|
81.6
|
67.5
|
55.7
|
46.5
|
|||||||||
Per
share-basic and diluted
|
1.11
|
0.99
|
0.82
|
0.68
|
2004
Quarter Ended
|
Dec.
31
|
Sept.
30
|
June
30
|
March
31
|
|||||||||
(In
millions, except per share data)
|
(Restated)
|
(Restated)
|
(Restated)
|
(Restated)
|
|||||||||
Total
revenues
|
$
|
4,052.1
|
$
|
3,782.0
|
$
|
3,909.4
|
$
|
3,493.4
|
|||||
Income
attributable to:
|
|||||||||||||
Loews
common stock:
|
|||||||||||||
Income
(loss) from continuing operations
|
445.3
|
225.1
|
369.9
|
10.5
|
|||||||||
Per
share-basic and diluted
|
2.40
|
1.21
|
1.99
|
0.6
|
|||||||||
Discontinued
operations
|
(1.0
|
)
|
(10.1
|
)
|
(3.0
|
)
|
(5.4
|
)
|
|||||
Per
share-basic and diluted
|
(0.01
|
)
|
(0.05
|
)
|
(0.02
|
)
|
(0.03
|
)
|
|||||
Net
income (loss)
|
444.3
|
215.0
|
366.9
|
5.1
|
|||||||||
Per
share-basic and diluted
|
2.39
|
1.16
|
1.97
|
0.03
|
|||||||||
Carolina
Group stock:
|
|||||||||||||
Net
income
|
56.1
|
53.4
|
40.6
|
34.4
|
|||||||||
Per
share-basic and diluted
|
0.93
|
0.92
|
0.70
|
0.59
|
2005
Quarter Ended
|
Sept.
30
|
June
30
|
March
31
|
|||||||
(In
millions, except per share data)
|
||||||||||
Total
revenues
|
$
|
4,137.9
|
$
|
4,030.7
|
$
|
3,741.2
|
||||
Net
income attributable to:
|
||||||||||
Loews
common stock:
|
||||||||||
Net
income
|
232.5
|
378.1
|
293.2
|
|||||||
Per
share-basic
|
1.25
|
2.04
|
1.58
|
|||||||
Per
share-diluted
|
1.25
|
2.03
|
1.58
|
|||||||
Carolina
Group stock:
|
||||||||||
Net
income
|
67.5
|
55.7
|
46.5
|
|||||||
Per
share-basic and diluted
|
0.99
|
0.82
|
0.68
|
2004
Quarter Ended
|
Dec.
31
|
Sept.
30
|
June
30
|
March
31
|
|||||||||
(In
millions, except per share data)
|
|||||||||||||
Total
revenues
|
$
|
4,052.7
|
$
|
3,786.8
|
$
|
3,915.7
|
$
|
3,493.3
|
|||||
Net
income attributable to:
|
|||||||||||||
Loews
common stock:
|
|||||||||||||
Net
income
|
445.3
|
225.1
|
369.9
|
10.5
|
|||||||||
Per
share-basic and diluted
|
2.40
|
1.21
|
1.99
|
0.06
|
|||||||||
Carolina
Group stock:
|
|||||||||||||
Net
income
|
56.1
|
53.4
|
40.6
|
34.4
|
|||||||||
Per
share-basic and diluted
|
0.93
|
0.92
|
0.70
|
0.59
|
Note
20.
|
Legal
Proceedings
|
Note
21.
|
Commitments
and Contingencies
|
Note
22.
|
Discontinued
Operations
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Revenues
:
|
||||||||||
Net
investment income
|
$
|
14.9
|
$
|
17.3
|
$
|
19.5
|
||||
Other
|
6.7
|
(7.8
|
)
|
4.6
|
||||||
Total
revenues
|
21.6
|
9.5
|
24.1
|
|||||||
Insurance
related benefits (expenses)
|
0.5
|
(29.7
|
)
|
(11.2
|
)
|
|||||
Income
(loss) before income taxes and minority interest
|
22.1
|
(20.2
|
)
|
12.9
|
||||||
Income
tax expense
|
1.6
|
1.2
|
11.4
|
|||||||
Minority
interest
|
1.8
|
(1.9
|
)
|
0.1
|
||||||
Net
income (loss) from discontinued operations
|
$
|
18.7
|
$
|
(19.5
|
)
|
$
|
1.4
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Assets:
|
|||||||
Investments
|
$
|
357.8
|
$
|
370.2
|
|||
Reinsurance
receivables
|
77.9
|
91.1
|
|||||
Cash
|
28.9
|
14.1
|
|||||
Other
assets
|
6.0
|
25.2
|
|||||
Total
assets
|
470.6
|
500.6
|
|||||
Liabilities:
|
|||||||
Insurance
reserves
|
(337.9
|
)
|
(401.0
|
)
|
|||
Other
liabilities
|
(19.4
|
)
|
(26.9
|
)
|
|||
Total
liabilities
|
|
(357.3
|
)
|
|
(427.9
|
)
|
|
Net
assets of discontinued operations
|
$
|
113.3
|
$
|
72.7
|
Note
23.
|
Business
Segments
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Revenues
(a):
|
||||||||||
CNA
Financial:
|
||||||||||
Standard
Lines
|
$
|
5,295.8
|
$
|
5,760.8
|
$
|
5,499.9
|
||||
Specialty
Lines
|
2,893.6
|
2,716.2
|
2,258.4
|
|||||||
Life
and Group Non-Core
|
1,361.9
|
1,093.0
|
3,218.9
|
|||||||
Other
Insurance
|
313.8
|
358.2
|
750.9
|
|||||||
Total
CNA Financial
|
9,865.1
|
9,928.2
|
11,728.1
|
|||||||
Lorillard
|
3,637.4
|
3,384.4
|
3,295.4
|
|||||||
Boardwalk
Pipeline
|
571.3
|
265.1
|
143.2
|
|||||||
Diamond
Offshore
|
1,294.1
|
835.6
|
694.9
|
|||||||
Loews
Hotels
|
350.5
|
315.2
|
286.0
|
|||||||
Corporate
and other
|
299.4
|
508.4
|
312.1
|
|||||||
Total
|
$
|
16,017.8
|
$
|
15,236.9
|
$
|
16,459.7
|
||||
Pretax
income (loss) (a)(c):
|
||||||||||
CNA
Financial:
|
||||||||||
Standard
Lines
|
$
|
(121.0
|
)
|
$
|
475.4
|
$
|
(1,173.1
|
)
|
||
Specialty
Lines
|
517.8
|
574.9
|
11.3
|
|||||||
Life
and Group Non-Core
|
(139.1
|
)
|
(678.9
|
)
|
5.1
|
|||||
Other
Insurance
|
(78.9
|
)
|
150.1
|
(1,138.2
|
)
|
|||||
Total
CNA Financial
|
178.8
|
521.5
|
(2,294.9
|
)
|
||||||
Lorillard
(b)
|
1,153.4
|
1,038.2
|
942.2
|
|||||||
Boardwalk
Pipeline
|
158.1
|
81.1
|
37.6
|
|||||||
Diamond
Offshore
|
351.0
|
(9.8
|
)
|
(53.2
|
)
|
|||||
Loews
Hotels
|
50.0
|
31.2
|
18.6
|
|||||||
Corporate
and other
|
(44.8
|
)
|
166.6
|
(7.4
|
)
|
|||||
Total
|
$
|
1,846.5
|
$
|
1,828.8
|
$
|
(1,357.1
|
)
|
|||
Net
income (loss) (a)(c):
|
||||||||||
CNA
Financial:
|
||||||||||
Standard
Lines
|
$
|
(29.2
|
)
|
$
|
327.4
|
$
|
(642.1
|
)
|
||
Specialty
Lines
|
317.4
|
344.9
|
36.1
|
|||||||
Life
and Group Non-Core
|
(64.3
|
)
|
(375.2
|
)
|
4.4
|
|||||
Other
Insurance
|
15.9
|
127.9
|
(644.5
|
)
|
||||||
Total
CNA Financial
|
239.8
|
425.0
|
(1,246.1
|
)
|
||||||
Lorillard
(b)
|
707.8
|
641.4
|
587.6
|
|||||||
Boardwalk
Pipeline
|
92.1
|
48.8
|
22.5
|
|||||||
Diamond
Offshore
|
127.3
|
(9.3
|
)
|
(27.2
|
)
|
|||||
Loews
Hotels
|
31.2
|
21.4
|
11.2
|
|||||||
Corporate
and other
|
(5.3
|
)
|
108.0
|
(2.0
|
)
|
|||||
Income
(loss) from continuing operations
|
1,192.9
|
1,235.3
|
(654.0
|
)
|
||||||
Discontinued
operations
|
18.7
|
(19.5
|
)
|
56.8
|
||||||
Total
|
$
|
1,211.6
|
$
|
1,215.8
|
$
|
(597.2
|
)
|
(a)
|
Investment
gains (losses) included in Revenues, Pretax income (loss) and Net
income
(loss) are as follows:
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
Revenues
and pretax income (loss):
|
||||||||||
CNA
Financial:
|
||||||||||
Standard
Lines
|
$
|
20.4
|
$
|
218.7
|
$
|
361.0
|
||||
Specialty
Lines
|
13.7
|
83.9
|
114.0
|
|||||||
Life
and Group Non-Core
|
(29.6
|
)
|
(611.0
|
)
|
(141.0
|
)
|
||||
Other
Insurance
|
(11.0
|
)
|
63.9
|
139.4
|
||||||
Total
CNA Financial
|
(6.5
|
)
|
(244.5
|
)
|
473.4
|
|||||
Corporate
and other
|
(6.7
|
)
|
(11.5
|
)
|
(9.3
|
)
|
||||
Total
|
$
|
(13.2
|
)
|
$
|
(256.0
|
)
|
$
|
464.1
|
||
Net
income (loss):
|
||||||||||
CNA
Financial:
|
||||||||||
Standard
Lines
|
$
|
8.5
|
$
|
126.2
|
$
|
211.1
|
||||
Specialty
Lines
|
10.7
|
49.6
|
66.7
|
|||||||
Life
and Group Non-Core
|
(17.6
|
)
|
(349.0
|
)
|
(97.6
|
)
|
||||
Other
Insurance
|
(8.5
|
)
|
36.1
|
85.5
|
||||||
Total
CNA Financial
|
(6.9
|
)
|
(137.1
|
)
|
265.7
|
|||||
Corporate
and other
|
(3.9
|
)
|
(7.5
|
)
|
(3.9
|
)
|
||||
Total
|
$
|
(10.8
|
)
|
$
|
(144.6
|
)
|
$
|
261.8
|
(b)
|
Includes
pretax charges related to the settlement of tobacco litigation of
$876.4,
$845.9 and $785.2 ($537.7, $522.6 and $489.5 after taxes) for the
respective periods.
|
(c)
|
Income
taxes and interest expense are as
follows:
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
||||||||||||||||
Income
Taxes
|
Interest
Expense
|
Income
Taxes
|
Interest
Expense
|
Income
Taxes
|
Interest
Expense
|
||||||||||||||
|
|||||||||||||||||||
CNA
Financial:
|
|||||||||||||||||||
Standard
Lines
|
$
|
(98.8
|
)
|
$
|
1.5
|
$
|
107.0
|
$
|
0.9
|
$
|
(462.7
|
)
|
$
|
0.9
|
|||||
Specialty
Lines
|
155.9
|
3.5
|
180.0
|
7.4
|
(18.6
|
)
|
1.6
|
||||||||||||
Life
and Group Non-Core
|
(68.6
|
)
|
24.2
|
(267.7
|
)
|
24.9
|
(0.2
|
)
|
13.4
|
||||||||||
Other
Insurance
|
(88.9
|
)
|
95.1
|
16.9
|
90.7
|
(412.8
|
)
|
113.9
|
|||||||||||
Total
CNA Financial
|
(100.4
|
)
|
124.3
|
36.2
|
123.9
|
(894.3
|
)
|
129.8
|
|||||||||||
Lorillard
|
445.6
|
0.5
|
396.8
|
354.5
|
0.1
|
||||||||||||||
Boardwalk
Pipeline
|
60.8
|
60.1
|
32.3
|
30.1
|
15.1
|
19.4
|
|||||||||||||
Diamond
Offshore
|
104.7
|
41.8
|
3.0
|
30.2
|
(5.6
|
)
|
23.9
|
||||||||||||
Loews
Hotels
|
18.8
|
10.9
|
9.8
|
5.7
|
7.4
|
9.0
|
|||||||||||||
Corporate
and other
|
(39.1
|
)
|
126.6
|
58.1
|
134.2
|
(3.7
|
)
|
126.2
|
|||||||||||
Total
|
$
|
490.4
|
$
|
364.2
|
$
|
536.2
|
$
|
324.1
|
$
|
(526.6
|
)
|
$
|
308.4
|
Investments
|
Receivables
|
Total
Assets
|
|||||||||||||||||
December
31
|
2005
|
2004
|
2005
|
2004
|
2005
|
2004
|
|||||||||||||
(In
millions)
|
|||||||||||||||||||
CNA
Financial
|
$
|
39,692.9
|
$
|
39,227.3
|
$
|
14,722.4
|
$
|
18,337.6
|
$
|
58,730.0
|
$
|
62,430.4
|
|||||||
Lorillard
|
1,747.7
|
1,545.6
|
25.5
|
32.1
|
2,795.5
|
2,677.7
|
|||||||||||||
Loews
Hotels
|
9.5
|
63.8
|
21.6
|
19.1
|
440.1
|
562.2
|
|||||||||||||
Diamond
Offshore
|
819.9
|
876.9
|
357.1
|
187.6
|
3,646.3
|
3,406.2
|
|||||||||||||
Boardwalk
Pipeline
|
65.0
|
9.0
|
106.8
|
131.6
|
2,482.1
|
2,452.6
|
|||||||||||||
Corporate
and eliminations
|
3,061.0
|
2,575.9
|
80.3
|
125.5
|
2,581.6
|
2,191.2
|
|||||||||||||
Total
|
$
|
45,396.0
|
$
|
44,298.5
|
$
|
15,313.7
|
$
|
18,833.5
|
$
|
70,675.6
|
$
|
73,720.3
|
Note
24.
|
Consolidating
Financial Information
|
December
31, 2005
|
CNA
Financial
|
Lorillard
|
Boardwalk
Pipeline
|
Diamond
Offshore
|
Loews
Hotels
|
Corporate
and
Other
|
Eliminations
|
Total
|
|||||||||||||||||
(In
millions)
|
|||||||||||||||||||||||||
Assets:
|
|||||||||||||||||||||||||
Investments
|
$
|
39,692.9
|
$
|
1,747.7
|
$
|
65.0
|
$
|
819.9
|
$
|
9.5
|
$
|
3,061.0
|
$
|
45,396.0
|
|||||||||||
Cash
|
96.4
|
2.4
|
0.8
|
24.9
|
9.6
|
19.0
|
153.1
|
||||||||||||||||||
Receivables
|
14,722.4
|
25.5
|
106.8
|
357.1
|
21.6
|
145.7
|
$
|
(65.4
|
)
|
15,313.7
|
|||||||||||||||
Property,
plant and equipment
|
148.5
|
213.9
|
1,867.4
|
2,333.7
|
366.6
|
21.5
|
4,951.6
|
||||||||||||||||||
Deferred
income taxes
|
1,140.5
|
428.5
|
16.6
|
22.2
|
(702.5
|
)
|
905.3
|
||||||||||||||||||
Goodwill
and other intangible assets
|
104.5
|
163.5
|
21.8
|
2.6
|
5.0
|
297.4
|
|||||||||||||||||||
Investments
in capital stocks of
|
|||||||||||||||||||||||||
subsidiaries
|
11,645.1
|
(11,645.1
|
)
|
||||||||||||||||||||||
Other
assets
|
1,075.9
|
377.5
|
262.0
|
88.9
|
30.2
|
75.1
|
1,909.6
|
||||||||||||||||||
Deferred
acquisition costs of
|
|||||||||||||||||||||||||
insurance
subsidiaries
|
1,197.4
|
1,197.4
|
|||||||||||||||||||||||
Separate
account business
|
551.5
|
551.5
|
|||||||||||||||||||||||
Total
assets
|
$
|
58,730.0
|
$
|
2,795.5
|
$
|
2,482.1
|
$
|
3,646.3
|
$
|
440.1
|
$
|
14,994.6
|
$
|
(12,413.0
|
)
|
$
|
70,675.6
|
||||||||
Liabilities
and Shareholders’ Equity:
|
|||||||||||||||||||||||||
Insurance
reserves
|
$
|
42,436.2
|
$
|
42,436.2
|
|||||||||||||||||||||
Payable
for securities purchased
|
226.5
|
$
|
175.2
|
401.7
|
|||||||||||||||||||||
Collateral
on loaned securities and
|
|||||||||||||||||||||||||
derivatives
|
767.4
|
767.4
|
|||||||||||||||||||||||
Short-term
debt
|
252.4
|
$
|
42.1
|
$
|
3.9
|
299.8
|
598.2
|
||||||||||||||||||
Long-term
debt
|
1,437.9
|
1,101.3
|
$
|
968.3
|
236.2
|
864.9
|
4,608.6
|
||||||||||||||||||
Reinsurance
balances payable
|
1,636.2
|
1,636.2
|
|||||||||||||||||||||||
Deferred
income taxes
|
456.9
|
50.2
|
195.4
|
$
|
(702.5
|
)
|
|||||||||||||||||||
Other
liabilities
|
2,239.9
|
$
|
1,455.7
|
347.0
|
335.8
|
11.5
|
206.2
|
(71.3
|
)
|
4,524.8
|
|||||||||||||||
Separate
account business
|
551.5
|
551.5
|
|||||||||||||||||||||||
Total
liabilities
|
49,548.0
|
1,455.7
|
1,490.4
|
1,761.0
|
301.8
|
1,741.5
|
(773.8
|
)
|
55,524.6
|
||||||||||||||||
Minority
interest
|
936.8
|
276.5
|
845.6
|
2,058.9
|
|||||||||||||||||||||
Shareholders’
equity
|
8,245.2
|
1,339.8
|
715.2
|
1,039.7
|
138.3
|
13,253.1
|
(11,639.2
|
)
|
13,092.1
|
||||||||||||||||
Total
liabilities and shareholders’ equity
|
$
|
58,730.0
|
$
|
2,795.5
|
$
|
2,482.1
|
$
|
3,646.3
|
$
|
440.1
|
$
|
14,994.6
|
$
|
(12,413.0
|
)
|
$
|
70,675.6
|
December
31, 2004
|
CNA
Financial
|
Lorillard
|
Boardwalk
Pipeline
|
Diamond
Offshore
|
Loews
Hotels
|
Corporate
and
Other
|
Eliminations
|
Total
|
|||||||||||||||||
(In
millions)
|
|||||||||||||||||||||||||
Assets:
|
|||||||||||||||||||||||||
Investments
|
$
|
39,227.3
|
$
|
1,545.6
|
$
|
9.0
|
$
|
876.9
|
$
|
63.8
|
$
|
2,575.9
|
$
|
44,298.5
|
|||||||||||
Cash
|
95.3
|
35.5
|
7.5
|
51.0
|
4.6
|
26.0
|
219.9
|
||||||||||||||||||
Receivables
|
18,337.6
|
32.1
|
131.6
|
187.6
|
19.1
|
144.3
|
$
|
(18.8
|
)
|
18,833.5
|
|||||||||||||||
Property,
plant and equipment
|
175.6
|
231.5
|
1,842.1
|
2,192.8
|
376.9
|
21.8
|
4,840.7
|
||||||||||||||||||
Deferred
income taxes
|
753.2
|
436.5
|
48.9
|
31.9
|
(625.2
|
)
|
645.3
|
||||||||||||||||||
Goodwill
and other intangible assets
|
118.3
|
163.5
|
9.7
|
2.6
|
5.0
|
299.1
|
|||||||||||||||||||
Investments
in capital stocks of
|
|||||||||||||||||||||||||
subsidiaries
|
11,874.9
|
(11,874.9
|
)
|
||||||||||||||||||||||
Other
assets
|
1,887.2
|
396.5
|
250.0
|
88.2
|
95.2
|
235.5
|
(205.2
|
)
|
2,747.4
|
||||||||||||||||
Deferred
acquisition costs of
|
|||||||||||||||||||||||||
insurance
subsidiaries
|
1,268.1
|
1,268.1
|
|||||||||||||||||||||||
Separate
account business
|
567.8
|
567.8
|
|||||||||||||||||||||||
Total
assets
|
$
|
62,430.4
|
$
|
2,677.7
|
$
|
2,452.6
|
$
|
3,406.2
|
$
|
562.2
|
$
|
14,915.3
|
$
|
(12,724.1
|
)
|
$
|
73,720.3
|
||||||||
Liabilities
and Shareholders’ Equity:
|
|||||||||||||||||||||||||
Insurance
reserves
|
$
|
43,652.2
|
$
|
43,652.2
|
|||||||||||||||||||||
Payable
for securities purchased
|
494.1
|
$
|
101.4
|
595.5
|
|||||||||||||||||||||
Collateral
on loaned securities and
|
|||||||||||||||||||||||||
derivatives
|
918.0
|
918.0
|
|||||||||||||||||||||||
Short-term
debt
|
530.9
|
$
|
477.1
|
$
|
2.1
|
1,010.1
|
|||||||||||||||||||
Long-term
debt
|
1,726.5
|
$
|
1,106.1
|
700.0
|
142.3
|
2,305.3
|
5,980.2
|
||||||||||||||||||
Reinsurance
balances payable
|
2,980.8
|
2,980.8
|
|||||||||||||||||||||||
Deferred
income taxes
|
361.5
|
38.0
|
225.7
|
$
|
(625.2
|
)
|
|||||||||||||||||||
Other
liabilities
|
2,380.5
|
$
|
1,392.6
|
253.5
|
193.2
|
166.3
|
208.1
|
(210.4
|
)
|
4,383.8
|
|||||||||||||||
Separate
account business
|
567.8
|
567.8
|
|||||||||||||||||||||||
Total
liabilities
|
53,250.8
|
1,392.6
|
1,359.6
|
1,731.8
|
348.7
|
2,840.5
|
(835.6
|
)
|
60,088.4
|
||||||||||||||||
Minority
interest
|
917.1
|
739.3
|
5.6
|
1,662.0
|
|||||||||||||||||||||
Shareholders’
equity
|
8,262.5
|
1,285.1
|
1,093.0
|
935.1
|
213.5
|
12,069.2
|
(11,888.5
|
)
|
11,969.9
|
||||||||||||||||
Total
liabilities and shareholders’ equity
|
$
|
62,430.4
|
$
|
2,677.7
|
$
|
2,452.6
|
$
|
3,406.2
|
$
|
562.2
|
$
|
14,915.3
|
$
|
(12,724.1
|
)
|
$
|
73,720.3
|
Year
Ended December 31, 2005
|
CNA
Financial
|
Lorillard
|
Boardwalk
Pipeline
|
Diamond
Offshore
|
Loews
Hotels
|
Corporate
and
Other
|
Eliminations
|
Total
|
|||||||||||||||||
(In
millions)
|
|||||||||||||||||||||||||
Revenues:
|
|||||||||||||||||||||||||
Insurance
premiums
|
$
|
7,568.7
|
$
|
(0.1
|
)
|
$
|
7,568.6
|
||||||||||||||||||
Net
investment income
|
1,891.9
|
$
|
63.6
|
$
|
1.5
|
$
|
26.0
|
$
|
6.0
|
$
|
109.8
|
2,098.8
|
|||||||||||||
Intercompany
interest and dividends
|
937.0
|
(937.0
|
)
|
||||||||||||||||||||||
Investment
losses
|
(6.5
|
)
|
(2.1
|
)
|
(1.2
|
)
|
(3.4
|
)
|
(13.2
|
)
|
|||||||||||||||
Manufactured
products
|
3,567.8
|
184.6
|
3,752.4
|
||||||||||||||||||||||
Other
|
411.0
|
6.0
|
569.8
|
1,268.1
|
344.5
|
11.8
|
2,611.2
|
||||||||||||||||||
Total
|
9,865.1
|
3,635.3
|
571.3
|
1,292.9
|
350.5
|
1,239.8
|
(937.1
|
)
|
16,017.8
|
||||||||||||||||
Expenses:
|
|||||||||||||||||||||||||
Insurance
claims and policyholders’
|
|||||||||||||||||||||||||
benefits
|
6,998.7
|
6,998.7
|
|||||||||||||||||||||||
Amortization
of deferred acquisition costs
|
1,542.6
|
1,542.6
|
|||||||||||||||||||||||
Cost
of manufactured products sold
|
2,114.4
|
87.9
|
2,202.3
|
||||||||||||||||||||||
Other
operating expenses
|
1,020.7
|
369.1
|
353.1
|
901.3
|
289.6
|
129.8
|
(0.1
|
)
|
3,063.5
|
||||||||||||||||
Interest
|
124.3
|
0.5
|
60.1
|
41.8
|
10.9
|
126.6
|
364.2
|
||||||||||||||||||
Total
|
9,686.3
|
2,484.0
|
413.2
|
943.1
|
300.5
|
344.3
|
(0.1
|
)
|
14,171.3
|
||||||||||||||||
178.8
|
1,151.3
|
158.1
|
349.8
|
50.0
|
895.5
|
(937.0
|
)
|
1,846.5
|
|||||||||||||||||
Income
tax expense (benefit)
|
(100.4
|
)
|
444.9
|
60.8
|
104.3
|
18.8
|
(38.0
|
)
|
490.4
|
||||||||||||||||
Minority
interest
|
39.4
|
5.2
|
118.6
|
163.2
|
|||||||||||||||||||||
Total
|
(61.0
|
)
|
444.9
|
66.0
|
222.9
|
18.8
|
(38.0
|
)
|
653.6
|
||||||||||||||||
Income
(loss) from continuing operations
|
239.8
|
706.4
|
92.1
|
126.9
|
31.2
|
933.5
|
(937.0
|
)
|
1,192.9
|
||||||||||||||||
Discontinued
operations, net
|
18.7
|
18.7
|
|||||||||||||||||||||||
Net
income (loss)
|
$
|
258.5
|
$
|
706.4
|
$
|
92.1
|
$
|
126.9
|
$
|
31.2
|
$
|
933.5
|
$
|
(937.0
|
)
|
$
|
1,211.6
|
Year
Ended December 31, 2004
|
CNA
Financial
|
Lorillard
|
Boardwalk
Pipeline
|
Diamond
Offshore
|
Loews
Hotels
|
Corporate
and
Other
|
Eliminations
|
Total
|
|||||||||||||||||
(In
millions)
|
|||||||||||||||||||||||||
Revenues:
|
|||||||||||||||||||||||||
Insurance
premiums
|
$
|
8,208.9
|
$
|
(3.7
|
)
|
$
|
8,205.2
|
||||||||||||||||||
Net
investment income
|
1,679.5
|
$
|
36.6
|
$
|
0.7
|
$
|
12.2
|
$
|
2.3
|
$
|
144.0
|
1,875.3
|
|||||||||||||
Intercompany
interest and dividends
|
919.9
|
(919.9
|
)
|
||||||||||||||||||||||
Investment
gains (losses)
|
(244.5
|
)
|
1.4
|
0.3
|
(13.2
|
)
|
(256.0
|
)
|
|||||||||||||||||
Manufactured
products
|
3,347.8
|
167.4
|
3,515.2
|
||||||||||||||||||||||
Other
|
284.3
|
264.4
|
823.4
|
312.9
|
212.2
|
1,897.2
|
|||||||||||||||||||
Total
|
9,928.2
|
3,385.8
|
265.1
|
835.9
|
315.2
|
1,430.3
|
(923.6
|
)
|
15,236.9
|
||||||||||||||||
Expenses:
|
|||||||||||||||||||||||||
Insurance
claims and policyholders’
|
|||||||||||||||||||||||||
benefits
|
6,445.0
|
6,445.0
|
|||||||||||||||||||||||
Amortization
of deferred acquisition
|
|||||||||||||||||||||||||
costs
|
1,679.8
|
1,679.8
|
|||||||||||||||||||||||
Cost
of manufactured products sold
|
1,965.6
|
79.8
|
2,045.4
|
||||||||||||||||||||||
Other
operating expenses
|
1,158.0
|
380.6
|
153.9
|
815.2
|
278.3
|
131.5
|
(3.7
|
)
|
2,913.8
|
||||||||||||||||
Interest
|
123.9
|
30.1
|
30.2
|
5.7
|
140.5
|
(6.3
|
)
|
324.1
|
|||||||||||||||||
Total
|
9,406.7
|
2,346.2
|
184.0
|
845.4
|
284.0
|
351.8
|
(10.0
|
)
|
13,408.1
|
||||||||||||||||
521.5
|
1,039.6
|
81.1
|
(9.5
|
)
|
31.2
|
1,078.5
|
(913.6
|
)
|
1,828.8
|
||||||||||||||||
Income
tax expense
|
36.2
|
397.3
|
32.3
|
3.0
|
9.8
|
57.6
|
536.2
|
||||||||||||||||||
Minority
interest
|
60.3
|
(3.3
|
)
|
0.3
|
57.3
|
||||||||||||||||||||
Total
|
96.5
|
397.3
|
32.3
|
(0.3
|
)
|
9.8
|
57.9
|
-
|
593.5
|
||||||||||||||||
Income
from continuing operations
|
425.0
|
642.3
|
48.8
|
(9.2
|
)
|
21.4
|
1,020.6
|
(913.6
|
)
|
1,235.3
|
|||||||||||||||
Discontinued
operations, net
|
(19.5
|
)
|
(19.5
|
)
|
|||||||||||||||||||||
Net
income (loss)
|
$
|
405.5
|
$
|
642.3
|
$
|
48.8
|
$
|
(9.2
|
)
|
$
|
21.4
|
$
|
1,020.6
|
$
|
(913.6
|
)
|
$
|
1,215.8
|
Year
Ended December 31, 2003
|
CNA
Financial
|
Lorillard
|
Boardwalk
Pipeline
|
Diamond
Offshore
|
Loews
Hotels
|
Corporate
and
Other
|
Eliminations
|
Total
|
|||||||||||||||||
(In
millions)
|
|||||||||||||||||||||||||
Revenues:
|
|||||||||||||||||||||||||
Insurance
premiums
|
$
|
9,215.3
|
$
|
(3.7
|
)
|
$
|
9,211.6
|
||||||||||||||||||
Net
investment income
|
1,655.9
|
$
|
39.9
|
$
|
0.2
|
$
|
12.0
|
$
|
2.4
|
$
|
148.7
|
1,859.1
|
|||||||||||||
Intercompany
interest and dividends
|
876.6
|
(876.6
|
)
|
||||||||||||||||||||||
Investment
gains (losses)
|
473.4
|
(9.7
|
)
|
(6.9
|
)
|
7.3
|
464.1
|
||||||||||||||||||
Manufactured
products
|
3,255.6
|
163.2
|
3,418.8
|
||||||||||||||||||||||
Other
|
383.5
|
(0.1
|
)
|
143.0
|
682.9
|
283.6
|
13.2
|
1,506.1
|
|||||||||||||||||
Total
|
11,728.1
|
3,285.7
|
143.2
|
688.0
|
286.0
|
1,209.0
|
(880.3
|
)
|
16,459.7
|
||||||||||||||||
Expenses:
|
|||||||||||||||||||||||||
Insurance
claims and policyholders’
|
|||||||||||||||||||||||||
benefits
|
10,276.2
|
10,276.2
|
|||||||||||||||||||||||
Amortization
of deferred acquisition costs
|
1,964.6
|
1,964.6
|
|||||||||||||||||||||||
Cost
of manufactured products sold
|
1,893.1
|
79.7
|
1,972.8
|
||||||||||||||||||||||
Other
operating expenses
|
1,652.4
|
460.0
|
86.2
|
724.2
|
258.4
|
117.3
|
(3.7
|
)
|
3,294.8
|
||||||||||||||||
Interest
|
129.8
|
0.1
|
19.4
|
23.9
|
9.0
|
126.2
|
308.4
|
||||||||||||||||||
Total
|
14,023.0
|
2,353.2
|
105.6
|
748.1
|
267.4
|
323.2
|
(3.7
|
)
|
17,816.8
|
||||||||||||||||
(2,294.9
|
)
|
932.5
|
37.6
|
(60.1
|
)
|
18.6
|
885.8
|
(876.6
|
)
|
(1,357.1
|
)
|
||||||||||||||
Income
tax (benefit) expense
|
(894.3
|
)
|
351.2
|
15.1
|
(8.1
|
)
|
7.4
|
2.1
|
(526.6
|
)
|
|||||||||||||||
Minority
interest
|
(154.5
|
)
|
(22.4
|
)
|
0.4
|
(176.5
|
)
|
||||||||||||||||||
Total
|
(1,048.8
|
)
|
351.2
|
15.1
|
(30.5
|
)
|
7.4
|
2.5
|
-
|
(703.1
|
)
|
||||||||||||||
(Loss)
income from continuing operations
|
(1,246.1
|
)
|
581.3
|
22.5
|
(29.6
|
)
|
11.2
|
883.3
|
(876.6
|
)
|
(654.0
|
)
|
|||||||||||||
Discontinued
operations, net
|
1.4
|
55.4
|
56.8
|
||||||||||||||||||||||
Net
(loss) income
|
$
|
(1,244.7
|
)
|
$
|
581.3
|
$
|
22.5
|
$
|
(29.6
|
)
|
$
|
66.6
|
$
|
883.3
|
$
|
(876.6
|
)
|
$
|
(597.2
|
)
|
Note
25.
|
Restatement
for Discontinued Operations and Classification of Cash
Flows
|
December
31
|
2004
|
||||||
(In
millions)
|
Previously
Reported
|
Restated
|
|||||
Consolidated
Balance Sheet:
|
|||||||
Deferred
income taxes
|
$
|
640.9
|
$
|
645.3
|
|||
Other
assets (a)
|
2,808.7
|
2,600.4
|
|||||
Total
assets (a)
|
73,772.2
|
73,568.3
|
|||||
Minority
interest
|
1,679.8
|
1,662.0
|
|||||
Earnings
retained in the business
|
9,589.3
|
9,392.7
|
|||||
Accumulated
other comprehensive income
|
586.9
|
597.4
|
|||||
Total
shareholders’ equity
|
12,156.0
|
11,969.9
|
(a)
|
The
restated amounts exclude a reclassification which increased Other
assets
and Total assets by $152.0 million.
|
Year
Ended December 31
|
2004
|
2003
|
|||||||||||
(In
millions, except per share data)
|
Previously
Reported
|
Restated
|
Previously
Reported
|
Restated
|
|||||||||
Consolidated
Statements of Operations:
|
|||||||||||||
Discontinued
operations, net
|
$
|
-
|
$
|
(19.5
|
)
|
$
|
55.4
|
$
|
56.8
|
||||
Net
income (loss)
|
1,235.3
|
1,215.8
|
(598.6
|
)
|
(597.2
|
)
|
|||||||
Per
Loews common share share-basic and diluted
|
|||||||||||||
Discontinued
operations, net
|
$
|
-
|
$
|
(0.10
|
)
|
$
|
0.30
|
$
|
0.31
|
||||
Net
income (loss)
|
5.66
|
5.56
|
(3.85
|
)
|
(3.84
|
)
|
·
|
CNA’s
net purchases and sales of trading securities and changes in the
net
receivable/payable from unsettled investment purchases and sales
related
to trading securities, previously classified within investing activities,
have been reclassified to cash flows from operating
activities.
|
·
|
CNA’s
cash flows from equity method investees were reclassified to distinguish
between return on investments, which are reflected within operating
cash
flows, and return of investments, which are reflected within investing
cash flows. Previously all amounts were reflected within investing
cash
flows.
|
·
|
Deposits
and withdrawals related to investment contract products issued by CNA
have been reflected within financing cash flows. Previously, amounts
related to certain investment contracts were reflected within operating
cash flows.
|
·
|
The
impact of the cumulative translation adjustment related to CNA,
previously
reflected within investing activities, is now classified within
operating
activities.
|
Year
Ended December 31
|
2004
|
2003
|
|||||||||||
Previously
Reported
|
Restated
|
Previously
Reported
|
Restated
|
||||||||||
Cash
flows from continuing operations provided
|
|||||||||||||
(used) by:
|
|||||||||||||
Operating
activities
|
$
|
2,821.1
|
$
|
3,198.3
|
$
|
2,783.8
|
$
|
3,188.9
|
|||||
Investing
activities
|
(3,977.3
|
)
|
(4,059.8
|
)
|
(2,871.6
|
)
|
(3,225.2
|
)
|
|||||
Financing
activities
|
1,195.3
|
888.4
|
84.7
|
20.9 |
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure.
|
Item
9A.
|
Controls
and Procedures.
|
Item
9B.
|
Other
Information.
|
Item
15.
|
Exhibits
and Financial Statement
Schedules.
|
Page
Number
|
|
2.
Financial Statement Schedules:
|
|
Loews
Corporation and Subsidiaries:
|
|
Schedule
I-Condensed financial information of Registrant for the years
ended
December 31,
|
|
2005,
2004 and 2003
|
L-1
|
Schedule
II-Valuation and qualifying accounts for the years ended December
31,
2005, 2004 and
|
|
2003
|
L-3
|
Schedule
V-Supplemental information concerning property-casualty insurance
operations for the
|
|
years
ended December 31, 2005, 2004 and 2003
|
L-4
|
Description
|
Exhibit
Number
|
|||
3.
Exhibits:
|
||||
(3)
|
Articles
of Incorporation and By-Laws
|
|||
Restated
Certificate of Incorporation of the Registrant, dated April
16, 2002,
incorporated herein by reference to Exhibit 3 to registrant’s Report on
Form 10-Q for the quarter ended March 31, 2002
|
3.01
|
|||
By-Laws
of the Registrant as amended through May 10, 2005, incorporated
herein by
reference to Exhibit 3.1 to Registrant’s Report on Form 8-K filed May 13,
2005.
|
3.02
|
|||
The
Carolina Group Policy Statement
|
3.03
|
* | ||
(4)
|
Instruments
Defining the Rights of Security Holders, Including
Indentures
|
|||
The
Registrant hereby agrees to furnish to the Commission upon
request copies
of instruments with respect to long-term debt, pursuant to
Item
601(b)(4)(iii) of Regulation S-K.
|
||||
(10)
|
Material
Contracts
|
|||
Loews
Corporation Deferred Compensation Plan amended and restated
as of December
31, 2005
|
10.01
|
* | ||
Amended
and Restated Loews Corporation Incentive Compensation Plan
for Executive
Officers, incorporated herein by reference to Exhibit B to
Registrant’s
Definitive Proxy Statement filed on March 25, 2005
|
10.02
|
|||
Amended
and Restated Loews Corporation 2000 Stock Option Plan, incorporated
herein
by reference to Exhibit A to Registrant’s Definitive Proxy Statement filed
on March 25, 2005
|
10.03
|
|||
Amended
and Restated Carolina Group 2002 Stock Option Plan
|
10.04
|
* | ||
Comprehensive
Settlement Agreement and Release with the State of Florida
to settle and
resolve with finality all present and future economic claims
by the State
and its subdivisions relating to the use of or exposure to
tobacco
products, incorporated herein by reference to Exhibit 10
to Registrant’s
Report on Form 8-K filed September 5, 1997
|
10.05
|
|||
Comprehensive
Settlement Agreement and Release with the State of Texas
to settle and
resolve with finality all present and future economic claims
by the State
and its subdivisions relating to the use of or exposure to
tobacco
products, incorporated herein by reference to Exhibit 10
to Registrant’s
Report on Form 8-K filed February 3, 1998
|
10.06
|
|||
State
of Minnesota Settlement Agreement and Stipulation for Entry
of Consent
Judgment to settle and resolve with finality all claims of
the State of
Minnesota relating to the subject matter of this action which
have been or
could have been asserted by the State, incorporated herein
by reference to
Exhibit 10.1 to Registrant’s Report on Form 10-Q for the quarter ended
March 31, 1998
|
10.07
|
Description
|
Exhibit
Number
|
|||
State
of Minnesota Consent Judgment relating to the settlement of
tobacco
litigation, incorporated herein by reference to Exhibit 10.2
to
Registrant’s Report on Form 10-Q for the quarter ended March 31,
1998
|
10.08
|
|||
State
of Minnesota Settlement Agreement and Release relating to the
settlement
of tobacco litigation, incorporated herein by reference to
Exhibit 10.3 to
Registrant’s Report on Form 10-Q for the quarter ended March 31, 1998
|
10.09
|
|||
State
of Minnesota State Escrow Agreement relating to the settlement
of tobacco
litigation, incorporated herein by reference to Exhibit 10.6
to
Registrant’s Report on Form 10-Q for the quarter ended March 31, 1998
|
10.10
|
|||
Stipulation
of Amendment to Settlement Agreement and For Entry of Agreed
Order, dated
July 2, 1998, regarding the settlement of the State of Mississippi
health
care cost recovery action, incorporated herein by reference
to Exhibit
10.1 to Registrant’s Report on Form 10-Q for the quarter ended June 30,
1998
|
10.11
|
|||
Mississippi
Fee Payment Agreement, dated July 2, 1998, regarding the payment
of
attorneys’ fees, incorporated herein by reference to Exhibit 10.2 to
Registrant’s Report on Form10-Q for the quarter ended June 30, 1998
|
10.12
|
|||
Stipulation
of Amendment to Settlement Agreement and For Entry of Consent
Decree,
dated July 24, 1998, regarding the settlement of the Texas
health care
cost recovery action, incorporated herein by reference to Exhibit
10.4 to
Registrant’s Report on Form 10-Q for the quarter ended June 30, 1998
|
10.13
|
|||
Texas
Fee Payment Agreement, dated July 24, 1998, regarding the payment
of
attorneys’ fees, incorporated herein by reference to Exhibit 10.5 to
Registrant’s Report on Form 10-Q for the quarter ended June 30, 1998
|
10.14
|
|||
Stipulation
of Amendment to Settlement Agreement and For Entry of Consent
Decree,
dated September 11, 1998, regarding the settlement of the Florida
health
care cost recovery action, incorporated herein by reference
to Exhibit
10.1 to Registrant’s Report on Form 10-Q for the quarter ended September
30, 1998
|
10.15
|
|||
Florida
Fee Payment Agreement, dated September 11, 1998, regarding
the payment of
attorneys’ fees, incorporated herein by reference to Exhibit 10.2 to
Registrant’s Report on Form 10-Q for the quarter ended September 30, 1998
|
10.16
|
|||
Master
Settlement Agreement with 46 states, the District of Columbia,
the
Commonwealth of Puerto Rico, Guam, the U.S. Virgin Islands,
American Samoa
and the Northern Marianas to settle the asserted and unasserted
health
care cost recovery and certain other claims of those states,
incorporated
herein by reference to Exhibit 10 to Registrant’s Report on Form 8-K filed
November 25, 1998
|
10.17
|
|||
Employment
Agreement dated as of January 1, 1999 between Registrant and
Andrew H.
Tisch, incorporated herein by reference to Exhibit 10.32 to
Registrant’s
Report on Form 10-K for the year ended December 31, 1998
|
10.18
|
Description
|
Exhibit
Number
|
|||
Amendment
dated January 1, 2002 to Employment Agreement between Registrant
and
Andrew H. Tisch, incorporated herein by reference to Exhibit
10.23 to
Registrant’s Report on Form 10-K for the year ended December 31,
2001
|
10.19
|
|||
Amendment
dated January 1, 2003 to Employment Agreement between Registrant
and
Andrew H. Tisch, incorporated herein by reference to Exhibit
10.21 to
Registrant’s Report on Form 10-K for the year ended December 31,
2002
|
10.20
|
|||
Amendment
dated January 1, 2004 to Employment Agreement between Registrant
and
Andrew H. Tisch, incorporated herein by reference to Exhibit
10.24 to
Registrant’s Report on Form 10-K for the year ended December 31,
2003
|
10.21
|
|||
Amendment
dated February 11, 2005, to Employment Agreement between Registrant
and
Andrew H. Tisch, incorporated herein by reference to Exhibit
10.24 to
Registrant’s Report on Form 10-K for the year ended December 31,
2004
|
10.22
|
|||
Supplemental
Retirement Agreement dated January 1, 2002 between Registrant
and Andrew
H. Tisch, incorporated herein by reference to Exhibit 10.30
to
Registrant’s Report on Form 10-K for the year ended December 31, 2001
|
10.23
|
|||
Amendment
No. 1 dated January 1, 2003 to Supplemental Retirement Agreement
between
Registrant and Andrew H. Tisch, incorporated herein by reference
to
Exhibit 10.33 to Registrant’s Report on Form 10-K for the year ended
December 31, 2002
|
10.24
|
|||
Amendment
No. 2 dated January 1, 2004 to Supplemental Retirement Agreement
between
Registrant and Andrew H. Tisch, incorporated herein by reference
to
Exhibit 10.27 to Registrant’s Report on Form 10-K for the year ended
December 31, 2003
|
10.25
|
|||
Employment
Agreement dated as of January 1, 1999 between Registrant and
James S.
Tisch, incorporated herein by reference to Exhibit 10.32 to
Registrant’s
Report on Form 10-K for the year ended December 31, 1998
|
10.26
|
|||
Amendment
dated January 1, 2002 to Employment Agreement between Registrant
and James
S. Tisch, incorporated herein by reference to Exhibit 10.23
to
Registrant’s Report on Form 10-K for the year ended December 31,
2001
|
10.27
|
|||
Amendment
dated January 1, 2003 to Employment Agreement between Registrant
and James
S. Tisch, incorporated herein by reference to Exhibit 10.23
to
Registrant’s Report on Form 10-K for the year ended December 31,
2002
|
10.28
|
|||
Amendment
dated January 1, 2004 to Employment Agreement between Registrant
and James
S. Tisch, incorporated herein by reference to Exhibit 10.31
to
Registrant’s Report on Form 10-K for the year ended December 31,
2003
|
10.29
|
|||
Amendment
dated February 11, 2005, to Employment Agreement between Registrant
and
James S. Tisch, incorporated herein by reference to Exhibit
10.32 to
Registrant’s Report on Form 10-K for the year ended December 31,
2004
|
10.30
|
|||
Supplemental
Retirement Agreement dated January 1, 2002 between Registrant
and James S.
Tisch, incorporated herein by reference to Exhibit 10.31 to
Registrant’s
Report on Form 10-K for the year ended December 31, 2001
|
10.31
|
Description
|
Exhibit
Number
|
|||
Amendment
No. 1 dated January 1, 2003 to Supplemental Retirement Agreement
between
Registrant and James S. Tisch, incorporated herein by reference
to Exhibit
10.35 to Registrant’s Report on Form 10-K for the year ended December 31,
2002
|
10.32
|
|||
Amendment
No. 2 dated January 1, 2004 to Supplemental Retirement Agreement
between
Registrant and James S. Tisch, incorporated herein by reference
to Exhibit
10.34 to Registrant’s Report on Form 10-K for the year ended December 31,
2003
|
10.33
|
|||
Employment
Agreement dated as of January 1, 1999 between Registrant and
Jonathan M.
Tisch, incorporated herein by reference to Exhibit 10.33 to
Registrant’s
Report on Form 10-K for the year ended December 31, 1998
|
10.34
|
|||
Amendment
dated January 1, 2002 to Employment Agreement between Registrant
and
Jonathan M. Tisch, incorporated herein by reference to Exhibit
10.24 to
Registrant’s Report on Form 10-K for the year ended December 31,
2001
|
10.35
|
|||
Amendment
dated January 1, 2003 to Employment Agreement between Registrant
and
Jonathan M. Tisch, incorporated herein by reference to Exhibit
10.25 to
Registrant’s Report on Form 10-K for the year ended December 31,
2002
|
10.36
|
|||
Amendment
dated January 1, 2004 to Employment Agreement between Registrant
and
Jonathan M. Tisch, incorporated herein by reference to Exhibit
10.38 to
Registrant’s Report on Form 10-K for the year ended December 31,
2003
|
10.37
|
|||
Amendment
dated February 11, 2005, to Employment Agreement between Registrant
and
Jonathan M. Tisch, incorporated herein by reference to Exhibit
10.40 to
Registrant’s Report on Form 10-K for the year ended December 31,
2004
|
10.38
|
|||
Supplemental
Retirement Agreement dated January 1, 2002 between Registrant
and Jonathan
M. Tisch, incorporated herein by reference to Exhibit 10.32
to
Registrant’s Report on Form 10-K for the year ended December 31, 2001
|
10.39
|
|||
Amendment
No. 1 dated January 1, 2003 to Supplemental Retirement Agreement
between
Registrant and Jonathan M. Tisch, incorporated herein by reference
to
Exhibit 10.37 to Registrant’s Report on Form 10-K for the year ended
December 31, 2002
|
10.40
|
|||
Amendment
No. 2 dated January 1, 2004 to Supplemental Retirement Agreement
between
Registrant and Jonathan M. Tisch, incorporated herein by reference
to
Exhibit 10.41 to Registrant’s Report on Form 10-K for the year ended
December 31, 2003
|
10.41
|
|||
Supplemental
Retirement Agreement dated March 24, 2000 between Registrant
and Peter W.
Keegan, incorporated herein by reference to Exhibit 10.01 to
Registrant’s
Report on Form 10-Q for the quarter ended March 31, 2000
|
10.42
|
|||
First
Amendment to Supplemental Retirement Agreement dated June 30,
2001 between
Registrant and Peter W. Keegan, incorporated herein by reference
to
Exhibit 10 to Registrant’s Report on From 10-Q for the quarter ended March
31, 2002
|
10.43
|
|||
Second
Amendment to Supplemental Retirement Agreement dated March
25, 2003
between Registrant and Peter W. Keegan and Third Amendment
to Supplemental
Retirement Agreement dated March 31, 2004 between Registrant
and Peter W.
Keegan
|
10.44
|
*
|
Description
|
Exhibit
Number
|
|||
Fourth
Amendment to Supplemental Retirement Agreement dated December
6, 2005
between Registrant and Peter W. Keegan, incorporated herein
by reference
to Exhibit 10.1 to Registrant’s Report on Form 8-K filed December 7,
2005
|
10.45
|
|||
Supplemental
Retirement Agreement dated September 21, 1999 between Registrant
and
Arthur L. Rebell, incorporated herein by reference to Exhibit
10.28 to
Registrant’s Report on Form 10-K for the year ended December 31, 1999
|
10.46
|
|||
First
Amendment to Supplemental Retirement Agreement dated March
24, 2000
between Registrant and Arthur L. Rebell, incorporated herein
by reference
to Exhibit 10.2 to Registrant’s Report on Form 10-Q for the quarter ended
March 31, 2000
|
10.47
|
|||
Second
Amendment to Supplemental Retirement Agreement dated March
28, 2001
between Registrant and Arthur L. Rebell, incorporated herein
by reference
to Exhibit 10.28 to Registrant’s Report on Form 10-K for the year ended
December 31, 2001
|
10.48
|
|||
Third
Amendment to Supplemental Retirement Agreement dated February
28, 2002
between Registrant and Arthur L. Rebell, incorporated herein
by reference
to Exhibit 10.33 to Registrant’s Report on Form 10-K for the year ended
December 31, 2001
|
10.49
|
|||
Fourth
Amendment to Supplemental Retirement Agreement dated March
31, 2003
between Registrant and Arthur L. Rebell and Fifth Amendment
to
Supplemental Retirement Agreement dated March 31, 2004 between
Registrant
and Arthur L. Rebell
|
10.50
|
*
|
||
Sixth
Amendment to Supplemental Retirement Agreement dated December
13, 2005
between Registrant and Arthur L. Rebell, incorporated herein
by reference
to Exhibit 10.1 to Registrant’s Report on Form 8-K filed December 14,
2005
|
10.51
|
|||
Forms
of Stock Option Certificates for grants to executive officers
and other
employees and to non-employee directors pursuant to the Loews
Corporation
2000 Stock Option Plan, incorporated herein by reference to
Exhibits 10.1
and 10.2, respectively, to Registrant’s Report on Form 8-K filed September
27, 2004
|
10.52
|
|||
Form
of Award Certificate for grants of stock appreciation rights
to executive
officers and other employees pursuant to the Loews Corporation
2000 Stock
Option Plan, incorporated herein by reference to Exhibit 10.1
to
Registrant’s Report on Form 8-K filed January 31, 2006
|
10.53
|
|||
(21)
|
Subsidiaries
of the Registrant
|
|
||
List
of subsidiaries of Registrant
|
21.01
|
* | ||
(23)
|
Consents
of Experts and Counsel
|
|||
Consent
of Deloitte & Touche LLP
|
23.01
|
* |
|
Description
|
Exhibit
Number
|
|||
(31)
|
Rule 13a-14(a)/15d-14(a) Certifications | |||
Certification
by the Chief Executive Officer of the Company pursuant to Rule
13a-14(a)
and Rule 15d-14(a)
|
31.01
|
*
|
||
Certification by the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) and Rule 15d-14(a) |
31.02
|
*
|
||
(32) | Section 1350 Certifications | |||
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) |
32.01
|
*
|
||
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)
|
32.02
|
*
|
||
(99)
|
Other
|
|||
Pending
Tobacco Litigation
|
99.01
|
* | ||
|
*
|
Filed
herewith.
|
LOEWS
CORPORATION
|
|||
Dated:
|
March
9, 2006
|
By
|
/s/
Peter W. Keegan
|
(Peter
W. Keegan, Senior Vice President and
|
|||
Chief
Financial Officer)
|
Dated:
|
March
9, 2006
|
By
|
/s/
James S. Tisch
|
(James
S. Tisch, President,
|
|||
Chief
Executive Officer and Director)
|
|||
Dated:
|
March
9, 2006
|
By
|
/s/
Peter W. Keegan
|
(Peter
W. Keegan, Senior Vice President and
|
|||
Chief
Financial Officer)
|
|||
Dated:
|
March
9, 2006
|
By
|
/s/
Mark S. Schwartz
|
(Mark
S. Schwartz, Controller)
|
|||
Dated:
|
March
9, 2006
|
By
|
/s/
Ann E. Berman
|
(Ann
E. Berman, Director)
|
|||
Dated:
|
March
9, 2006
|
By
|
/s/
Joseph L. Bower
|
(Joseph
L. Bower, Director)
|
|||
Dated:
|
March
9, 2006
|
By
|
/s/
John Brademas
|
(John
Brademas, Director)
|
|||
Dated:
|
March
9, 2006
|
By
|
/s/
Charles M. Diker
|
(Charles
M. Diker, Director)
|
|||
Dated:
|
March
9, 2006
|
By
|
/s/
Paul J. Fribourg
|
(Paul
J. Fribourg, Director)
|
|||
Dated:
|
March
9, 2006
|
By
|
/s/
Walter L. Harris
|
(Walter
L. Harris, Director)
|
|||
Dated:
|
March
9, 2006
|
By
|
/s/
Philip A. Laskawy
|
(Philip
A. Laskawy, Director)
|
|||
Dated:
|
March
9, 2006
|
By
|
/s/
Gloria R. Scott
|
(Gloria
R. Scott, Director)
|
|||
Dated:
|
March
9, 2006
|
By
|
/s/
Andrew H. Tisch
|
(Andrew
H. Tisch, Director)
|
|||
Dated:
|
March
9, 2006
|
By
|
/s/
Jonathan M. Tisch
|
(Jonathan
M. Tisch, Director)
|
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
(Restated)
|
||||||
Current
assets, principally investment in short-term instruments
|
$
|
2,581.0
|
$
|
975.5
|
|||
Investments
in securities
|
659.7
|
1,961.2
|
|||||
Investments
in capital stocks of subsidiaries, at equity
|
11,645.1
|
11,874.9
|
|||||
Other
assets
|
11.4
|
10.6
|
|||||
Total
assets
|
$
|
14,897.2
|
$
|
14,822.2
|
|||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|||||||
Accounts
payable and accrued liabilities
|
$
|
737.6
|
$
|
319.9
|
|||
Long-term
debt
|
864.9
|
2,305.2
|
|||||
Deferred
income tax and other
|
202.6
|
227.2
|
|||||
Total
liabilities
|
1,805.1
|
2,852.3
|
|||||
Shareholders’
equity
|
13,092.1
|
11,969.9
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
14,897.2
|
$
|
14,822.2
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
(Restated)
|
(Restated)
|
||||||||
Revenues:
|
||||||||||
Equity
in income (losses) of subsidiaries (a)
|
$
|
1,208.7
|
$
|
1,260.0
|
$
|
(638.8
|
)
|
|||
Investment
gains (losses)
|
(3.3
|
)
|
(13.1
|
)
|
7.3
|
|||||
Interest
and other
|
133.1
|
158.7
|
153.2
|
|||||||
Total
|
1,338.5
|
1,405.6
|
(478.3
|
)
|
||||||
Expenses:
|
||||||||||
Administrative
|
49.7
|
45.2
|
41.2
|
|||||||
Interest
|
125.9
|
140.2
|
125.8
|
|||||||
Total
|
175.6
|
185.4
|
167.0
|
|||||||
1,162.9
|
1,220.2
|
(645.3
|
)
|
|||||||
Income
tax expense (benefit)
|
(30.0
|
)
|
(15.1
|
)
|
8.7
|
|||||
Income
(loss) from continuing operations
|
1,192.9
|
1,235.3
|
(654.0
|
)
|
||||||
Discontinued
operations, net
|
18.7
|
(19.5
|
)
|
56.8
|
||||||
Net
income (loss)
|
$
|
1,211.6
|
$
|
1,215.8
|
$
|
(597.2
|
)
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
(Restated)
|
(Restated)
|
||||||||
Operating
Activities:
|
||||||||||
Net
income (loss)
|
$
|
1,211.6
|
$
|
1,215.8
|
$
|
(597.2
|
)
|
|||
Adjustments
to reconcile net income (loss) to net cash provided
|
||||||||||
(used)
by operating activities:
|
||||||||||
Gain
on disposal of discontinued operations
|
(56.7
|
)
|
||||||||
Undistributed
(earnings) losses of affiliates
|
(358.4
|
)
|
(317.4
|
)
|
1,509.8
|
|||||
Investment
losses (gains)
|
3.3
|
13.1
|
(7.3
|
)
|
||||||
Provision
for deferred income taxes
|
(14.1
|
)
|
(17.9
|
)
|
28.4
|
|||||
Changes
in operating assets and liabilities-net
|
||||||||||
Receivables
|
7.3
|
27.6
|
(19.8
|
)
|
||||||
Accounts
payable and accrued liabilities
|
69.0
|
29.3
|
(160.0
|
)
|
||||||
Federal
income taxes
|
48.9
|
675.5
|
210.7
|
|||||||
Trading
securities
|
(264.1
|
)
|
105.7
|
766.3
|
||||||
Other-net
|
(2.6
|
)
|
(9.6
|
)
|
(4.4
|
)
|
||||
700.9
|
1,722.1
|
1,669.8
|
||||||||
Investing
Activities:
|
||||||||||
Change
in investments and advances to subsidiaries
|
249.7
|
(1,790.1
|
)
|
(1,134.0
|
)
|
|||||
Purchase
of CNA participating Series I preferred stock (b)
|
(750.0
|
)
|
||||||||
249.7
|
(1,790.1
|
)
|
(1,884.0
|
)
|
||||||
Financing
Activities:
|
||||||||||
Dividends
paid to shareholders
|
(239.9
|
)
|
(216.8
|
)
|
(191.8
|
)
|
||||
Issuance
of common stock
|
432.5
|
287.8
|
399.7
|
|||||||
Decrease
in long-term debt
|
(1,150.0
|
)
|
||||||||
(957.4
|
)
|
71.0
|
207.9
|
|||||||
Net
change in cash
|
(6.8
|
)
|
3.0
|
(6.3
|
)
|
|||||
Cash,
beginning of year
|
6.9
|
3.9
|
10.2
|
|||||||
Cash,
end of year
|
$
|
0.1
|
$
|
6.9
|
$
|
3.9
|
(a)
|
Cash
dividends paid to the Company by affiliates amounted to $937.0,
$913.6 and
$876.6 for the years ended December 31, 2005, 2004 and 2003,
respectively.
|
(b)
|
In
April of 2004, the Company’s investment in CNA participating Series I
preferred stock was converted into approximately 32.3 million
shares of
CNA common stock.
|
Column
A
|
Column
B
|
Column
C
|
Column
D
|
Column
E
|
||||||||||||
Additions
|
||||||||||||||||
Description
|
Balance
at
Beginning
of
Period
|
Charged
to
Costs
and
Expenses
|
Charged
to
Other
Accounts
|
Deductions
|
Balance
at
End
of
Period
|
|||||||||||
(In
millions)
|
||||||||||||||||
For
the Year Ended December 31, 2005
|
||||||||||||||||
Deducted
from assets:
|
||||||||||||||||
Allowance
for discounts
|
$
|
1.1
|
$
|
131.6
|
$
|
131.6
(1
|
)
|
$
|
1.1
|
|||||||
Allowance
for doubtful accounts
|
1,056.1
|
114.7
|
|
$
|
0.4
|
|
199.0
|
972.2
|
||||||||
Allowance
for deferred taxes
|
43.4
|
12.2
|
31.2
|
|||||||||||||
Total
|
$
|
1,100.6
|
$
|
246.3
|
$
|
0.4
|
|
$
|
342.8
|
$
|
1,004.5
|
|||||
|
For
the Year Ended December 31, 2004
|
|||||||||||||||
Deducted
from assets:
|
||||||||||||||||
Allowance
for discounts
|
$
|
1.0
|
$
|
135.2
|
$
|
135.1
(1
|
)
|
$
|
1.1
|
|||||||
Allowance
for doubtful accounts
|
955.1
|
317.1
|
$
|
5.6
|
221.7
|
1,056.1
|
||||||||||
Allowance
for deferred taxes
|
10.2
|
33.1
|
0.1 |
43.4
|
||||||||||||
Total
|
$
|
966.3
|
$
|
485.4
|
$
|
5.7
|
$
|
356.8
|
$
|
1,100.6
|
||||||
|
For
the Year Ended December 31, 2003
|
|||||||||||||||
Deducted
from assets:
|
||||||||||||||||
Allowance
for discounts
|
$
|
1.2
|
$
|
176.3
|
$
|
176.5
(1
|
)
|
$
|
1.0
|
|||||||
Allowance
for doubtful accounts
|
361.0
|
709.6
|
$ | 2.2 |
117.7
|
955.1
|
||||||||||
Allowance
for deferred taxes
|
10.2
|
10.2
|
||||||||||||||
Total
|
$
|
362.2
|
$
|
896.1
|
$
|
2.2
|
$
|
294.2
|
$
|
966.3
|
(1)
|
|
Discounts
allowed.
|
Consolidated
Property and Casualty Operations
|
|||||||
December
31
|
2005
|
2004
|
|||||
(In
millions)
|
|||||||
Deferred
acquisition costs
|
$
|
1,197
|
$
|
1,267
|
|||
Reserves
for unpaid claim and claim adjustment expenses
|
30,694
|
31,204
|
|||||
Discount
deducted from claim and claim adjustment expense
|
|||||||
reserves
above (based on interest rates ranging from 3.5% to 7.5%)
|
1,739
|
1,827
|
|||||
Unearned
premiums
|
3,706
|
4,522
|
Year
Ended December 31
|
2005
|
2004
|
2003
|
|||||||
(In
millions)
|
||||||||||
Net
written premiums
|
$
|
7,509
|
$
|
7,594
|
$
|
7,619
|
||||
Net
earned premiums
|
7,558
|
7,925
|
7,471
|
|||||||
Net
investment income
|
1,595
|
1,266
|
1,541
|
|||||||
Incurred
claim and claim adjustment expenses related to current
|
||||||||||
year
|
5,054
|
5,118
|
4,747
|
|||||||
Incurred
claim and claim adjustment expenses related to prior years
|
1,107
|
234
|
2,421
|
|||||||
Amortization
of deferred acquisition costs
|
1,541
|
1,641
|
1,827
|
|||||||
Paid
claim and claim adjustment expenses
|
3,541
|
5,401
|
5,077
|
(a)
|
A
Participant may elect to defer receipt of a portion of his/her
compensation (as defined in Paragraph 10 hereunder) as (and to the
extent)
permitted by the Committee. A Participant may also elect the rate
of
interest to be applied to said deferral.
|
(b)
|
The
election by a Participant to defer compensation shall be made before
the
beginning of the calendar year in which such compensation is earned.
The
election by a Participant of the rate of interest to be applied to
said
deferred compensation shall also be made before the beginning of
the
calendar year in which such compensation is earned.
|
(c)
|
A
Participant must make separate elections as to the amount deferred
and the
applicable rate of interest to be applied thereon, with respect to
each
calendar year of participation in the Plan. Amounts deferred under
this
Paragraph 4 shall be referred to as the “Deferred Amounts”. Election forms
for Participants to defer compensation and elect a rate of interest
thereon (as provided in Paragraph 6 hereunder), shall be provided
by the
Committee, and all such elections shall be made in writing on such
forms.
|
(d)
|
All
amounts deferred prior to January 1, 2005 together with any income
earned
thereon are deemed “grandfathered” pursuant to Section 409A of the
Internal Revenue Code and all Treasury Regulations issued thereunder,
and
shall be administered in accordance with the Plan in effect as of
October
4, 2004 for said “grandfathered” amounts, with one exception: the notional
interest rates earned on amounts deferred prior to January 1, 2005
shall
be revised to comply with the proposed Treasury regulations issued
under
Section 409A of the Internal Revenue
Code.
|
(a)
|
Subject
to the provisions of subparagraphs (b) and (c) below, to the extent
a
Participant elects to defer compensation for any given year, such
deferral
shall be for at least three years.
|
(b)
|
The
Participant shall elect, in his/her election to defer, that his/her
Deferred Compensation Account be paid
either:
|
(i)
|
in
a lump sum; or
|
(ii)
|
in
a series of annual installment payments (each as nearly equal as
possible), the number of which cannot exceed fifteen, as the Participant
shall elect under rules established by the Committee. Each series
shall be
designated as a separate payment.
|
(c)
|
(i)
In the event of the Participant’s death or disability, payment of the
balance in the Participant’s Deferred Compensation Account shall be made
as elected by the Participant in the election to defer, to the
Participant’s designated beneficiary or if none, to the Participant’s
estate, in the case of death, or to the Participant, in the case
of
disability;
|
(d)
|
Anything
contained in this Paragraph 7 to the contrary notwithstanding, in
the
event a Participant incurs a severe financial hardship or a Participant
becomes disabled, the Committee, upon written application of such
Participant, will direct immediate payment of all or a portion of
the then
current value of such Participant’s Deferred Compensation Account. The
Participant’s deferral election shall be cancelled, and not postponed or
otherwise delayed, and any later deferral election shall be treated
as an
initial deferral election.
|
(i)
|
A
severe financial hardship to the Participant is a situation: (1)
resulting
from an illness or accident of the Participant, the Participant’s spouse,
or a dependent; (2) loss of the Participant’s property due to casualty; or
(3) other similar extraordinary and unforeseeable circumstances arising
as
a result of events beyond the control of the Participant. The amount
of
the distribution is limited to the amount needed to satisfy the emergency
plus taxes reasonably anticipated as a result of the distribution.
Distributions shall not be allowed to the extent that the hardship
may be
relieved through reimbursement or compensation by insurance or otherwise,
or by liquidation of the Participant’s assets (to the extent such
liquidation would not itself cause a severe financial
hardship).
|
(ii)
|
A
Participant is deemed disabled if determined to be totally disabled
by the
Social Security Administration.
|
(e)
|
For
deferrals on or after January 1, 2005, a Participant may make a new
election as to the time and/or form of payment at any time with respect
to
prior deferrals, provided that such election; (1) will not take effect
until at least 12 months after the date on which such election is
made;
(2) that the first payment with respect to which such election is
made is
deferred for a period of not less than 5 years; and, (3) that such
election shall not be made less than 12 months prior to the date
of the
first scheduled payment.
|
(a)
|
The
term “Compensation” shall mean:
|
(i)
|
base
salary for employees; and,
|
(ii)
|
cash
retainer and meeting fees for non-employee directors of the
Corporation.
|
(b)
|
The
term “Subsidiary” shall mean any corporation or other entity 50 percent or
more of the voting stock or ownership interest of which shall at
the time
be owned directly or indirectly by the
Corporation.
|
(c)
|
The
term “Affiliate” means any corporation or other entity which is not a
Subsidiary but as to which the Corporation or a Subsidiary possesses
a
direct or indirect ownership
interest.
|
Section
1.
|
General
|
Section
2.
|
Options
|
(a)
|
Unless
otherwise provided by the Committee at the time of grant or thereafter,
each Option shall vest and become exercisable in four equal annual
installments beginning on the first anniversary of the date of grant,
and
shall thereafter remain exercisable during the Option
Term.
|
(b)
|
Unless
otherwise provided by the Committee at the time of grant or thereafter,
the Option Term of each Option shall end on the earliest of (1) the
date
on which such Option has been exercised in full, (2) the date on
which the
Participant experiences a Termination for Cause or a voluntary
Termination, (3) the one-year anniversary of the date on which the
Participant experiences a Termination due to death or Disability,
(4) the
three-year anniversary of the date on which the Participant experiences
a
Termination due to such person’s Retirement, and (5) the 90th day after
the Participant experiences a Termination for any other reason;
provided,
that in no event may the Option Term exceed ten (10) years from the
date
of grant of the Option. Except as otherwise determined by the Committee
at
the time of grant or thereafter, upon the occurrence of a Termination
of a
Participant for any reason, the Option Term of all outstanding Options
held by the Participant that are unvested as of the date of such
Termination shall thereupon end and such unvested Options shall be
forfeited immediately; provided,
however,
that the Committee may, in its sole discretion, accelerate the vesting
of
any Option and/or extend the exercise period of any Option (but not
beyond
the ten-year anniversary of the grant date).
|
(c)
|
An
Option may be exercised and the underlying shares purchased in accordance
with this Section 2 at any time after the Option with respect to
those
shares vests and before the expiration of the Option Term. To exercise
an
Option, the Participant shall give written notice to the Company
stating
the number of shares with respect to which the Option is being
exercised.
|
(d)
|
The
full Exercise Price for shares of Stock purchased upon the exercise
of any
Option shall be paid at the time of such exercise (except that, in
the
case of an exercise arrangement approved by the Committee and described
in
the last sentence of this paragraph (d), payment may be made as soon
as
practicable after the exercise). The Exercise Price shall be payable
by
check, or such other instrument as the Committee may accept. The
Committee
may permit a Participant to elect to pay the Exercise Price upon
the
exercise of an Option by irrevocably authorizing a third party to
sell
shares of Stock (or a sufficient portion of the shares) acquired
upon
exercise of the Option and remit to the Company a sufficient portion
of
the sale proceeds to pay the entire Exercise Price and any tax withholding
resulting from such exercise. In the case of any ISO such permission
must
be provided for at the time of grant and set forth in an Award
Certificate. In addition, if approved by the Committee, payment,
in full
or in part, may also be made in the form of unrestricted Mature Shares,
based on the Fair Market Value of the Mature Shares on the date the
Option
is exercised; provided,
however,
that, in the case of an ISO the right to make a payment in such Mature
Shares may be authorized only at the time the Option is
granted.
|
Section
3.
|
Stock
Appreciation Rights
|
Section
4.
|
Operation
And Administration
|
(a)
|
The
shares of Stock with respect to which Options and Stock Appreciation
Rights may be granted under the Plan shall be shares currently authorized
but unissued or currently held or subsequently acquired by the Company
as
treasury shares, including shares purchased in the open market or
in
private transactions.
|
(b)
|
Subject
to the following provisions of this subsection 4.2, the maximum number
of
shares of Stock that may be delivered to Participants and their
beneficiaries under the Plan shall be 1,500,000 shares of
Stock.
|
(c)
|
To
the extent any shares of Stock covered by an Option are not delivered
to a
Participant or beneficiary because the Option is forfeited or canceled,
such shares shall not be deemed to have been delivered for purposes
of
determining the maximum number of shares of Stock available for delivery
under the Plan.
|
(d)
|
Subject
to paragraph 4.2(e), the maximum number of shares that may be covered
by
Options, and/or Stock Appreciation Rights granted to any one individual
during any one calendar year period shall be 200,000
shares.
|
(e)
|
In
the event of a corporate transaction involving the Stock and/or the
Company (including, without limitation, any stock dividend, stock
split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination or exchange of shares),
the
Committee may make adjustments to preserve the benefits or potential
benefits of the Plan and outstanding Options and/or Stock Appreciation
Rights. Action by the Committee may include: (i) adjustment of the
number
and kind of shares which may be delivered under the Plan; (ii) adjustment
of the number and kind of shares referred to in Sections 4.2 (b)
and (d);
(iii) adjustment of the number and kind of shares subject to outstanding
Options and Stock Appreciation Rights; (iv) adjustment of the Exercise
Price of outstanding Options and Stock Appreciation Rights; (v) settlement
in cash or Stock in an amount equal to the excess of the value of
the
Stock subject to such Option and Stock Appreciation Rights over the
aggregate Exercise Price (as determined by the Committee) of such
Options
and Stock Appreciation Rights; and (vi) any other adjustments that
the
Committee determines to be
equitable.
|
(a)
|
Notwithstanding
any other provision of the Plan, the Company shall have no liability
to
deliver any shares of Stock under the Plan or make any other distribution
of benefits under the Plan unless such delivery or distribution would
comply with all applicable laws (including, without limitation, the
requirements of the Securities Act of 1933 and Code Section 409(A)),
and
the applicable requirements of any securities exchange or similar
entity.
|
(b)
|
To
the extent that the Plan provides for issuance of stock certificates
to
reflect the issuance of shares of Stock, the issuance may be effected
on a
non-certificated basis, to the extent not prohibited by applicable
law or
the applicable rules of any stock
exchange.
|
(a)
|
It
is the intention of the Company that no grant of Options or Stock
Appreciation Rights shall be “deferred compensation” subject to Code
Section 409A, unless and to the extent that the Committee specifically
determines otherwise as provided below, and the Plan and the terms
and
conditions of all grants of Options and Stock Appreciation Rights
shall be
interpreted accordingly.
|
(b)
|
The
terms and conditions governing any grants of Options and Stock
Appreciation Rights that the Committee determines will be subject
to Code
Section 409A, including any rules for elective or mandatory deferral
of
the delivery of cash pursuant thereto, shall be set forth in writing,
and
shall comply in all respects with Code Section 409A.
|
(a)
|
Neither
a Participant nor any other person shall, by reason of participation
in
the Plan, acquire any right in or title to any assets, funds or property
of the Company whatsoever, including, without limitation, any specific
funds, assets, or other property which the Company, in its sole
discretion, may set aside in anticipation of a liability under the
Plan. A
Participant shall have only a contractual right to the amounts, if
any,
payable under the Plan, unsecured by any assets of the Company, and
nothing contained in the Plan shall constitute a guarantee that the
assets
of the Company shall be sufficient to pay any benefits to any
person.
|
(b)
|
The
Plan does not constitute a contract of employment, and selection
as a
Participant will not give any Participant the right to be retained
in the
employ of, or as a director or consultant to, the Company or any
Subsidiary, nor any right or claim to any benefit under the Plan,
unless
such right or claim has specifically accrued under the terms of the
Plan.
|
Section
5.
|
Committee
|
(a)
|
Subject
to the provisions of the Plan, the Committee will have the authority
and
discretion to select from among the Eligible Grantees those persons
who
shall receive Options and/or Stock Appreciation Rights, to determine
the
grant date of, the number of shares subject to and the Exercise Price
of
those Options and Stock Appreciation Rights, to establish all other
terms
and conditions of such Options and Stock Appreciation Rights, and
(subject
to the restrictions imposed by Section 6) to cancel or suspend Options
and
Stock Appreciation Rights.
|
(b)
|
The
Committee will have the authority and discretion to interpret the
Plan, to
establish, amend, and rescind any rules and regulations relating
to the
Plan, and to make all other determinations that may be necessary
or
advisable for the administration of the Plan.
|
(c)
|
Any
interpretation of the Plan by the Committee and any decision made
by it
under the Plan is final and binding on all persons.
|
(d)
|
In
controlling and managing the operation and administration of the
Plan, the
Committee shall take action in a manner that conforms to the charter
and
by-laws of the Company, and applicable state corporate
law.
|
Section
6.
|
Amendment
And Termination
|
Section
7.
|
Defined
Terms
|
As
used in this Plan, the following definitions shall
apply:
|
|
(a)
|
Award
Certificate.
The term “Award Certificate” shall mean a written certificate setting
forth the terms and conditions of an Option or Stock Appreciation
Right,
in such form as the Committee may from time to time
prescribe.
|
(b)
|
Board.
The term “Board” means the Board of Directors of the
Company.
|
(c)
|
Carolina
Group.
The term “Carolina Group” shall have the meaning set forth in the
Company’s Restated Certificate of Incorporation, as amended from time to
time.
|
(d)
|
Cause.
The term “Cause” shall have the meaning set forth in the employment or
engagement agreement between a Participant and Lorillard, Inc. or
its
subsidiaries or any company attributed to the Carolina Group in the
future, if such an agreement exists and contains a definition of
Cause;
otherwise Cause shall mean (1) conviction of the Participant for
committing a felony under Federal law or the law of the state in
which
such action occurred, (2) dishonesty in the course of fulfilling
a
Participant’s employment, engagement or directorial duties, (3) willful
and deliberate failure on the part of a Participant to perform the
Participant’s employment, engagement or directorial duties in any material
respect or (4) such other events as shall be determined in good faith
by
the Committee. The Committee shall, unless otherwise provided in
the Award
Certificate or an employment agreement with the Participant, have
the sole
discretion to determine whether Cause exists, and its determination
shall
be final.
|
(e)
|
Code.
The term “Code” means the Internal Revenue Code of 1986, as amended, the
Treasury Regulations thereunder and other relevant interpretive guidance
issued by the Internal Revenue Service or the Treasury Department.
Reference to any specific section of the Code shall be deemed to
include
such regulations and guidance, as well as any successor provision
of the
Code.
|
(f)
|
Committee.
The term “Committee” shall have the meaning set forth in Section
5.1.
|
(g)
|
Company.
The term “Company” shall have the meaning set forth in Section
1.1.
|
(h)
|
Designated
Beneficiary.
The term “Designated Beneficiary” shall have the meaning set forth in
Section 4.10.
|
(i)
|
Disability.
The term “Disability” shall mean, unless otherwise provided by the
Committee, (1) “Disability” as defined in any individual Award Certificate
to which the Participant is a party, or (2) if there is no such Award
Certificate or it does not define “Disability,” permanent and total
disability as determined under the long-term disability plan of Lorillard,
Inc. or any of its subsidiaries or any company attributed to the
Carolina
Group in the future applicable to the Participant.
|
(j)
|
Effective
Date.
The term “Effective Date” shall have the meaning set forth in Section
4.1.
|
(k)
|
Eligible
Grantee.
The term “Eligible Grantee” shall mean any individual who is employed on a
full-time or part-time basis by, or who serves as a consultant to,
Lorillard, Inc. or any of its subsidiaries or any company attributed
to
the Carolina Group in the future and any non-employee director of
Lorillard, Inc. or any of its subsidiaries or any company attributed
to
the Carolina Group in the future. An Option or Stock Appreciation
Right
may be granted to an individual in connection with such individual’s
hiring or engagement prior to the date the individual first performs
services for Lorillard, Inc. or any of its subsidiaries or any company
attributed to the Carolina Group in the future; provided
that the individual will be an Eligible Grantee upon his hiring or
engagement; and further provided
that such Options and/or Stock Appreciation Rights shall not become
vested
prior to the date the individual first performs such
services.
|
(l)
|
Exercise
Price.
The term “Exercise Price” shall have the meaning set forth in Section 2.3
and 3.3 as applicable.
|
(m)
|
Fair
Market Value.
The “Fair Market Value” of a share of Stock shall be, as of any given
date, the mean between the highest and lowest reported sales prices
during
normal trading hours on the immediately preceding date (or, if there
are
no reported sales on such immediately preceding date, on the last
date
prior to such date on which there were sales) of the Stock on the
New York
Stock Exchange Composite Tape or, if not listed on such exchange,
on any
other national securities exchange on which the Stock is listed or
on
NASDAQ. If there is no regular public trading market for such Stock,
the
Fair Market Value of the Stock shall be determined by the Committee
in
good faith.
|
(n)
|
Free-Standing
SAR.
The term “Free-Standing SAR” shall have the meaning set forth in Section
3.1.
|
(o)
|
ISO.
The term “ISO” shall have the meaning set forth in Section
2.2.
|
(p)
|
Mature
Shares.
The term “Mature Shares” shall mean shares of Stock that have been owned
by the Participant in question for at least six months.
|
(q)
|
NQO.
The term “NQO” shall have the meaning set forth in Section
2.2.
|
(r)
|
Option.
The term “Option” shall have the meaning set forth in Section
2.2.
|
(s)
|
Plan.
The term “Plan” shall have the meaning set forth in Section
1.1.
|
(t)
|
Retirement.
The term “Retirement” shall mean retirement from active employment with
Lorillard, Inc. or its subsidiaries or any company attributed to
the
Carolina Group in the future pursuant to any retirement plan or program
of
Lorillard, Inc. or its subsidiaries or any company attributed to
the
Carolina Group in the future in which the Participant participates.
A
Termination by a consultant or non-employee director shall in no
event be
considered a Retirement.
|
(u)
|
Stock.
The term “Stock” shall mean shares of Carolina Group stock, par value,
$0.01 per share, of the Company.
|
(v)
|
Stock
Appreciation Right.
The term “Stock Appreciation Right “ shall have the meaning set forth in
Section 3.1.
|
(w)
|
Subsidiary.
The term “Subsidiary” means any business or entity in which at any
relevant time the Company holds at least a 50% equity (voting or
non-voting) interest.
|
(x)
|
Tandem
SAR.
The term “Tandem SAR” shall have the meaning set forth in Section
3.1.
|
(y)
|
Term.
The term “Term” shall mean the period beginning on the date of grant of an
Option or Stock Appreciation Right and ending on the date the Option
or
Stock Appreciation Right expires pursuant to the Plan and the relevant
Award Certificate.
|
(z)
|
Termination.
A
Participant shall be considered to have experienced a Termination
if he or
she ceases, for any reason, to be an employee, consultant or non-employee
director of Lorillard, Inc. or any of its subsidiaries or any company
attributed to the Carolina Group in the future, including, without
limitation, as a result of the fact that the entity by which he or
she is
employed or engaged or of which he or she is a director has ceased
to be
affiliated with Lorillard, Inc. or its subsidiaries or any company
attributed to the Carolina Group in the
future.
|
LOEWS
CORPORATION
|
||||
|
||||
|
||||
|
By:
|
/s/
James S. Tisch
|
|
|
James S. Tisch
|
||||
President
|
Accepted
and Agreed to:
|
|
|
|
|
|
|
|
/s/
Peter W. Keegan
|
|
The
Executive
|
LOEWS
CORPORATION
|
||||
|
||||
|
||||
|
By:
|
/s/
James S. Tisch
|
|
|
James S. Tisch
|
||||
President
|
Accepted
and Agreed to:
|
|
|
|
|
|
|
|
/s/
Peter W. Keegan
|
|
The
Executive
|
LOEWS
CORPORATION
|
||||
|
||||
|
||||
|
By:
|
/s/
James S. Tisch
|
|
|
James S. Tisch
|
||||
President
|
Accepted
and Agreed to:
|
|
|
|
|
|
|
|
/s/
Arthur L. Rebell
|
|
The
Executive
|
LOEWS
CORPORATION
|
||||
|
||||
|
||||
|
By:
|
/s/
James S. Tisch
|
|
|
James S. Tisch
|
||||
President
|
Accepted
and Agreed to:
|
|
|
|
|
|
|
|
/s/
Arthur L. Rebell
|
|
The
Executive
|
Organized
Under
|
|||
Name
of Subsidiary
|
Laws
of
|
Business
Names
|
|
CNA
Financial Corporation
|
Delaware
|
)
|
|
CNA
National Warranty Corporation
|
Arizona
|
)
|
|
The
Continental Corporation
|
New
York
|
)
|
|
Continental
Casualty Company
|
Illinois
|
)
|
|
CNA
Casualty of California
|
California
|
)
|
|
CNA
Surety Corporation
|
Delaware
|
)
|
|
Continental
Assurance Company
|
Illinois
|
)
|
|
The
Continental Insurance Company
|
South
Carolina
|
)
|
|
Commercial
Insurance Company of Newark, New Jersey
|
New
Jersey
|
)
|
CNA
Insurance
|
Firemen’s
Insurance Company of Newark, New Jersey
|
New
Jersey
|
)
|
|
First
Insurance Company of Hawaii
|
Hawaii
|
)
|
|
National
Ben Franklin Insurance Company of Illinois
|
Illinois
|
)
|
|
Pacific
Insurance Company
|
Illinois
|
)
|
|
The
Buckeye Union Insurance Company
|
Illinois
|
)
|
|
The
Fidelity & Casualty of New York
|
South
Carolina
|
)
|
|
The
Glens Falls Insurance Company
|
Illinois
|
)
|
|
Lorillard,
Inc.
|
Delaware
|
)
|
Lorillard
|
Lorillard
Tobacco Company
|
Delaware
|
)
|
|
Diamond
Offshore Drilling, Inc.
|
Delaware
|
)
|
Diamond
Offshore
|
Drilling,
Inc.
|
Exhibit
23.01
|
(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: March
9, 2006
|
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: March
9, 2006
|
By:
|
/s/
Peter W. Keegan
|
PETER
W. KEEGAN
|
||
Chief
Financial Officer
|
Dated: March
9, 2006
|
By:
|
/s/
James S. Tisch
|
JAMES
S. TISCH
|
||
Chief
Executive Officer
|
Dated:
March 9, 2006
|
By:
|
/s/
Peter W. Keegan
|
PETER
W. KEEGAN
|
||
Chief
Financial Officer
|