Edgar Filing: LOEWS CORP

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

Commission File Number 1-6541

LOEWS CORPORATION

(Exact name of registrant as specified in its charter)


Delaware				13-2646102
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

667 Madison Avenue, New York, N.Y. 10065-8087

(Address of principal executive offices) (Zip Code)

(212) 521-2000

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes X No Not Applicable

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer X Accelerated filer Non-accelerated filer Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No X


Class		Outstanding at October 21, 2013
Common stock, $0.01 par value		387,161,457 shares

INDEX


	Page
	No.

Part I. Financial Information

Item 1. Financial Statements (unaudited)

Consolidated Condensed Balance Sheets September 30, 2013 and December 31, 2012		3

Consolidated Condensed Statements of Income Three and nine months ended September 30, 2013 and 2012		4

Consolidated Condensed Statements of Comprehensive Income Three and nine months ended September 30, 2013 and 2012		5

Consolidated Condensed Statements of Equity Nine months ended September 30, 2013 and 2012		6

Consolidated Condensed Statements of Cash Flows Nine months ended September 30, 2013 and 2012		7

Notes to Consolidated Condensed Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		39

Item 3. Quantitative and Qualitative Disclosures about Market Risk		68

Item 4. Controls and Procedures		68

Part II. Other Information		69

Item 1. Legal Proceedings		69

Item 1A. Risk Factors		69

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		69

Item 6. Exhibits		70

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)


	September 30, 2013		December 31, 2012

(Dollar amounts in millions, except per share data)

Assets:

Investments:
Fixed maturities, amortized cost of $39,261 and $38,324		$ 41,376		$ 42,765
Equity securities, cost of $862 and $893		841		898
Limited partnership investments		3,465		3,090
Other invested assets, primarily mortgage loans		496		460
Short term investments		6,180		5,835

Total investments		52,358		53,048
Cash		257		228
Receivables		9,023		9,366
Property, plant and equipment		14,381		13,935
Goodwill		991		996
Other assets		1,645		1,538
Deferred acquisition costs of insurance subsidiaries		642		598
Separate account business		213		312

Total assets		$ 79,510		$ 80,021


Liabilities and Equity:

Insurance reserves:
Claim and claim adjustment expense		$ 23,962		$ 24,763
Future policy benefits		10,681		11,475
Unearned premiums		3,820		3,610
Policyholders’ funds		127		157

Total insurance reserves		38,590		40,005
Payable to brokers		326		205
Short term debt		270		19
Long term debt		9,705		9,191
Deferred income taxes		831		840
Other liabilities		4,754		4,773
Separate account business		213		312

Total liabilities		54,689		55,345


Commitments and contingent liabilities

Preferred stock, $0.10 par value:
Authorized – 100,000,000 shares
Common stock, $0.01 par value:
Authorized – 1,800,000,000 shares
Issued – 392,351,798 and 392,054,766 shares		4		4
Additional paid-in capital		3,648		3,595
Retained earnings		15,911		15,192
Accumulated other comprehensive income		20		678

		19,583		19,469
Less treasury stock, at cost (5,194,400 and 249,600 shares)		(228)		(10)

Total shareholders’ equity		19,355		19,459
Noncontrolling interests		5,466		5,217

Total equity		24,821		24,676

Total liabilities and equity		$ 79,510		$ 80,021

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,

	2013			2012			2013			2012

(In millions, except per share data)

Revenues:
Insurance premiums	$	1,825		$	1,781		$	5,389		$	5,098
Net investment income		647			682			1,867			1,794
Investment gains (losses):
Other-than-temporary impairment losses		(15	)		(62	)		(49	)		(89)
Portion of other-than-temporary impairment losses recognized in Other comprehensive income (loss)		(2	)		(2	)		(2	)		(25)

Net impairment losses recognized in earnings		(17	)		(64	)		(51	)		(114)
Other net investment gains		21			71			65			173

Total investment gains		4			7			14			59
Contract drilling revenues		691			714			2,136			2,195
Other		537			531			1,757			1,701

Total		3,704			3,715			11,163			10,847


Expenses:
Insurance claims and policyholders’ benefits		1,414			1,435			4,364			4,164
Amortization of deferred acquisition costs		341			333			1,004			937
Contract drilling expenses		420			358			1,164			1,160
Other operating expenses (Note 1)		900			1,071			2,689			2,891
Interest		109			109			329			331

Total		3,184			3,306			9,550			9,483

Income before income tax		520			409			1,613			1,364
Income tax expense		(136	)		(99	)		(419	)		(337)

Net income		384			310			1,194			1,027
Amounts attributable to noncontrolling interests		(102	)		(133	)		(401	)		(427)

Net income attributable to Loews Corporation	$	282		$	177		$	793		$	600


Basic net income per share	$	0.73		$	0.45		$	2.04		$	1.52


Diluted net income per share	$	0.73		$	0.45		$	2.03		$	1.51


Dividends per share	$	0.0625		$	0.0625		$	0.1875		$	0.1875


Weighted-average shares outstanding:
Shares of common stock		387.26			394.48			389.13			395.88
Dilutive potential shares of common stock		0.88			0.81			0.83			0.76

Total weighted-average shares outstanding assuming dilution		388.14			395.29			389.96			396.64

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,

	2013			2012			2013			2012

(In millions)

Net income		$ 384			$ 310		$	1,194		$	1,027


Other comprehensive income (loss), after tax
Changes in:
Net unrealized gains (losses) on investments with other-than-temporary impairments		(3	)		36			3			73
Net other unrealized gains (losses) on investments		(70	)		191			(717	)		528

Total unrealized gains (losses) on available-for-sale investments		(73	)		227			(714	)		601
Unrealized losses on cash flow hedges		(3	)		(18	)		(14	)		(5)
Pension liability		3						12			11
Foreign currency		56			34			(18	)		36


Other comprehensive income (loss)		(17	)		243			(734	)		643


Comprehensive income		367			553			460			1,670

Amounts attributable to noncontrolling interests		(102	)		(160	)		(327	)		(493)


Total comprehensive income attributable to Loews Corporation		$ 265			$ 393		$	133		$	1,177

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF EQUITY

(Unaudited)


				Loews Corporation Shareholders

	Total			Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)		Common Stock Held in Treasury			Noncontrolling Interests

(In millions)

Balance, January 1, 2012	$	23,203		$	4	$	3,494		$	14,890		$	384	$	-		$	4,431
Net income		1,027								600								427
Other comprehensive income		643											577					66
Dividends paid		(404	)							(74	)							(330)
Issuance of equity securities by subsidiary		508					79						3					426
Purchase of Loews treasury stock		(139	)												(139	)
Issuance of Loews common stock		9					9
Stock-based compensation		17					15											2
Other		(2	)				(2	)		(1	)							1

Balance, September 30, 2012	$	24,862		$	4	$	3,595		$	15,415		$	964	$	(139	)	$	5,023


Balance, January 1, 2013	$	24,676		$	4	$	3,595		$	15,192		$	678	$	(10	)	$	5,217
Net income		1,194								793								401
Other comprehensive loss		(734	)										(660)					(74)
Dividends paid		(444	)							(73	)							(371)
Issuance of equity securities by subsidiary		337					51						2					284
Purchase of Loews treasury stock		(218	)												(218	)
Issuance of Loews common stock		4					4
Stock-based compensation		12					(1	)										13
Other		(6	)				(1	)		(1	)							(4)

Balance, September 30, 2013	$	24,821		$	4	$	3,648		$	15,911		$	20	$	(228	)	$	5,466

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


Nine Months Ended September 30	2013		2012

(In millions)

Operating Activities:

Net income	$	1,194	$	1,027
Adjustments to reconcile net income to net cash provided (used) by operating activities, net		925		1,110
Changes in operating assets and liabilities, net:
Receivables		146		522
Deferred acquisition costs		(23)		(27)
Insurance reserves		(166)		(53)
Other assets		(64)		(14)
Other liabilities		215		(41)
Trading securities		(898)		(422)

Net cash flow operating activities		1,329		2,102


Investing Activities:

Purchases of fixed maturities		(8,205)		(7,369)
Proceeds from sales of fixed maturities		4,830		4,761
Proceeds from maturities of fixed maturities		2,496		2,655
Purchases of equity securities		(61)		(30)
Proceeds from sales of equity securities		82		72
Purchases of limited partnership investments		(263)		(249)
Proceeds from sales of limited partnership investments		187		204
Purchases of property, plant and equipment		(1,307)		(994)
Acquisitions		(235)		(367)
Dispositions		135		160
Change in short term investments		611		(637)
Other, net		(135)		(108)

Net cash flow investing activities		(1,865)		(1,902)


Financing Activities:

Dividends paid		(73)		(74)
Dividends paid to noncontrolling interests		(371)		(330)
Purchases of treasury shares		(228)		(139)
Issuance of common stock		4		9
Proceeds from sale of subsidiary stock		370		557
Principal payments on debt		(1,058)		(2,098)
Issuance of debt		1,953		1,918
Other, net		(29)		(6)

Net cash flow financing activities		568		(163)


Effect of foreign exchange rate on cash		(3)		3


Net change in cash		29		40
Cash, beginning of period		228		129

Cash, end of period	$	257	$	169

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

Loews Corporation is a holding company. Its subsidiaries are engaged in the following lines of business: commercial property and casualty insurance (CNA Financial Corporation (“CNA”), a 90% owned subsidiary); the operation of offshore oil and gas drilling rigs (Diamond Offshore Drilling, Inc. (“Diamond Offshore”), a 50.4% owned subsidiary); transportation and storage of natural gas and natural gas liquids and gathering and processing of natural gas (Boardwalk Pipeline Partners, LP (“Boardwalk Pipeline”), a 53% owned subsidiary); exploration, production and marketing of natural gas and oil (including condensate and natural gas liquids), (HighMount Exploration & Production LLC (“HighMount”), a wholly owned subsidiary); and the operation of a chain of hotels (Loews Hotels Holding Corporation (“Loews Hotels”), a wholly owned subsidiary). Unless the context otherwise requires, the terms “Company,” “Loews” and “Registrant” as used herein mean Loews Corporation excluding its subsidiaries and the term “Net income (loss) attributable to Loews Corporation” as used herein means Net income (loss) attributable to Loews Corporation shareholders.

In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of September 30, 2013 and December 31, 2012 and the results of operations and comprehensive income for the three and nine months ended September 30, 2013 and 2012 and changes in shareholders’ equity and cash flows for the nine months ended September 30, 2013 and 2012.

Net income for the third quarter and first nine months of each of the years is not necessarily indicative of net income for that entire year.

Reference is made to the Notes to Consolidated Financial Statements in the 2012 Annual Report on Form 10-K which should be read in conjunction with these Consolidated Condensed Financial Statements.

The Company presents basic and diluted net income per share on the Consolidated Condensed Statements of Income. Basic net income per share excludes dilution and is computed by dividing net income attributable to common stock by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Stock appreciation rights (“SARs”) of 1.4 million, 2.3 million, 1.4 million and 2.7 million shares were not included in the diluted weighted average shares amounts for the three and nine months ended September 30, 2013 and 2012 due to the exercise price being greater than the average stock price.

Bluegrass Project – In 2013, Boardwalk Pipeline executed a series of agreements with the Williams Companies, Inc. (“Williams”) to continue the development process for the Bluegrass Project, a project that would transport natural gas liquids from the Marcellus and Utica shale plays to the petrochemical and export complex in the U.S. Gulf Coast region, and related fractionation, storage and export facilities. In connection with the transaction, Boardwalk Pipeline and Boardwalk Pipelines Holding Corp. (“BPHC”), a wholly owned subsidiary of the Company, have entered into separate joint venture arrangements for purposes of funding the project. Boardwalk Pipeline and BPHC have contributed a total of $28 million to the project as of September 30, 2013. Funding and scope approval of the project is dependent on, among other conditions, execution of customer contracts sufficient to support the project and obtaining all necessary board and regulatory approvals.

Impairment of Natural Gas and Oil Properties – Results for the three and nine months ended September 30, 2013 include non-cash ceiling test impairment charges of $65 million and $210 million, ($42 million and $134 million after tax) related to the carrying value of HighMount’s natural gas and oil properties. For the three and nine months ended September 30, 2012, HighMount recorded non-cash ceiling test impairment charges of $261 million and $527 million ($166 million and $336 million after tax). The impairments were recorded within Other operating expenses and as credits to Accumulated depreciation, depletion and amortization. The 2013 write-downs were primarily attributable to reduced average natural gas liquids (“NGL”) prices used in the ceiling test calculations and

negative reserve revisions. Had the effects of HighMount’s cash flow hedges not been considered in calculating the ceiling limitation, the impairments would have been $83 million and $228 million, ($53 million and $145 million after tax) for the three and nine months ended September 30, 2013, and $322 million and $588 million ($205 million and $375 million after tax) for the three and nine months ended September 30, 2012. In periods which HighMount took ceiling test impairment charges, HighMount performed a goodwill impairment test. No impairment charges were required.

2. Investments

Net investment income is as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,

	2013		2012		2013		2012

(In millions)

Fixed maturity securities	$	504	$	507	$	1,501	$	1,528
Short term investments		2		3		5		10
Limited partnership investments		115		110		345		210
Equity securities		3		4		9		10
Income from trading portfolio (a)		30		66		28		62
Other		7		5		19		16

Total investment income		661		695		1,907		1,836
Investment expenses		(14)		(13)		(40)		(42)

Net investment income	$	647	$	682	$	1,867	$	1,794

(a)	Includes net unrealized gains (losses) related to changes in fair value on trading securities still held of $25, $66, $(22) and $21 for the three and nine months ended September 30, 2013 and 2012.

Investment gains (losses) are as follows:


Fixed maturity securities	$	7	$	26	$	34	$	73
Equity securities		(2)		(15)		(17)		(14)
Derivative instruments		(2)		(2)		(5)		(4)
Short term investments and other		1		(2)		2		4

Investment gains (a)	$	4	$	7	$	14	$	59

(a)	Includes gross realized gains of $54, $80, $142 and $203 and gross realized losses of $49, $69, $125 and $144 on available-for-sale securities for the three and nine months ended September 30, 2013 and 2012.

The components of other-than-temporary impairment (“OTTI”) losses recognized in earnings by asset type are as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,

	2013		2012		2013		2012

(In millions)

Fixed maturity securities available-for-sale:
Corporate and other bonds	$	9	$	7	$	17	$	23
States, municipalities and political subdivisions				17				17
Asset-backed:
Residential mortgage-backed		2		20		5		49
Other asset-backed		1				2

Total asset-backed		3		20		7		49
U.S. Treasury and obligations of government - sponsored enterprises								1

Total fixed maturities available-for-sale		12		44		24		90

Equity securities available-for-sale:
Common stock		3		1		5		5
Preferred stock		2		19		22		19

Total equity securities available-for-sale		5		20		27		24

Net OTTI losses recognized in earnings	$	17	$	64	$	51	$	114

The amortized cost and fair values of securities are as follows:

September 30, 2013

Cost or
Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated

Fair Value

Unrealized
OTTI Losses
(Gains)

(In millions)

Fixed maturity securities:

Corporate and other bonds

19,616

$ 1,695

151

$21,160

States, municipalities and political subdivisions

11,000

672

233

11,439

Asset-backed:

Residential mortgage-backed

4,779

141

101

4,819

(33)

Commercial mortgage-backed

1,942

2,017

(3)

Other asset-backed

942

956

Total asset-backed

7,663

256

127

7,792

(36)

U.S. Treasury and obligations of government- sponsored enterprises

166

173

Foreign government

547

561

Redeemable preferred stock

106

Fixed maturities available- for-sale

39,086

2,660

515

41,231

(36)

Fixed maturities, trading

175

145

Total fixed maturities

39,261

2,660

545

41,376

(36)

Equity securities:

Common stock

Preferred stock

148

146

Equity securities available-for-sale

189

199

Equity securities, trading

673

116

642

Total equity securities

862

119

841

Total

40,123

$ 2,758

664

$42,217

(36)


December 31, 2012	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Unrealized OTTI Losses (Gains)

(In millions)

Fixed maturity securities:
Corporate and other bonds	$	19,530	$	2,698	$	21	$	22,207
States, municipalities and political subdivisions		9,372		1,455		44		10,783
Asset-backed:
Residential mortgage-backed		5,745		246		71		5,920	$	(28)
Commercial mortgage-backed		1,692		147		17		1,822		(3)
Other asset-backed		929		23				952

Total asset-backed		8,366		416		88		8,694		(31)
U.S. Treasury and obligations of government- sponsored enterprises		172		11		1		182
Foreign government		588		25				613
Redeemable preferred stock		113		13		1		125

Fixed maturities available-for-sale		38,141		4,618		155		42,604		(31)
Fixed maturities, trading		183				22		161

Total fixed maturities		38,324		4,618		177		42,765		(31)

Equity securities:
Common stock		38		14				52
Preferred stock		190		7				197

Equity securities available-for-sale		228		21		-		249		-
Equity securities, trading		665		80		96		649

Total equity securities		893		101		96		898		-

Total	$	39,217	$	4,719	$	273	$	43,663	$	(31)

The net unrealized gains on investments included in the tables above are recorded as a component of Accumulated Other Comprehensive Income (“AOCI”). When presented in AOCI, these amounts are net of tax and noncontrolling interests and any required Shadow Adjustments. At September 30, 2013 and December 31, 2012, the net unrealized gains on investments included in AOCI were net of Shadow Adjustments of $650 million and $1.4 billion. To the extent that unrealized gains on fixed income securities supporting certain products within CNA’s Life & Group Non-Core segment would result in a premium deficiency if realized, a related decrease in Deferred acquisition costs, and/or increase in Insurance reserves is recorded, net of tax and noncontrolling interests, as a reduction of net unrealized gains through Other comprehensive income (loss) (Shadow Adjustments).

The available-for-sale securities in a gross unrealized loss position are as follows:


	Less than 12 Months				12 Months or Longer				Total

September 30, 2013	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses

(In millions)

Fixed maturity securities:
Corporate and other bonds	$	3,521	$	146	$	45	$	5	$	3,566	$	151
States, municipalities and political subdivisions		2,413		179		122		54		2,535		233
Asset-backed:
Residential mortgage-backed		1,289		40		287		61		1,576		101
Commercial mortgage-backed		449		20		79		4		528		24
Other asset-backed		207		2						207		2

Total asset-backed		1,945		62		366		65		2,311		127
U.S. Treasury and obligations of government-sponsored enterprises		21		1						21		1
Foreign government		76		3						76		3

Total fixed maturity securities		7,976		391		533		124		8,509		515
Preferred stock		86		3						86		3

Total	$	8,062	$	394	$	533	$	124	$	8,595	$	518

December 31, 2012


Fixed maturity securities:
Corporate and other bonds	$	846	$	13	$	108	$	8	$	954	$	21
States, municipalities and political subdivisions		254		5		165		39		419		44
Asset-backed:
Residential mortgage-backed		583		5		452		66		1,035		71
Commercial mortgage-backed		85		2		141		15		226		17

Total asset-backed		668		7		593		81		1,261		88
U.S. Treasury and obligations of government- sponsored enterprises		23		1						23		1
Redeemable preferred stock		28		1						28		1

Total	$	1,819	$	27	$	866	$	128	$	2,685	$	155

The amount of pretax net realized gains on available-for-sale securities reclassified out of AOCI into earnings was $3 million, $12 million, $15 million and $59 million for the three and nine months ended September 30, 2013 and 2012.

Based on current facts and circumstances, the Company believes the unrealized losses presented in the table above are primarily attributable to broader economic conditions, changes in interest rates and credit spreads, market illiquidity and other market factors, but are not indicative of the ultimate collectibility of the current amortized cost of the securities. The investments with longer duration, primarily included within the states, municipalities and political subdivision asset category, were more significantly impacted by changes in market interest rates. The Company has no current intent to sell these securities, nor is it more likely than not that it will be required to sell

prior to recovery of amortized cost; accordingly, the Company has determined that there are no additional OTTI losses to be recorded at September 30, 2013.

The following table summarizes the activity for the three and nine months ended September 30, 2013 and 2012 related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held at September 30, 2013 and 2012 for which a portion of an OTTI loss was recognized in Other comprehensive income (loss).


	Three Months Ended				Nine Months Ended
	September 30,				September 30,

	2013		2012		2013		2012

(In millions)

Beginning balance of credit losses on fixed maturity securities	$	89	$	99	$	95	$	92
Additional credit losses for securities for which an OTTI loss was previously recognized		1		2		2		23
Credit losses for securities for which an OTTI loss was not previously recognized								2
Reductions for securities sold during the period		(7)		(3)		(14)		(11)
Reductions for securities the Company intends to sell or more likely than not will be required to sell								(8)

Ending balance of credit losses on fixed maturity securities	$	83	$	98	$	83	$	98

Contractual Maturity

The following table summarizes available-for-sale fixed maturity securities by contractual maturity at September 30, 2013 and December 31, 2012. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid with or without call or prepayment penalties. Securities not due at a single date are allocated based on weighted average life.


	September 30, 2013				December 31, 2012

	Cost or Amortized Cost		Estimated Fair Value		Cost or Amortized Cost		Estimated Fair Value

(In millions)

Due in one year or less	$	2,475	$	2,516	$	1,648	$	1,665
Due after one year through five years		10,687		11,304		13,603		14,442
Due after five years through ten years		10,586		10,901		8,726		9,555
Due after ten years		15,338		16,510		14,164		16,942

Total	$	39,086	$	41,231	$	38,141	$	42,604

Investment Commitments

As of September 30, 2013, the Company had committed approximately $405 million to future capital calls from various third-party limited partnership investments in exchange for an ownership interest in the related partnerships.

The Company invests in various privately placed debt securities, including bank loans, as part of its overall investment strategy and has committed to additional future purchases, sales and funding. As of September 30, 2013, the Company had commitments to purchase or fund additional amounts of $172 million and sell $143 million under the terms of such securities.

3. Fair Value

Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable:

—

Level 1 – Quoted prices for identical instruments in active markets.

—

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

—

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs are not observable.

Prices may fall within Level 1, 2 or 3 depending upon the methodologies and inputs used to estimate fair value for each specific security. In general, the Company seeks to price securities using third party pricing services. Securities not priced by pricing services are submitted to independent brokers for valuation and, if those are not available, internally developed pricing models are used to value assets using methodologies and inputs the Company believes market participants would use to value the assets. Prices obtained from third-party pricing services or brokers are not adjusted by the Company.

The Company performs control procedures over information obtained from pricing services and brokers to ensure prices received represent a reasonable estimate of fair value and to confirm representations regarding whether inputs are observable or unobservable. Procedures include (i) the review of pricing service or broker pricing methodologies, (ii) back-testing, where past fair value estimates are compared to actual transactions executed in the market on similar dates, (iii) exception reporting, where changes in price, period-over-period, are reviewed and challenged with the pricing service or broker based on exception criteria, (iv) detailed analysis, where the Company independently validates information regarding inputs and assumptions for individual securities and (v) pricing validation, where prices received are compared to prices independently estimated by the Company.

The fair values of CNA’s life settlement contracts are included in Other assets on the Consolidated Condensed Balance Sheets. Equity options purchased are included in Equity securities, and all other derivative assets are included in Receivables. Derivative liabilities are included in Payable to brokers. Assets and liabilities measured at fair value on a recurring basis are summarized in the tables below:

September 30, 2013

Level 1

Level 2

Level 3

Total

(In millions)

Fixed maturity securities:

Corporate and other bonds

20,922

211

21,160

States, municipalities and political subdivisions

11,344

11,439

Asset-backed:

Residential mortgage-backed

4,449

370

4,819

Commercial mortgage-backed

1,860

157

2,017

Other asset-backed

523

433

956

Total asset-backed

6,832

960

7,792

U.S. Treasury and obligations of government-sponsored
enterprises

144

173

Foreign government

480

561

Redeemable preferred stock

106

Fixed maturities available-for-sale

300

39,665

1,266

41,231

Fixed maturities, trading

145

Total fixed maturities

300

39,732

1,344

41,376

Equity securities available-for-sale

135

199

Equity securities, trading

640

642

Total equity securities

775

841

Short term investments

5,697

430

6,127

Other invested assets

Receivables

Life settlement contracts

Separate account business

199

213

Payable to brokers

(76)

(12)

(4)

(92)



December 31, 2012	Level 1		Level 2		Level 3		Total

(In millions)

Fixed maturity securities:
Corporate and other bonds	$	6	$	21,982	$	219	$	22,207
States, municipalities and political subdivisions				10,687		96		10,783
Asset-backed:
Residential mortgage-backed				5,507		413		5,920
Commercial mortgage-backed				1,693		129		1,822
Other asset-backed				584		368		952

Total asset-backed				7,784		910		8,694
U.S. Treasury and obligations of government-sponsored enterprises		158		24				182
Foreign government		140		473				613
Redeemable preferred stock		40		59		26		125

Fixed maturities available-for-sale		344		41,009		1,251		42,604
Fixed maturities, trading				72		89		161

Total fixed maturities	$	344	$	41,081	$	1,340	$	42,765


Equity securities available-for-sale	$	117	$	98	$	34	$	249
Equity securities, trading		642				7		649

Total equity securities	$	759	$	98	$	41	$	898


Short term investments	$	4,990	$	799	$	6	$	5,795
Other invested assets				58		1		59
Receivables				32		11		43
Life settlement contracts						100		100
Separate account business		4		306		2		312
Payable to brokers		(95)		(11)		(6)		(112)

The tables below present reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2013 and 2012:


			Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)										Transfers		Transfers				Unrealized Gains (Losses) Recognized in Net Income on Level 3 Assets and Liabilities
2013	Balance, July 1		Included in Net Income		Included in OCI		Purchases		Sales		Settlements		into Level 3		out of Level 3		Balance, September 30		Held at September 30

(In millions)

Fixed maturity securities:
Corporate and other bonds	$	202	$	1			$	6	$	(6)	$	(8)	$	17	$	(1)	$	211
States, municipalities and political subdivisions		140			$	(3)						(15)				(27)		95
Asset-backed:
Residential mortgage-backed		428				(20)		5				(21)				(22)		370	$	(1)
Commercial mortgage- backed		165		(1)		(2)		10				(1)				(14)		157
Other asset-backed		387				1		56				(6)				(5)		433		(1)

Total asset-backed		980		(1)		(21)		71				(28)				(41)		960		(2)
Redeemable preferred stock		25		(1)		1						(25)						-

Fixed maturities available-for-sale		1,347		(1)		(23)		77		(6)		(76)		17		(69)		1,266		(2)
Fixed maturities, trading		87		(8)						(1)								78		(8)

Total fixed maturities	$	1,434	$	(9)	$	(23)	$	77	$	(7)	$	(76)	$	17	$	(69)	$	1,344	$	(10)


Equity securities available-for-sale	$	13	$	(2)	$	2											$	13	$	(2)
Equity securities trading		2																2

Total equity securities	$	15	$	(2)	$	2	$	-	$	-	$	-	$	-	$	-	$	15	$	(2)


Life settlement contracts	$	91	$	3							$	(4)					$	90
Separate account business		2																2
Derivative financial instruments, net		5		2	$	(4)			$	(2)		(1)						-


			Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)										Transfers		Transfers				Unrealized Gains (Losses) Recognized in Net Income on Level 3 Assets and Liabilities
2012	Balance, July 1		Included in Net Income		Included in OCI		Purchases		Sales		Settlements		into Level 3		out of Level 3		Balance, September 30		Held at September 30

(In millions)

Fixed maturity securities:
Corporate and other bonds	$	488	$	1	$	(4)	$	50	$	(5)	$	(11)			$	(260)	$	259	$	(1)
States, municipalities and political subdivisions		89																89
Asset-backed:
Residential mortgage-backed		443		(17)		20		21				(8)				(22)		437		(18)
Commercial mortgage-backed		166		4		6		12				(17)	$	11		(65)		117
Other asset-backed		434		2		5		143		(117)		(34)				(62)		371

Total asset-backed		1,043		(11)		31		176		(117)		(59)		11		(149)		925		(18)
Redeemable preferred stock		27				(1)												26

Fixed maturities available-for-sale		1,647		(10)		26		226		(122)		(70)		11		(409)		1,299		(19)
Fixed maturities, trading		94								(1)								93

Total fixed maturities	$	1,741	$	(10)	$	26	$	226	$	(123)	$	(70)	$	11	$	(409)	$	1,392	$	(19)


Equity securities available-for-sale	$	93	$	(19)	$	(10)									$	(14)	$	50	$	(19)
Equity securities trading		9		2														11		3

Total equity securities	$	102	$	(17)	$	(10)	$	-	$	-	$	-	$	-	$	(14)	$	61	$	(16)


Short term investments	$	4					$	7	$	(4)			$	1			$	8
Other invested assets		11																11
Life settlement contracts		116	$	7							$	(10)						113
Separate account business		3																3
Derivative financial instruments, net		12		(1)	$	(5)						(1)						5	$	(2)


			Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)										Transfers		Transfers				Unrealized Gains (Losses) Recognized in Net Income on Level 3 Assets and Liabilities
2013	Balance, January 1		Included in Net Income		Included in OCI		Purchases		Sales		Settlements		into Level 3		out of Level 3		Balance, September 30		Held at September 30

(In millions)

Fixed maturity securities:
Corporate and other bonds	$	219	$	2	$	(1)	$	129	$	(96)	$	(34)	$	43	$	(51)	$	211	$	(2)
States, municipalities and political subdivisions		96		(3)		1		122		(79)		(20)		5		(27)		95
Asset-backed:
Residential mortgage-backed		413		2		(21)		116		(10)		(53)		4		(81)		370		(3)
Commercial mortgage- backed		129				7		88				(10)		21		(78)		157
Other asset-backed		368		3		(1)		230		(132)		(30)				(5)		433		(2)

Total asset-backed		910		5		(15)		434		(142)		(93)		25		(164)		960		(5)
Redeemable preferred stock		26		(1)								(25)						-

Fixed maturities available-for-sale		1,251		3		(15)		685		(317)		(172)		73		(242)		1,266		(7)
Fixed maturities, trading		89		(7)						(4)								78		(7)

Total fixed maturities	$	1,340	$	(4)	$	(15)	$	685	$	(321)	$	(172)	$	73	$	(242)	$	1,344	$	(14)


Equity securities available-for-sale	$	34	$	(22)	$	2									$	(1)	$	13	$	(22)
Equity securities trading		7		(5)														2		(5)

Total equity securities	$	41	$	(27)	$	2	$	-	$	-	$	-	$	-	$	(1)	$	15	$	(27)


Short term investments	$	6							$	(6)							$	-
Other invested assets		1								(1)								-
Life settlement contracts		100	$	14							$	(24)						90	$	(1)
Separate account business		2																2
Derivative financial instruments, net		5		7	$	(6)	$	1		(2)		(5)						-		1


			Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)										Transfers		Transfers				Unrealized Gains (Losses) Recognized in Net Income on Level 3 Assets and Liabilities
2012	Balance, January 1		Included in Net Income		Included in OCI		Purchases		Sales		Settlements		into Level 3		out of Level 3		Balance, September 30		Held at September 30

(In millions)

Fixed maturity securities:
Corporate and other bonds	$	482	$	7		$ 2	$	196	$	(117)	$	(43)	$	42	$	(310)	$	259	$	(1)
States, municipalities and political subdivisions		171				3						(85)						89
Asset-backed:
Residential mortgage-backed		452		(15)		(2)		81				(24)				(55)		437		(18)
Commercial mortgage-backed		59		6		14		141		(12)		(21)		11		(81)		117
Other asset-backed		343		8		8		501		(293)		(93)				(103)		371

Total asset-backed		854		(1)		20		723		(305)		(138)		11		(239)		925		(18)
Redeemable preferred stock						(1)		53		(26)								26

Fixed maturities available-for-sale		1,507		6		24		972		(448)		(266)		53		(549)		1,299		(19)
Fixed maturities, trading		101		(7)				1		(2)								93		(7)

Total fixed maturities	$	1,608	$	(1)		$ 24	$	973	$	(450)	$	(266)	$	53	$	(549)	$	1,392	$	(26)


Equity securities available-for-sale	$	67	$	(19)		$ 6	$	26	$	(16)					$	(14)	$	50	$	(21)
Equity securities trading		14		(3)														11		(1)

Total equity securities	$	81	$	(22)		$ 6	$	26	$	(16)	$	-	$	-	$	(14)	$	61	$	(22)


Short term investments	$	27					$	23	$	(4)	$	(39)	$	1			$	8
Other invested assets		11																11
Life settlement contracts		117	$	30								(34)						113	$	3
Separate account business		23								(20)								3
Derivative financial instruments, net		(15)		(5)		$ 29				(6)		2						5		(1)

Net realized and unrealized gains and losses are reported in Net income as follows:


Major Category of Assets and Liabilities		Consolidated Condensed Statements of Income Line Items


Fixed maturity securities available-for-sale		Investment gains (losses)
Fixed maturity securities, trading		Net investment income
Equity securities available-for-sale		Investment gains (losses)
Equity securities, trading		Net investment income
Other invested assets		Investment gains (losses) and Net investment income
Derivative financial instruments held in a trading portfolio		Net investment income
Derivative financial instruments, other		Investment gains (losses) and Other revenues
Life settlement contracts		Other revenues

Securities shown in the Level 3 tables may be transferred in or out of Level 3 based on the availability of observable market information used to determine the fair value of the security. The availability of observable market information varies based on market conditions and trading volume and may cause securities to move in and out of Level 3 from reporting period to reporting period. There were no transfers between Level 1 and Level 2 during the three or nine months ended September 30, 2013 and 2012 and $106 million of transfers from Level 2 to Level 1 during the three and nine months ended September 30, 2012. The Company’s policy is to recognize transfers between levels at the beginning of quarterly reporting periods.

Valuation Methodologies and Inputs

The following section describes the valuation methodologies and relevant inputs used to measure different financial instruments at fair value, including an indication of the level in the fair value hierarchy in which the instruments are generally classified.

Fixed Maturity Securities

Fixed maturity securities are valued using methodologies that model information generated by market transactions involving identical or comparable assets, as well as discounted cash flow methodologies. Common inputs include: prices from recently executed transactions of similar securities, broker/dealer quotes, benchmark yields, spreads off benchmark yields, interest rates and U.S. Treasury or swap curves. Specifically for asset-backed securities, key inputs include prepayment and default projections based on past performance of the underlying collateral and current market data.

Level 1 securities include exchange traded bonds, highly liquid U.S. and foreign government bonds, and redeemable preferred stock, valued using quoted market prices. Level 2 securities include most other fixed maturity securities as the significant inputs are observable in the marketplace. Securities are generally assigned to Level 3 in cases where broker/dealer quotes are significant inputs to the valuation and there is a lack of transparency as to whether these quotes are based on information that is observable in the marketplace. Level 3 securities also include tax-exempt auction rate certificates and private placement debt securities. Fair value of auction rate securities is determined utilizing a pricing model with three primary inputs. The interest rate and spread inputs are observable from like instruments while the expected call date assumption is unobservable due to the uncertain nature of principal prepayments prior to maturity and the credit spread adjustment that is security specific. Fair value of certain private placement debt securities is determined using internal models with inputs that are not market observable.

Equity Securities

Level 1 equity securities include publicly traded securities valued using quoted market prices. Level 2 securities are primarily non-redeemable preferred stocks and common stocks valued using pricing for similar securities, recently executed transactions, broker/dealer quotes and other pricing models utilizing market observable inputs. Level 3 securities are priced using internal models with inputs that are not market observable.

Derivative Financial Instruments

Exchange traded derivatives are valued using quoted market prices and are classified within Level 1 of the fair value hierarchy. Level 2 derivatives primarily include currency forwards valued using observable market forward rates. Over-the-counter derivatives, principally interest rate swaps, total return swaps, commodity swaps, credit default swaps, equity warrants and options, are valued using inputs including broker/dealer quotes and are classified within Level 2 or Level 3 of the valuation hierarchy, depending on the amount of transparency as to whether these quotes are based on information that is observable in the marketplace.

Short Term Investments

Securities that are actively traded or have quoted prices are classified as Level 1. These securities include money market funds and treasury bills. Level 2 primarily includes commercial paper, for which all inputs are market observable. Fixed maturity securities purchased within one year of maturity are classified consistent with fixed

maturity securities discussed above. Short term investments as presented in the tables above differ from the amounts presented in the Consolidated Condensed Balance Sheets because certain short term investments, such as time deposits, are not measured at fair value.

Life Settlement Contracts

The fair values of life settlement contracts are determined as the present value of the anticipated death benefits less anticipated premium payments based on contract terms that are distinct for each insured, as well as CNA’s own assumptions for mortality, premium expense, and the rate of return that a buyer would require on the contracts, as no comparable market pricing data is available.

Separate Account Business

Separate account business includes fixed maturity securities, equities and short term investments. The valuation methodologies and inputs for these asset types have been described above.

Significant Unobservable Inputs

The table below presents quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurements of Level 3 assets. Valuations for assets and liabilities not presented in the table below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of unobservable inputs from these broker quotes is neither provided nor reasonably available to the Company.

September 30, 2013

Fair Value

Valuation
Technique(s)

Unobservable

Input(s)

Range

(Weighted

Average)

(In millions)

Assets

Fixed maturity securities

179

Discounted cash flow

Expected call date

2.1 –5.3 years (3.8 years)

Credit spread

1.92% –26.24% (3.80%)

Equity securities

Market approach

Private offering price

$289.80 – $4,273.77 per

share ($1,337.14 per share)

Life settlement contracts

Discounted cash flow

Discount rate risk premium

Mortality assumption

69% – 883% (208.8%)

December 31, 2012

Assets

Fixed maturity securities

121

Discounted cash flow

Expected call date

3.3 – 5.3 years (4.3 years)

Credit spread adjustment

0.02% – 0.48%(0.17%)

Market approach

Private offering price

$42.39 – $102.32 ($100.11)

Equity securities

Market approach

Private offering price

$4.54 – $3,842.00 per share

($571.17 per share)

Life settlement contracts

100

Discounted cash flow

Discount rate risk premium

Mortality assumption

69% – 883%(208.9%)

For fixed maturity securities, an increase to the expected call date and credit spread assumptions would result in a lower fair value measurement. For equity securities, an increase in the private offering price would result in a higher fair value measurement. For life settlement contracts, an increase in the discount rate risk premium or decrease in the mortality assumption would result in a lower fair value measurement.

Financial Assets and Liabilities Not Measured at Fair Value

The carrying amount, estimated fair value and the level of the fair value hierarchy of the Company’s financial instrument assets and liabilities which are not measured at fair value on the Consolidated Condensed Balance Sheets are listed in the tables below. The carrying amounts and estimated fair values of short term debt and long term debt exclude capital lease obligations. The carrying amounts reported on the Consolidated Condensed Balance Sheets for cash and short term investments not carried at fair value and certain other assets and liabilities approximate fair value due to the short term nature of these items.


	Carrying		Estimated Fair Value

September 30, 2013	Amount		Level 1	Level 2		Level 3		Total

(In millions)

Financial Assets:
Other invested assets, primarily mortgage loans	$	440				$	452	$	452

Financial Liabilities:
Premium deposits and annuity contracts		68					69		69
Short term debt		270		$	260		20		280
Long term debt		9,694			10,229		183		10,412
December 31, 2012


Financial Assets:
Other invested assets, primarily mortgage loans	$	401				$	418	$	418

Financial Liabilities:
Premium deposits and annuity contracts		100					104		104
Short term debt		19		$	13		6		19
Long term debt		9,191			10,170		202		10,372

The following methods and assumptions were used in estimating the fair value of these financial assets and liabilities.

The fair values of mortgage loans were based on the present value of the expected future cash flows discounted at the current interest rate for similar financial instruments, adjusted for specific loan risk.

Premium deposits and annuity contracts were valued based on cash surrender values or estimated fair values of policyholder liabilities, net of amounts ceded related to sold business.

Fair value of debt was based on observable market prices when available. When observable market prices were not available, the fair value for debt was based on observable market prices of comparable instruments adjusted for differences between the observed instruments and the instruments being valued or is estimated using discounted cash flow analyses, based on current incremental borrowing rates for similar types of borrowing arrangements.

4. Derivative Financial Instruments

A summary of the aggregate contractual or notional amounts and gross estimated fair values related to derivative financial instruments follows. The contractual or notional amounts for derivatives are used to calculate the exchange of contractual payments under the agreements and may not be representative of the potential for gain or loss on these instruments.


	September 30, 2013						December 31, 2012

	Contractual/						Contractual/
	Notional		Estimated Fair Value				Notional		Estimated Fair Value

	Amount		Asset		(Liability)		Amount		Asset		(Liability)

(In millions)

With hedge designation:

Interest rate risk:
Interest rate swaps	$	300			$	(4)	$	300			$	(6)
Commodities:
Forwards – short		214	$	15		(3)		288	$	39		(3)
Foreign exchange:
Currency forwards – short		152		3		(4)		144		4

Without hedge designation:

Equity markets:
Options – purchased		606		36				255		19
– written		442				(32)		374				(11)
Equity swaps and warrants
– long		11		2				14		6

Interest rate risk:
Credit default swaps
– purchased protection		75				(3)		78				(2)
– sold protection		30						33				(2)

Foreign exchange:
Currency forwards – long								404				(2)
– short		140				(2)		128

Gross estimated fair values of derivative positions are currently presented in Equity securities, Receivables and Payable to brokers on the Consolidated Condensed Balance Sheets. There would be no significant difference in the balance included in such accounts if the estimated fair values were presented net for the periods ended September 30, 2013 and December 31, 2012.

For derivative financial instruments without hedge designation, changes in the fair value of derivatives not held in a trading portfolio are reported in Investment gains (losses) and changes in the fair value of derivatives held for trading purposes are reported in Net investment income on the Consolidated Condensed Statements of Income. Losses of $2 million for the three months ended September 30, 2013 and 2012 and losses of $5 million and $4 million for the nine months ended September 30, 2013 and 2012 were included in Investment gains (losses). Losses of $17 million for the three months ended September 30, 2013 and 2012 and losses of $33 million and $16 million for the nine months ended September 30, 2013 and 2012 were included in Net investment income.

The Company’s derivative financial instruments with cash flow hedge designation hedge variable price risk associated with the purchase and sale of natural gas and other energy-related products, exposure to foreign currency losses on future foreign currency expenditures, as well as risks attributable to changes in interest rates on long term debt. Gains of $12 million and losses of $16 million were recognized in OCI related to these cash flow hedges for

the three months ended September 30, 2013 and 2012. Gains of $13 million and $33 million were recognized in OCI related to these cash flow hedges for the nine months ended September 30, 2013 and 2012. For the three months ended September 30, 2013 and 2012, the amount of gains reclassified from AOCI into income were $19 million and $12 million. For the nine months ended September 30, 2013 and 2012, the amount of gains reclassified from AOCI into income were $38 million and $39 million. As of September 30, 2013, the estimated amount of net unrealized gains associated with these cash flow hedges that will be reclassified from AOCI into earnings during the next twelve months was $7 million. The net amounts recognized due to ineffectiveness were less than $1 million for the three and nine months ended September 30, 2013 and 2012.

5. Claim and Claim Adjustment Expense Reserves

CNA’s property and casualty insurance claim and claim adjustment expense reserves represent the estimated amounts necessary to resolve all outstanding claims, including claims that are incurred but not reported (“IBNR”) as of the reporting date. CNA’s reserve projections are based primarily on detailed analysis of the facts in each case, CNA’s experience with similar cases and various historical development patterns. Consideration is given to such historical patterns as field reserving trends and claims settlement practices, loss payments, pending levels of unpaid claims and product mix, as well as court decisions, economic conditions including inflation and public attitudes. All of these factors can affect the estimation of claim and claim adjustment expense reserves.

Establishing claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves for catastrophic events that have occurred, is an estimation process. Many factors can ultimately affect the final settlement of a claim and, therefore, the necessary reserve. Changes in the law, results of litigation, medical costs, the cost of repair materials and labor rates can all affect ultimate claim costs. In addition, time can be a critical part of reserving determinations since the longer the span between the incidence of a loss and the payment or settlement of the claim, the more variable the ultimate settlement amount can be. Accordingly, short-tail claims, such as property damage claims, tend to be more reasonably estimable than long-tail claims, such as workers’ compensation, general liability and professional liability claims. Adjustments to prior year reserve estimates, if necessary, are reflected in the results of operations in the period that the need for such adjustments is determined. There can be no assurance that CNA’s ultimate cost for insurance losses will not exceed current estimates.

Catastrophes are an inherent risk of the property and casualty insurance business and have contributed to material period-to-period fluctuations in CNA’s results of operations and/or equity. CNA reported catastrophe losses, net of reinsurance, of $42 million and $27 million for the three months ended September 30, 2013 and 2012 and $146 million and $123 million for the nine months ended September 30, 2013 and 2012. Catastrophe losses in 2013 related primarily to U.S. storms.

Net Prior Year Development

The following tables and discussion include the net prior year development recorded for CNA Specialty, CNA Commercial and Other.


Three Months Ended September 30, 2013	CNA Specialty		CNA Commercial		Other		Total

(In millions)

Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development	$	(74)	$	(3)	$	(4)	$	(81)
Pretax (favorable) unfavorable premium development		(3)		7		1		5

Total pretax (favorable) unfavorable net prior year development	$	(77)	$	4	$	(3)	$	(76)


Three Months Ended September 30, 2012	CNA Specialty		CNA Commercial		Other		Total

(In millions)

Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development		$ (39)		$ 2		$ (3)		$ (40)
Pretax (favorable) unfavorable premium development		(1)		(5)		(1)		(7)

Total pretax (favorable) unfavorable net prior year development		$ (40)		$ (3)		$ (4)		$ (47)


Nine Months Ended September 30, 2013


Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development		$ (130)		$ 13		$ 5		$ (112)
Pretax (favorable) unfavorable premium development		(16)		(8)		8		(16)

Total pretax (favorable) unfavorable net prior year development		$ (146)		$ 5		$ 13		$ (128)


Nine Months Ended September 30, 2012


Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development		$ (80)		$ (25)		$ (5)		$ (110)
Pretax (favorable) unfavorable premium development		(15)		(41)		1		(55)

Total pretax (favorable) unfavorable net prior year development		$ (95)		$ (66)		$ (4)		$ (165)

For the nine months ended September 30, 2012, favorable premium development was recorded for CNA Commercial primarily due to premium adjustments on auditable policies arising from increased exposures.

CNA Specialty

The following table and discussion provide further detail of the net prior year claim and allocated claim adjustment expense reserve development (“development”) recorded for the CNA Specialty segment:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2013

2012

2013

2012

(In millions)

Medical professional liability

$ 9

$ 9

$ (11)

$ (6)

Other professional liability

(4)

(28)

(1)

Surety

(76)

(60)

(74)

(59)

Warranty

(1)

Other

(3)

(17)

(13)

Total pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development

$ (74)

$ (39)

$ (130)

$ (80)

Three Month Comparison

2013

Favorable development for surety coverages was primarily due to better than expected large loss emergence in accident years 2011 and prior.

2012

Favorable development for surety coverages was primarily due to better than expected loss emergence in accident years 2010 and prior.

Other includes standard property and casualty coverages provided to CNA Specialty customers. Unfavorable development for other coverages was primarily due to an unfavorable outcome on an individual general liability claim in accident year 2009.

Nine Month Comparison

2013

Overall, favorable development for medical professional liability reflects favorable experience in accident years 2009 and prior. Unfavorable development was recorded for accident years 2010 and 2011 due to higher than expected large loss activity.

Overall, favorable development for other professional liability was related to better than expected loss emergence in accident years 2007 through 2009. Unfavorable development was recorded in accident years 2010 through 2012 related to an increase in severity.

Favorable development for surety coverages was primarily due to better than expected large loss emergence in accident years 2011 and prior.

Favorable development for other coverages was primarily due to better than expected loss emergence in property coverages in accident years 2010 and subsequent.

2012

Favorable development for surety coverages was primarily due to better than expected loss emergence in accident years 2010 and prior.

Overall, favorable development for other coverages was primarily due to favorable loss emergence in property and workers’ compensation coverages in accident years 2005 and subsequent. Unfavorable development was recorded in accident year 2009 primarily due to an unfavorable outcome on an individual general liability claim.

CNA Commercial

The following table and discussion provide further detail of the development recorded for the CNA Commercial segment:


	Three Months Ended September 30,				Nine Months Ended September 30,

	2013		2012		2013		2012

(In millions)

Commercial auto	$	4	$	9	$	1	$	11
General liability		(18)		(21)		(24)		(26)
Workers’ compensation		26		24		96		13
Property and other		(15)		(10)		(60)		(23)

Total pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development	$	(3)	$	2	$	13	$	(25)

Three Month Comparison

2013

Favorable development for general liability coverages was primarily related to better than expected loss emergence in accident years 2005 through 2007 and 2012.

Unfavorable development for workers’ compensation was primarily due to increased frequency and severity on claims related to Defense Base Act (DBA) contractors in accident year 2012.

Favorable development for property and other coverages was primarily related to favorable loss emergence in non-catastrophe losses in accident years 2010 through 2012.

2012

Favorable development for general liability coverages was primarily due to favorable loss emergence in accident years 2003 and prior related to large account business.

Unfavorable development for workers’ compensation was primarily due to increased medical severity in accident years 2010 and 2011.

Favorable development for property and other coverages was due to favorable loss emergence in non-catastrophe losses in accident years 2009 and subsequent.

Nine Month Comparison

2013

Favorable development for general liability coverages was primarily related to better than expected loss emergence in accident years 2009 and prior and 2012.

Unfavorable development for workers’ compensation includes CNA’s response to legislation enacted during 2013 related to the New York Fund for Reopened Cases. The law change necessitated an increase in reserves as re-opened workers’ compensation claims can no longer be turned over to the state for handling and payment after December 31, 2013. Additional unfavorable development was recorded in accident year 2012 related to increased frequency and severity on claims related to DBA contractors and in accident year 2010 due to higher than expected large losses and increased severity in the state of California.

Favorable development for property and other coverages was primarily related to favorable outcomes on litigated catastrophe claims in accident years 2005 and 2010 and favorable loss emergence in non-catastrophe losses in accident years 2010 through 2012.

2012

Unfavorable development for commercial auto coverages was primarily due to higher than expected frequency in accident years 2009 and subsequent.

Favorable development for general liability coverages was primarily due to favorable loss emergence in accident years 2003 and prior related to large account business.

Overall, unfavorable development for workers’ compensation was primarily due to increased medical severity in accident years 2010 and 2011 and losses related to favorable premium development in accident year 2011. Favorable development was recorded in accident years 2001 and prior reflecting favorable experience.

Favorable development for property and other coverages was due to a favorable outcome on an individual claim in accident year 2005 and favorable loss emergence in non-catastrophe losses in accident years 2009 through 2011.

6. Debt

In May of 2013, the Company completed a public offering of $500 million aggregate principal amount of 2.6% senior notes due May 15, 2023 and $500 million aggregate principal amount of 4.1% senior notes due May 15, 2043. The Company received net proceeds of $983 million, after deducting the underwriters’ discounts and commissions and offering expenses of $17 million, which will be amortized over the life of the notes. The proceeds for this offering are expected to be used for general corporate purposes.

7. Shareholders’ Equity

Accumulated other comprehensive income

The tables below present the changes in Accumulated other comprehensive income (“AOCI”) by component for the three and nine months ended September 30, 2013:


	Unrealized Gains (Losses) On Investments		OTTI Gains (Losses)		Cash Flow Hedges						Pension Liability		Foreign Currency Translation		Total Accumulated Other Comprehensive Income (Loss)
					Cash Flow Hedges
					Interest Rate Swaps		Commodity Hedges		Foreign Currency Forwards



(In millions)

Balance, July 1, 2013	$	650	$	23	$	(7)	$	18	$	(3)		$ (721)	$	77	$	37

Other comprehensive income (loss) before reclassifications, after tax of $36, $1, $0, $(2), $(1), $0 and $0		(68)		(4)		1		7		1				56		(7)
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $2, $0, $2, $7, $(2), $(5) and $0		(2)		1				(16)		4		3				(10)

Other comprehensive income (loss)		(70)		(3)		1		(9)		5		3		56		(17)
Amounts attributable to noncontrolling interests		7		1						(2)				(6)		-

Balance, September 30, 2013	$	587	$	21	$	(6)	$	9	$	-		$ (718)	$	127	$	20


Balance, January 1, 2013	$	1,233	$	18	$	(9)	$	24	$	1		$ (732)	$	143	$	678

Other comprehensive income (loss) before reclassifications, after tax of $382, $(2), $(1), $(4), $3, $0 and $0		(706)		2		4		12		(5)				(18)		(711)
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $5, $0, $1, $13, $(1), $(10) and $0		(11)		1		(1)		(26)		2		12				(23)
Issuance of equity securities by subsidiary												2				2

Other comprehensive income (loss)		(717)		3		3		(14)		(3)		14		(18)		(732)
Amounts attributable to noncontrolling interests		71						(1)		2				2		74

Balance, September 30, 2013	$	587	$	21	$	(6)	$	9	$	-		$ (718)	$	127	$	20

Amounts reclassified from AOCI shown above are reported in Net income as follows:


Major Category of AOCI		Affected Line Item


Unrealized gains (losses) on investments		Investment gains (losses)
OTTI gains (losses)		Investment gains (losses)
Cash flow hedges
Interest rate swaps		Interest expense
Commodity hedges		Other revenues
Foreign currency forwards		Contract drilling expenses
Pension liability		Other operating expenses

Subsidiary Equity Transaction

In May of 2013, Boardwalk Pipeline sold 12.7 million common units in a public offering and received net proceeds of $377 million, including an $8 million contribution from the Company to maintain its 2% general partner interest. The Company’s percentage ownership interest in Boardwalk Pipeline declined as a result of this transaction, from 55% to 53%. The issuance price of the common units exceeded the Company’s carrying value, resulting in an increase to Additional paid-in capital of $51 million and an increase to AOCI of $2 million.

Treasury Stock

The Company purchased 4.9 million and 3.5 million shares of Loews common stock at aggregate costs of $218 million and $139 million during the nine months ended September 30, 2013 and 2012.

8. Benefit Plans

Pension Plans - The Company has several non-contributory defined benefit plans for eligible employees. Benefits for certain plans are determined annually based on a specified percentage of annual earnings (based on the participant’s age or years of service) and a specified interest rate (which is established annually for all participants) applied to accrued balances. The benefits for another plan which cover salaried employees are based on formulas which include, among others, years of service and average pay. The Company’s funding policy is to make contributions in accordance with applicable governmental regulatory requirements.

Other Postretirement Benefit Plans - The Company has several postretirement benefit plans covering eligible employees and retirees. Participants generally become eligible after reaching age 55 with required years of service. Actual requirements for coverage vary by plan. Benefits for retirees who were covered by bargaining units vary by each unit and contract. Benefits for certain retirees are in the form of a Company health care account.

Benefits for retirees reaching age 65 are generally integrated with Medicare. Other retirees, based on plan provisions, must use Medicare as their primary coverage, with the Company reimbursing a portion of the unpaid amount; or are reimbursed for the Medicare Part B premium or have no Company coverage. The benefits provided by the Company are basically health and, for certain retirees, life insurance type benefits.

The Company funds certain of these benefit plans and accrues postretirement benefits during the active service of those employees who would become eligible for such benefits when they retire.

The components of net periodic benefit cost are as follows:


	Pension Benefits

	Three Months Ended				Nine Months Ended
	September 30,				September 30,

	2013		2012		2013		2012

(In millions)

Service cost	$	6	$	5	$	18	$	17
Interest cost		34		39		101		114
Expected return on plan assets		(49)		(47)		(148)		(140)
Amortization of unrecognized net loss		12		11		40		34
Settlement loss		4				4

Net periodic benefit cost	$	7	$	8	$	15	$	25


	Other Postretirement Benefits

	Three Months Ended				Nine Months Ended
	September 30,				September 30,

	2013		2012		2013		2012

(In millions)

Service cost	$	1	$	1	$	1	$	1
Interest cost		1		1		3		4
Expected return on plan assets		(1)		(1)		(3)		(3)
Amortization of unrecognized net loss		1				1
Amortization of unrecognized prior service benefit		(6)		(6)		(19)		(19)

Net periodic benefit cost	$	(4)	$	(5)	$	(17)	$	(17)

9. Business Segments

The Company’s reportable segments are primarily based on its individual operating subsidiaries. Each of the principal operating subsidiaries are headed by a chief executive officer who is responsible for the operation of its business and has the duties and authority commensurate with that position. Investment gains (losses) and the related income taxes, excluding those of CNA, are included in the Corporate and other segment.

CNA’s results are reported in four business segments: CNA Specialty, CNA Commercial, Life & Group Non-Core and Other. CNA Specialty provides a broad array of professional, financial and specialty property and casualty products and services, primarily through insurance brokers and managing general underwriters. CNA Commercial includes property and casualty coverages sold to small businesses and middle market entities and organizations primarily through an independent agency distribution system. CNA Commercial also includes commercial insurance and risk management products sold to large corporations primarily through insurance brokers. Life & Group Non-Core primarily includes the results of the life and group lines of business that are in run-off. Other includes the operations of Hardy Underwriting Bermuda Limited (“Hardy”) since its acquisition date of July 2, 2012, corporate expenses, including interest on corporate debt, and the results of certain property and casualty business primarily in run-off, including CNA Re and asbestos and environmental pollution. Hardy is a specialized Lloyd’s of London underwriter primarily of short-tail exposures in marine and aviation, non-marine property, specialty lines and property treaty reinsurance.

Diamond Offshore owns and operates offshore drilling rigs that are chartered on a contract basis for fixed terms by companies engaged in exploration and production of hydrocarbons. Offshore rigs are mobile units that can be relocated based on market demand. Diamond Offshore’s fleet consists of 45 drilling rigs, including five new-build rigs which are under construction and two rigs being constructed utilizing the hulls of Diamond Offshore’s existing mid-water floaters. On September 30, 2013, Diamond Offshore’s drilling rigs were located offshore 13 countries in addition to the United States.

Boardwalk Pipeline is engaged in the interstate transportation and storage of natural gas and NGLs and gathering and processing of natural gas. This segment consists of interstate natural gas pipeline systems originating in the Gulf Coast region, Oklahoma and Arkansas, and extending north and east through the midwestern states of Tennessee, Kentucky, Illinois, Indiana and Ohio, natural gas storage facilities in four states and NGL pipelines and storage facilities in Louisiana, with approximately 14,410 miles of pipeline.

HighMount is engaged in the exploration, production and marketing of natural gas and oil (including condensate and NGLs), primarily located in the Permian Basin in West Texas as well as the Mississippian Lime in Oklahoma.

Loews Hotels operates a chain of 19 hotels, 17 of which are in the United States and two are in Canada.

The Corporate and other segment consists primarily of corporate investment income, corporate interest expense and other unallocated expenses.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. In addition, CNA does not maintain a distinct investment portfolio for every insurance segment, and accordingly, allocation of assets to each segment is not performed. Therefore, a significant portion of net investment income and investment gains (losses) are allocated based on each segment’s carried insurance reserves, as adjusted.

The following tables set forth the Company’s consolidated revenues and income (loss) by business segment:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,

	2013		2012		2013		2012

(In millions)

Revenues (a):

CNA Financial:
CNA Specialty	$	996	$	957	$	2,906	$	2,798
CNA Commercial		1,062		1,091		3,267		3,163
Life & Group Non-Core		346		340		1,055		1,050
Other		100		77		272		101

Total CNA Financial		2,504		2,465		7,500		7,112
Diamond Offshore		706		730		2,198		2,319
Boardwalk Pipeline		288		271		921		862
HighMount		62		74		196		219
Loews Hotels		95		98		290		272
Corporate and other		49		77		58		63

Total	$	3,704	$	3,715	$	11,163	$	10,847


Income (loss) before income tax and noncontrolling interests (a):

CNA Financial:
CNA Specialty	$	283	$	214	$	718	$	589
CNA Commercial		200		193		559		519
Life & Group Non-Core		(79)		(60)		(166)		(111)
Other		(26)		(33)		(91)		(84)

Total CNA Financial		378		314		1,020		913
Diamond Offshore (b)		131		234		593		732
Boardwalk Pipeline		60		58		226		216
HighMount		(59)		(248)		(189)		(499)
Loews Hotels		(2)		(1)				17
Corporate and other		12		52		(37)		(15)

Total	$	520	$	409	$	1,613	$	1,364


Net income (loss) (a):

CNA Financial:
CNA Specialty	$	170	$	122	$	427	$	347
CNA Commercial		119		119		328		309
Life & Group Non-Core		(31)		(21)		(56)		(26)
Other		(11)		(20)		(51)		(53)

Total CNA Financial		247		200		648		577
Diamond Offshore (b)		44		83		213		264
Boardwalk Pipeline		19		20		74		80
HighMount		(37)		(158)		(120)		(319)
Loews Hotels		1		(1)		2		9
Corporate and other		8		33		(24)		(11)

Total	$	282	$	177	$	793	$	600

(a)	Investment gains (losses) included in Revenues, Income (loss) before income tax and noncontrolling interests and Net income (loss) are as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,

	2013		2012		2013		2012


Revenues and Income (loss) before income tax and noncontrolling interests:

CNA Financial:
CNA Specialty	$	2	$	2	$	(1)	$	18
CNA Commercial		3		10		(5)		34
Life & Group Non-Core				(3)		14		14
Other				(1)		7		(4)

Total CNA Financial		5		8		15		62
Corporate and other		(1)		(1)		(1)		(3)

Total	$	4	$	7	$	14	$	59


Net income (loss):

CNA Financial:
CNA Specialty			$	1	$	(1)	$	11
CNA Commercial	$	1		6		(3)		20
Life & Group Non-Core				(2)		8		8
Other		2				5		(2)

Total CNA Financial		3		5		9		37
Corporate and other		(1)		(1)		(1)		(2)

Total	$	2	$	4	$	8	$	35

(b)	For the three and nine months ended September 30, 2013, bad debt expense of $23 million ($9 million after tax and noncontrolling interests) was recorded by Diamond Offshore to fully reserve the outstanding receivable balances of two of its customers.

10. Legal Proceedings

The Company and its subsidiaries are parties to litigation arising in the ordinary course of business. The outcome of this litigation will not, in the opinion of management, materially affect the Company’s results of operations or equity.

11. Commitments and Contingencies

Guarantees

In the course of selling business entities and assets to third parties, CNA has agreed to indemnify purchasers for losses arising out of breaches of representation and warranties with respect to the business entities or assets being sold, including, in certain cases, losses arising from undisclosed liabilities or certain named litigation. Such indemnification provisions generally survive for periods ranging from nine months following the applicable closing date to the expiration of the relevant statutes of limitation. As of September 30, 2013, the aggregate amount of quantifiable indemnification agreements in effect for sales of business entities, assets and third party loans was $723 million.

In addition, CNA has agreed to provide indemnification to third party purchasers for certain losses associated with sold business entities or assets that are not limited by a contractual monetary amount. As of September 30, 2013, CNA had outstanding unlimited indemnifications in connection with the sales of certain of its business entities or assets that included tax liabilities arising prior to a purchaser’s ownership of an entity or asset, defects in title at the time of sale, employee claims arising prior to closing and in some cases losses arising from certain litigation and undisclosed liabilities. These indemnification agreements survive until the applicable statutes of limitation expire, or until the agreed upon contract terms expire.

Offshore Rig Purchase Obligations

Diamond Offshore is financially obligated under four turnkey construction contracts with Hyundai Heavy Industries, Co. Ltd. (“Hyundai”) for the construction of four dynamically positioned, ultra-deepwater drillships. Diamond Offshore expects the aggregate cost of the construction of its drillships, including commissioning, capital spares and project management costs, to be approximately $2.6 billion, of which approximately $650 million in contractual installment payments have been paid. These amounts are included in Construction in process within Property, plant and equipment in the Consolidated Condensed Balance Sheets. Diamond Offshore expects to pay a total of approximately $790 million for the first two drillships which are expected to be delivered in the fourth quarter of 2013 and the first quarter of 2014, and the remaining contractual payments due to Hyundai will be paid when the remaining drillships are delivered in 2014.

Diamond Offshore is also financially obligated under agreements for the construction of two moored semisubmersible deepwater rigs with expected completion dates in the fourth quarter of 2013 and in the third quarter of 2014. The rigs will be constructed utilizing the hulls of two of Diamond Offshore’s mid-water floaters and the aggregate cost of the rigs, including commissioning, capital spares and project management costs, are estimated to be approximately $705 million, of which $185 million in contractual installment payments have been paid.

In February of 2013, Diamond Offshore entered into a vessel modification agreement for enhancements to a mid-water floater that will enable the rig to work in the North Sea. The contracted price with the shipyard is $29 million, of which $10 million has been paid. The total cost of the project is estimated to be approximately $120 million, including shipyard costs, owner-furnished equipment and labor, commissioning and capital spares, with an expected completion date in the second quarter of 2014.

In May of 2013, Diamond Offshore entered into a construction contract with Hyundai for the construction of a dynamically positioned, ultra-deepwater harsh environment semisubmersible drilling rig, expected to be delivered in the first quarter of 2016. The total cost of the rig including capital spares, commissioning and shipyard supervision is estimated to be approximately $755 million. The first installment payment of $189 million has been paid and is included in Construction in process within Property, plant and equipment in the Consolidated Condensed Balance Sheets.

Boardwalk Pipeline

Boardwalk Pipeline’s future capital commitments are comprised of binding commitments under purchase orders for materials ordered but not received and firm commitments under binding construction service agreements. The commitments as of September 30, 2013 were approximately $105 million, all of which are expected to be settled within the next twelve months.

Loews Hotels

Loews Hotels has commitments aggregating approximately $205 million for the development and renovation of hotel properties.

12. Consolidating Financial Information

The following schedules present the Company’s consolidating balance sheet information at September 30, 2013 and December 31, 2012, and consolidating statements of income information for the nine months ended September 30, 2013 and 2012. These schedules present the individual subsidiaries of the Company and their contribution to the Consolidated Condensed Financial Statements. Amounts presented will not necessarily be the same as those in the individual financial statements of the Company’s subsidiaries due to adjustments for purchase accounting, income taxes and noncontrolling interests. In addition, many of the Company’s subsidiaries use a classified balance sheet which also leads to differences in amounts reported for certain line items.

The Corporate and Other column primarily reflects the parent company’s investment in its subsidiaries, invested cash portfolio and corporate long term debt. The elimination adjustments are for intercompany assets and liabilities, interest and dividends, the parent company’s investment in capital stocks of subsidiaries, and various reclasses of debit or credit balances to the amounts in consolidation. Purchase accounting adjustments have been pushed down to the appropriate subsidiary.

Loews Corporation

Consolidating Balance Sheet Information

CNA

Diamond

Boardwalk

Loews

Corporate

September 30, 2013

Financial

Offshore

Pipeline

HighMount

Hotels

and Other

Eliminations

Total

(In millions)

Assets:

Investments

46,233

1,206

4,838

52,358

Cash

185

257

Receivables

8,325

444

231

(136)

9,023

Property, plant and equipment

311

5,336

7,253

1,040

396

14,381

Deferred income taxes

355

811

(1,169)

Goodwill

117

267

584

991

Investments in capital stocks of subsidiaries

16,982

(16,982)

Other assets

770

314

182

1,645

Deferred acquisition costs of insurance subsidiaries

642

Separate account business

213

Total assets

57,151

7,353

7,951

2,522

676

22,109

(18,252)

79,510

Liabilities and Equity:

Insurance reserves

38,590

Payable to brokers

218

326

Short term debt

250

270

Long term debt

2,559

1,240

3,334

711

183

1,678

9,705

Deferred income taxes

524

688

709

(1,134)

831

Other liabilities

3,454

647

396

111

248

(136)

4,754

Separate account business

213

Total liabilities

45,034

2,665

4,418

830

281

2,731

(1,270)

54,689

Total shareholders’ equity

10,906

2,375

1,591

1,692

395

19,378

(16,982)

19,355

Noncontrolling interests

1,211

2,313

1,942

5,466

Total equity

12,117

4,688

3,533

1,692

395

19,378

(16,982)

24,821

Total liabilities and equity

57,151

7,353

7,951

2,522

676

22,109

(18,252)

79,510

Loews Corporation

Consolidating Balance Sheet Information


	CNA		Diamond		Boardwalk				Loews		Corporate
December 31, 2012	Financial		Offshore		Pipeline		HighMount		Hotels		and Other		Eliminations		Total

(In millions)

Assets:

Investments	$	47,636	$	1,435	$	1	$	8	$	33	$	3,935			$	53,048
Cash		156		53		3		2		10		4				228
Receivables		8,516		503		89		69		25		183	$	(19)		9,366
Property, plant and equipment		297		4,870		7,252		1,136		333		47				13,935
Deferred income taxes		119						734						(853)		-
Goodwill		118		20		271		584		3						996
Investments in capital stocks of subsidiaries												16,936		(16,936)		-
Other assets		730		366		330		22		84		4		2		1,538
Deferred acquisition costs of insurance subsidiaries		598														598
Separate account business		312														312

Total assets	$	58,482	$	7,247	$	7,946	$	2,555	$	488	$	21,109	$	(17,806)	$	80,021


Liabilities and Equity:

Insurance reserves	$	40,005													$	40,005
Payable to brokers		61					$	10			$	134				205
Short term debt		13							$	6						19
Long term debt		2,557	$	1,489	$	3,539		710		203		693				9,191
Deferred income taxes				483		619				37		552	$	(851)		840
Other liabilities		3,260		675		432		120		42		263		(19)		4,773
Separate account business		312														312

Total liabilities		46,208		2,647		4,590		840		288		1,642		(870)		55,345

Total shareholders’ equity		11,058		2,331		1,624		1,715		200		19,467		(16,936)		19,459
Noncontrolling interests		1,216		2,269		1,732										5,217

Total equity		12,274		4,600		3,356		1,715		200		19,467		(16,936)		24,676

Total liabilities and equity	$	58,482	$	7,247	$	7,946	$	2,555	$	488	$	21,109	$	(17,806)	$	80,021

Loews Corporation

Consolidating Statement of Income Information

CNA

Diamond

Boardwalk

Loews

Corporate

Nine Months Ended September 30, 2013

Financial

Offshore

Pipeline

HighMount

Hotels

and Other

Eliminations

Total

(In millions)

Revenues:

Insurance premiums

5,389

Net investment income

1,808

1,867

Intercompany interest and dividends

547

(547)

Investment gains (losses)

(1)

Contract drilling revenues

2,136

Other

288

921

196

290

1,757

Total

7,500

2,198

921

195

290

606

(547)

11,163

Expenses:

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