Loews Corp 10-Q for FY2022 Q1

Loews Corp (L)

10-Q 2022-05-02 For: 2022-03-31

Added on April 07, 2026

About this 10-Q

Loews Corp filed this 10-Q on May 2, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $3.4B; down 6.1% from $3.62B a year earlier
Net income: $338M; up 29.5% from net income of $261M a year earlier
Diluted EPS: $1.36; up 40.2% from $0.97 a year earlier

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	L	New York Stock Exchange


			Page
			No.

Part I. Financial Information

Item 1. Financial Statements (unaudited)

Consolidated Condensed Balance Sheets			3
March 31, 2022 and December 31, 2021

Consolidated Condensed Statements of Operations			4
Three months ended March 31, 2022 and 2021

Consolidated Condensed Statements of Comprehensive Loss			5
Three months ended March 31, 2022 and 2021

Consolidated Condensed Statement of Equity			6
Three months ended March 31, 2022 and 2021

Consolidated Condensed Statements of Cash Flows			7
Three months ended March 31, 2022 and 2021

Notes to Consolidated Condensed Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			30

Item 3. Quantitative and Qualitative Disclosures about Market Risk			45

Item 4. Controls and Procedures			45

Part II. Other Information			45

Item 1. Legal Proceedings			45

Item 1A. Risk Factors			45

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			45

Item 6. Exhibits			47


	March 31,		December 31,
	2022		2021
(Dollar amounts in millions, except per share data)

Assets:

Investments:
Fixed maturities, amortized cost of $40,928 and $39,952, less allowance for credit loss of $17 and $18	$	41,945	$	44,380
Equity securities, cost of $1,496 and $1,546	1,515		1,674
Limited partnership investments	1,917		1,933
Other invested assets, primarily mortgage loans, less allowance for credit loss of $16 and $16	1,070		1,091
Short term investments	4,655		4,860
Total investments	51,102		53,938
Cash	798		621
Receivables	9,259		9,273
Property, plant and equipment	9,896		9,888
Goodwill	348		349
Deferred non-insurance warranty acquisition expenses	3,504		3,476
Deferred acquisition costs of insurance subsidiaries	766		737
Other assets	3,471		3,344
Total assets	$	79,144	$	81,626

Liabilities and Equity:

Insurance reserves:
Claim and claim adjustment expense	$	24,348	$	24,174
Future policy benefits	11,938		13,236
Unearned premiums	5,942		5,761
Total insurance reserves	42,228		43,171
Payable to brokers	396		90
Short term debt	393		93
Long term debt	8,883		8,986
Deferred income taxes	715		1,079
Deferred non-insurance warranty revenue	4,528		4,503
Other liabilities	4,306		4,529
Total liabilities	61,449		62,451

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 – 248,596,343 and 248,467,051 shares	2		2
Additional paid-in capital	2,859		2,885
Retained earnings	15,097		14,776
Accumulated other comprehensive income (loss)	(1,251)		186
	16,707		17,849
Less treasury stock, at cost (2,195,656 and 50,000 shares)	(132)		(3)
Total shareholders’ equity	16,575		17,846
Noncontrolling interests	1,120		1,329
Total equity	17,695		19,175
Total liabilities and equity	$	79,144	$	81,626


Three Months Ended March 31	2022		2021
(In millions, except per share data)

Revenues:
Insurance premiums	$	2,059	$	1,962
Net investment income	432		550
Investment gains (losses)	(11)		57
Non-insurance warranty revenue	382		338
Operating revenues and other	540		715
Total	3,402		3,622

Expenses:
Insurance claims and policyholders’ benefits	1,455		1,506
Amortization of deferred acquisition costs	344		359
Non-insurance warranty expense	354		311
Operating expenses and other	691		914
Interest	96		125
Total	2,940		3,215
Income before income tax	462		407
Income tax expense	(92)		(114)
Net income	370		293
Amounts attributable to noncontrolling interests	(32)		(32)
Net income attributable to Loews Corporation	$	338	$	261

Basic net income per share	$	1.36	$	0.98
Diluted net income per share	$	1.36	$	0.97

Weighted average shares outstanding:
Shares of common stock	247.97		267.39
Dilutive potential shares of common stock	0.51		0.37
Total weighted average shares outstanding assuming dilution	248.48		267.76


			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, 2021	$	19,181	$	3	$	3,133	$	14,150	$	581	$	(7)	$	1,321
Net income	293						261						32
Other comprehensive loss	(611)								(547)				(64)
Dividends paid ($0.0625 per share)	(49)						(17)						(32)
Purchase of subsidiary stock from noncontrolling interests	(3)												(3)
Purchases of Loews Corporation treasury stock	(274)										(274)

Stock-based compensation	4				(11)								15
Other	(4)				(3)						1		(2)
Balance, March 31, 2021	$	18,537	$	3	$	3,119	$	14,394	$	34	$	(280)	$	1,267

Balance, January 1, 2022	$	19,175	$	2	$	2,885	$	14,776	$	186	$	(3)	$	1,329
Net income	370						338						32
Other comprehensive loss	(1,605)								(1,437)				(168)
Dividends paid ($0.0625 per share)	(84)						(16)						(68)

Purchase of subsidiary stock from noncontrolling interests	(21)				(1)								(20)
Purchases of Loews Corporation treasury stock	(129)										(129)
Stock-based compensation	(10)				(25)								15
Other	(1)						(1)
Balance, March 31, 2022	$	17,695	$	2	$	2,859	$	15,097	$	(1,251)	$	(132)	$	1,120


(a)			During the three months ended March 31, 2022 and 2021, $(31) and $32 of net investment income (loss) was recognized due to the change in fair value of securities still held as of March 31, 2022 and 2021.


Three months ended March 31, 2022	Corporate and Other Bonds		Asset-backed		Total
(In millions)

Allowance for credit losses:
Balance as of January 1, 2022	$	11	$	7	$	18









Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period	1		(2)		(1)
Total allowance for credit losses	$	12	$	5	$	17


Three months ended March 31, 2021

Allowance for credit losses:
Balance as of January 1, 2021	$	23	$	17	$	40
Additions to the allowance for credit losses:

Securities for which credit losses were not previously recorded	14				14
Available-for-sale securities accounted for as PCD assets	2				2

Reductions to the allowance for credit losses:
Securities sold during the period (realized)	6				6


Additional decreases to the allowance for credit losses on securities that had an allowance recorded in a previous period	(6)		(1)		(7)
Total allowance for credit losses	$	27	$	16	$	43


March 31, 2022	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
(In millions)

Fixed maturity securities:
Corporate and other bonds	$	22,001	$	1,277	$	486	$	12	$	22,780
States, municipalities and political subdivisions	10,516		862		319				11,059
Asset-backed:
Residential mortgage-backed	2,983		25		160				2,848
Commercial mortgage-backed	2,008		13		81				1,940
Other asset-backed	2,710		11		93		5		2,623
Total asset-backed	7,701		49		334		5		7,411
U.S. Treasury and obligations of government sponsored enterprises	125				5				120
Foreign government	559		3		13				549
Redeemable preferred stock	20								20
Fixed maturities available-for-sale	40,922		2,191		1,157		17		41,939
Fixed maturities trading	6								6
Total fixed maturity securities	$	40,928	$	2,191	$	1,157	$	17	$	41,945


December 31, 2021	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
(In millions)

Fixed maturity securities:
Corporate and other bonds	$	21,444	$	2,755	$	56	$	11	$	24,132
States, municipalities and political subdivisions	10,358		1,599		14				11,943
Asset-backed:
Residential mortgage-backed	2,893		71		8				2,956
Commercial mortgage-backed	1,987		63		19				2,031
Other asset-backed	2,561		54		10		7		2,598
Total asset-backed	7,441		188		37		7		7,585
U.S. Treasury and obligations of government sponsored enterprises	132		1		3				130
Foreign government	570		15		2				583

Fixed maturities available-for-sale	39,945		4,558		112		18		44,373
Fixed maturities trading	7								7
Total fixed maturity securities	$	39,952	$	4,558	$	112	$	18	$	44,380


	Less than 12 Months				12 Months or Longer				Total
March 31, 2022	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	$	7,390	$	441	$	327	$	45	$	7,717	$	486
States, municipalities and political subdivisions	2,796		314		35		5		2,831		319
Asset-backed:
Residential mortgage-backed	2,315		160						2,315		160
Commercial mortgage-backed	1,274		65		151		16		1,425		81
Other asset-backed	1,717		90		67		3		1,784		93
Total asset-backed	5,306		315		218		19		5,524		334
U.S. Treasury and obligations of government-sponsored enterprises	94		5		5				99		5
Foreign government	327		11		26		2		353		13
Total fixed maturity securities	$	15,913	$	1,086	$	611	$	71	$	16,524	$	1,157

December 31, 2021

Fixed maturity securities:
Corporate and other bonds	$	2,389	$	48	$	136	$	8	$	2,525	$	56
States, municipalities and political subdivisions	730		14						730		14
Asset-backed:
Residential mortgage-backed	1,043		8						1,043		8
Commercial mortgage-backed	527		7		167		12		694		19
Other asset-backed	840		10		62				902		10
Total asset-backed	2,410		25		229		12		2,639		37
U.S. Treasury and obligations of government-sponsored enterprises	69		3		5				74		3
Foreign government	97		2						97		2
Total fixed maturity securities	$	5,695	$	92	$	370	$	20	$	6,065	$	112


	Mortgage Loans Amortized Cost Basis by Origination Year (a)
As of March 31, 2022	2022		2021		2020		2019		2018		Prior		Total
(In millions)

DSCR ≥1.6x
LTV less than 55%			$	9	$	94	$	21	$	54	$	247	$	425
LTV 55% to 65%			5		19		8				24		56
LTV greater than 65%	$	18	11										29
DSCR 1.2x - 1.6x
LTV less than 55%			13		14		95		10		56		188
LTV 55% to 65%	21		36		24						8		89
LTV greater than 65%													—
DSCR ≤1.2x
LTV less than 55%							52				30		82
LTV 55% to 65%							55						55
LTV greater than 65%			21				6				7		34
Total	$	39	$	95	$	151	$	237	$	64	$	372	$	958


(a)			The values in the table above reflect DSCR on a standardized amortization period and LTV ratios based on the most recent appraised values trended forward using changes in a commercial real estate price index.


	March 31, 2022					December 31, 2021
	Contractual/Notional Amount		Estimated Fair Value			Contractual/Notional Amount		Estimated Fair Value
			Asset		(Liability)			Asset	(Liability)
(In millions)

Without hedge designation:

Equity markets:
Options – purchased	$	76	$	1
Futures – short	103		1
Interest rate swaps	240		10			$	100
Forward commitments for mortgage-backed securities	45
Currency forwards	13
Embedded derivative on funds withheld liability	268		16			270			$	(12)


			Emerging growth company			☐


	March 31, 2022				December 31, 2021
	Cost or Amortized Cost		Estimated Fair Value		Cost or Amortized Cost		Estimated Fair Value
(In millions)

Due in one year or less	$	1,533	$	1,546	$	1,603	$	1,624
Due after one year through five years	10,206		10,337		10,637		11,229
Due after five years through ten years	14,040		14,032		13,294		14,338
Due after ten years	15,143		16,024		14,411		17,182
Total	$	40,922	$	41,939	$	39,945	$	44,373


March 31, 2022	Level 1		Level 2		Level 3		Total
(In millions)

Fixed maturity securities:
Corporate bonds and other	$	129	$	22,425	$	915	$	23,469
States, municipalities and political subdivisions			11,008		51		11,059
Asset-backed			6,807		604		7,411
Fixed maturities available-for-sale	129		40,240		1,570		41,939
Fixed maturities trading			6				6
Total fixed maturities	$	129	$	40,246	$	1,570	$	41,945

Equity securities	$	788	$	683	$	44	$	1,515
Short term and other	4,530		30				4,560
Receivables			12				12
Payable to brokers	(96)						(96)


			Net Realized Investment Gains (Losses) and Net Change in Unrealized Investment Gains (Losses)																Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and Liabilities Held at March 31		Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and Liabilities Held at March 31
2022	Balance, January 1		Included in Net Income		Included in OCI		Purchases		Sales		Settlements		Transfers into Level 3		Transfers out of Level 3		Balance, March 31
(In millions)

Fixed maturity securities:
Corporate bonds and other	$	937	$	(1)	$	(71)	$	67	$	(5)	$	(22)	$	10			$	915			$	(72)
States, municipalities and political
subdivisions	56				(5)												51				(5)
Asset-backed	556		3		(32)		140				(17)		5		$	(51)	604				(31)
Fixed maturities available-for-sale	1,549		2		(108)		207		(5)		(39)		15		(51)		1,570		$	—	(108)
Fixed maturities trading	—																—
Total fixed maturities	$	1,549	$	2	$	(108)	$	207	$	(5)	$	(39)	$	15	$	(51)	$	1,570	$	—	$	(108)

Equity securities	$	29	$	3			$	12									$	44	$	3


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

Fixed maturity securities available-for-sale			Investment gains (losses)
Fixed maturity securities trading			Net investment income
Equity securities			Investment gains (losses) and 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 Operating revenues and other


March 31, 2022	Estimated Fair Value		Valuation Techniques	Unobservable Inputs	Range (Weighted Average)
	(In millions)

Fixed maturity securities	$	1,198	Discounted cash flow	Credit spread	1%	—	7%	(3%)

December 31, 2021

Fixed maturity securities	$	1,225	Discounted cash flow	Credit spread	1%	—	7%	(2%)


	Carrying Amount		Estimated Fair Value
March 31, 2022			Level 1	Level 2		Level 3		Total
(In millions)

Assets:
Other invested assets, primarily mortgage loans	$	942				$	940	$	940

Liabilities:
Short term debt	392			$	302	93		395
Long term debt	8,878			8,469		606		9,075

December 31, 2021

Assets:
Other invested assets, primarily mortgage loans	$	973				$	1,018	$	1,018

Liabilities:
Short term debt	93					93		93
Long term debt	8,981			$	9,170	611		9,781


(a)			Total net incurred above does not agree to Insurance claims and policyholders’ benefits as reflected on the Consolidated Condensed Statements of Operations due to amounts related to retroactive reinsurance deferred gain accounting, the loss on the excess workers’ compensation loss portfolio transfer, uncollectible reinsurance and benefit expenses related to future policy benefits, which are not reflected in the table above.


	Net Unrealized Gains (Losses) on Investments with an Allowance for Credit Losses		Net Unrealized Gains (Losses) on Other Investments		Unrealized Gains (Losses) on Cash Flow Hedges		Pension and Postretirement Benefits		Foreign Currency Translation		Total Accumulated Other Comprehensive Income (Loss)
(In millions)








Balance, January 1, 2021	$	—	$	1,563	$	(23)	$	(877)	$	(82)	$	581
Other comprehensive income (loss) before reclassifications, after tax of $1, $154, $(2), $0 and $0	(3)		(593)		3				3		(590)
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $(1), $8, $(1), $(2) and $0	3		(34)		1		9				(21)
Other comprehensive income (loss)	—		(627)		4		9		3		(611)
Amounts attributable to noncontrolling interests			66				(1)		(1)		64

Balance, March 31, 2021	$	—	$	1,002	$	(19)	$	(869)	$	(80)	$	34

Balance, January 1, 2022	$	(2)	$	930	$	(6)	$	(636)	$	(100)	$	186
Other comprehensive income (loss) before reclassifications, after tax of $1, $425, $(2), $(2) and $0	(4)		(1,612)		15		2		(15)		(1,614)
Reclassification of losses from accumulated other comprehensive loss, after tax of $0, $(1), $(1), $(2) and $0			1		3		5				9
Other comprehensive income (loss)	(4)		(1,611)		18		7		(15)		(1,605)
Amounts attributable to noncontrolling interests			168				(1)		1		168
Balance, March 31, 2022	$	(6)	$	(513)	$	12	$	(630)	$	(114)	$	(1,251)


Major Category of AOCI			Affected Line Item

Net unrealized gains (losses) on investments with an allowance for credit losses and Net unrealized gains (losses) on other investments			Investment gains (losses)
Unrealized gains (losses) on cash flow hedges			Operating revenues and other, Interest expense and Operating expenses and other
Pension and postretirement benefits			Operating expenses and other


	Pension Benefits				Other Postretirement Benefits
Three Months Ended March 31	2022		2021			2022		2021
(In millions)

Service cost	$	1	$	1
Interest cost	19		18
Expected return on plan assets	(43)		(43)					$	(1)
Amortization of unrecognized net loss	8		12

Settlements	1
Regulatory asset decrease	1
Net periodic benefit	$	(13)	$	(12)		$	—	$	(1)


Three Months Ended March 31, 2022	CNA Financial		Boardwalk Pipelines		Loews Hotels & Co		Corporate		Total
(In millions)

Revenues:

Insurance premiums	$	2,059							$	2,059
Net investment income (loss)	448						$	(16)	432
Investment losses	(11)								(11)
Non-insurance warranty revenue	382								382
Operating revenues and other	7		$	381	$	152			540
Total	2,885		381		152		(16)		3,402

Expenses:

Insurance claims and policyholders’ benefits	1,455								1,455
Amortization of deferred acquisition costs	344								344
Non-insurance warranty expense	354								354
Operating expenses and other	326		217		126		22		691
Interest	28		42		4		22		96
Total	2,507		259		130		44		2,940
Income (loss) before income tax	378		122		22		(60)		462
Income tax (expense) benefit	(65)		(31)		(7)		11		(92)
Net income (loss)	313		91		15		(49)		370
Amounts attributable to noncontrolling interests	(32)								(32)
Net income (loss) attributable to Loews Corporation	$	281	$	91	$	15	$	(49)	$	338


(a)			Amounts include the consolidated results of Altium Packaging for the three months ended March 31, 2021.


			Page No.

Overview			30
Results of Operations			31
Consolidated Financial Results			31
CNA Financial			32
Boardwalk Pipelines			37
Loews Hotels & Co			38
Corporate			38
Liquidity and Capital Resources			39
Parent Company			39
Subsidiaries			40
Investments			41
Critical Accounting Estimates			44
Accounting Standards Update			44
Forward-Looking Statements			44


Three Months Ended March 31, 2022	Specialty			Commercial			International			Total
(In millions, except %)

Gross written premiums	$	1,846		$	1,208		$	363		$	3,417
Gross written premiums excluding third-party captives	885			1,206			363			2,454
Net written premiums	771			1,001			251			2,023
Net earned premiums	772			904			264			1,940
Net investment income	103			118			14			235
Core income	163			132			26			321

Other performance metrics:
Loss ratio excluding catastrophes and development	58.9		%	61.5		%	58.6		%	60.1		%
Effect of catastrophe impacts				1.8			1.2			1.0
Effect of development-related items	(1.3)									(0.5)
Loss ratio	57.6		%	63.3		%	59.8		%	60.6		%
Expense ratio	30.9			30.7			32.6			31.0
Dividend ratio	0.2			0.5						0.3
Combined ratio	88.7		%	94.5		%	92.4		%	91.9		%
Combined ratio excluding catastrophes and development	90.0		%	92.7		%	91.2		%	91.4		%

Rate	9		%	5		%	9		%	7		%
Renewal premium change	10			8			10			9
Retention	85			85			73			83
New business	$	145		$	228		$	78		$	451


Three Months Ended March 31, 2021

Gross written premiums	$	1,794		$	1,113		$	343		$	3,250
Gross written premiums excluding third-party captives	816			1,111			343			2,270
Net written premiums	742			960			235			1,937
Net earned premiums	735			855			252			1,842
Net investment income	117			148			14			279
Core income	170			69			24			263

Other performance metrics:
Loss ratio excluding catastrophes and development	59.4		%	60.8		%	59.6		%	60.1		%
Effect of catastrophe impacts	0.7			13.4			2.0			6.8
Effect of development-related items	(2.1)			0.5			(0.1)			(0.6)
Loss ratio	58.0		%	74.7		%	61.5		%	66.3		%
Expense ratio	30.6			31.4			34.4			31.5
Dividend ratio	0.2			0.6						0.3
Combined ratio	88.8		%	106.7		%	95.9		%	98.1		%
Combined ratio excluding catastrophes and development	90.2		%	92.8		%	94.0		%	91.9		%

Rate	11		%	10		%	14		%	11		%
Renewal premium change	12			11			12			11
Retention	86			83			75			83
New business	$	103		$	211		$	80		$	394


Effective income yield for the fixed income securities
portfolio	4.3	%	4.4	%
Limited partnership and common stock return	0.4	%	3.4	%


Description of Exhibit			Exhibit Number

Certification by the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) and Rule 15d-14(a)			31.1*

Certification by the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) and Rule 15d-14(a)			31.2*

Certification by the Chief Executive Officer of the Company pursuant to 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of 2002)			32.1*

Certification by the Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of 2002)			32.2*

XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document			101.INS *

Inline XBRL Taxonomy Extension Schema			101.SCH *

Inline XBRL Taxonomy Extension Calculation Linkbase			101.CAL *

Inline XBRL Taxonomy Extension Definition Linkbase			101.DEF *

Inline XBRL Taxonomy Label Linkbase			101.LAB *

Inline XBRL Taxonomy Extension Presentation Linkbase			101.PRE *

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)			104*


	LOEWS CORPORATION
	(Registrant)

Dated: May 2, 2022	By:	/s/ David B. Edelson
		DAVID B. EDELSON
		Senior Vice President and Chief Financial Officer (Duly authorized officer and principal financial officer)


			(a)			Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


			(b)			Designed such internal control over financial reporting, or caused such internal control 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