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Loews Annual Report, Year Ended Dec 31, 2001

Filing Date
Filed March 8, 2002
Period End
December 31, 2001
Security
L
In the record · 2016–202610-K1110-Q338-K83

L filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 83 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Deal closed8-K · Apr ’20Apr ’20
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 8, 2002. Cited figures are marked; the original filing is the authoritative source.

Loews Corporation reported a 2001 net loss of $589.1 milliona, or $3.02 per share, compared with net income of $1,876.7 million, or $9.44 per share, in 2000.

Management attributes the loss primarily to CNA's second quarter reserve charge of $1.8 billionb, World Trade Center related losses of $264.6 million at CNA, fourth quarter restructuring and other charges at CNA, and a $121.0 million after-tax charge at Lorillard related to the Engle class agreement. Revenues fell to $19.4 billion from $21.3 billion, mainly on lower CNA property-casualty earned premiums. Book value per share declined to $50.39 from $56.74.

The filing describes a diversified holding company whose main operations are CNA Financial (89% owned, property-casualty and life insurance, 68.00% of 2001 consolidated revenue), Lorillard (cigarettes, 100% owned, 23.32% of revenue), Loews Hotels, Diamond Offshore (53% owned) and Bulova (97% owned). CNA took $2.6 billionc in pretax-and-related second quarter reserve strengthening charges, of which $1.2 billion related to asbestos, pollution and other mass tort claims. CNA's 2001 combined ratio, including these items, was 162.3% for the property-casualty segment.

The filing also discloses that CNA's Continental Casualty Company pool is in a negative earned surplus position, and that CNA's commercial paper rating was lowered and Moody's downgraded CNA's senior debt to Baa2. On February 6, 2002, Loews issued 40,250,000 shares of Carolina Group tracking stock for net proceeds of $1,070.5 milliond.

The Carolina Group tracks Lorillard and carries $2.5 billion of intergroup debt, with holders holding an approximately 23.17% economic interest. Lorillard faces extensive tobacco litigation, including the Engle class judgment with $16.3 billion in punitive damages awarded against Lorillard, and the Master Settlement Agreement payments, which Lorillard expects to cost more than $1.0 billion annually.

02—Key points

Key Highlights

  1. Net loss of $589.1 million, or $3.02 per share, in 2001, versus net income of $1,876.7 million, or $9.44 per share, in 2000.
  2. CNA's second quarter 2001 reserve strengthening and related items totaled $3,182.0 million pretax, or $1,809.0 million after tax and minority interest.
  3. CNA's World Trade Center event estimated gross losses were $1,648.0 million and net pretax impact was $727.0 million before corporate aggregate reinsurance treaties.
  4. Total revenues fell to $19,417.2 million from $21,251.2 million, reflecting lower CNA property-casualty earned premiums.
  5. Carolina Group tracking stock IPO on February 6, 2002 sold 40.25 million shares for net proceeds of $1,070.5 million, tracking Lorillard.
  6. Lorillard faces the Engle class judgment, with $16.3 billion in punitive damages awarded against it, and recorded a $121.0 million after-tax charge for the related agreement.
  7. Book value per share declined to $50.39 from $56.74 at year end 2000; shareholders' equity fell to $9,649.3 million from $11,191.1 million.

03—Questions

Frequently Asked Questions

  1. Why did Loews report a net loss in 2001?

    The filing attributes the $589.1 million net loss mainly to CNA's second quarter reserve charge of $1.8 billion, $264.6 million of CNA losses related to the World Trade Center attack, fourth quarter restructuring and other charges at CNA, and a $121.0 million after-tax charge at Lorillard related to the Engle agreement. Net investment gains of $792.2 million partly offset these losses.

  2. What is the Carolina Group tracking stock?

    On February 6, 2002, Loews issued 40,250,000 shares of Carolina Group stock in an initial public offering for net proceeds of $1,070.5 million. It is designed to reflect the performance of Lorillard, Inc., along with $2.5 billion of notional intergroup debt bearing 8.0% interest and Lorillard-related tobacco liabilities. Holders have an approximately 23.17% economic interest in the Carolina Group.

  3. How much of Loews' revenue comes from its main subsidiaries?

    The filing states that CNA accounted for 68.00% of 2001 consolidated total revenue, Lorillard for 23.32%, Diamond Offshore for 4.85%, Loews Hotels for 1.66% and Bulova for .75%.

  4. What are the main tobacco risks disclosed for Lorillard?

    Lorillard faces about 4,675 pending product liability cases, including the Engle class action in which a Florida jury awarded $16.3 billion in punitive damages against Lorillard, and reimbursement and antitrust suits. Annual payments under the State Settlement Agreements are expected to exceed $1.0 billion in future years, and the filing says these will materially adversely affect Loews' consolidated results and cash flows.

  5. What did CNA's ratings actions and reinsurance changes mean for the company?

    Moody's lowered CNA's long-term debt rating from Baa1 to Baa2 on December 28, 2001, and S&P lowered CNA's commercial paper rating from A2 to A3 on October 10, 2001. CNA discontinued its commercial paper program and drew on a $500.0 million revolving credit facility. CNA also expects to buy less reinsurance in 2002, which the filing says will likely increase the volatility of reported losses.

04—Continue

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