Skip to content
AnalystLens

Loews Annual Report, Year Ended Dec 31, 2003

Filing Date
Filed March 1, 2004
Period End
December 31, 2003
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 1, 2004. Cited figures are marked; the original filing is the authoritative source.

Loews Corporation, a holding company, reported a 2003 net loss of $610.7 milliona, driven primarily by unfavorable net prior year reserve development at its 90% owned subsidiary CNA Financial Corporation.

Total revenues were $16,461.0 millionb versus $17,456.5 million in 2002. The loss from continuing operations was $666.1 million, compared with income of $978.6 million in 2002. Loss from continuing operations attributable to Loews common stock was $781.3 million, or $4.21 per share.

CNA recorded 2003 unfavorable net prior year development of $1,667.4 millionc after tax and minority interest, plus a $356.9 million increase in reinsurance and insurance receivable bad debt reserves. CNA also launched a strategic review that led to a capital plan, the sale of most of its Group Benefits business to Hartford in December 2003, and a February 2004 agreement to sell its individual life business to Swiss Re for approximately $690.0 million. Loews committed additional capital support to CNA, including $750.0 million of CNA convertible preferred stock purchased in November 2003.

Lorillard, the wholly owned cigarette subsidiary, remains a major contributor, accounting for 19.96% of consolidated revenue in 2003. Lorillard's revenues declined $548.4 milliond, or 14.3%, and its net income fell $178.2 million, or 23.3%. The company also faces substantial tobacco litigation, including the Engle punitive damages judgment that was vacated on appeal and a U.S. government RICO action seeking $280.0 billion in disgorgement.

The filing also describes ongoing State Settlement Agreement payments, which Lorillard made at approximately $800.0 million in 2003. Other operations include Diamond Offshore (54% owned), Loews Hotels, Texas Gas Transmission (acquired May 2003 for approximately $1.05 billion), and Bulova (97% owned). Carolina Group tracking stock, outstanding at 57,965,000 shares, reflects economic performance of Lorillard and related liabilities.

Carolina Group stock produced net income of $115.2 million, or $2.76 per share, in 2003. Shareholders' equity was $11,054.3 million, and book value per Loews common share was $60.92.

02—Key points

Key Highlights

  1. Net loss of $610.7 million in 2003, compared with net income of $912.0 million in 2002, reflecting unfavorable prior year reserve development at CNA.
  2. CNA recorded $1,667.4 million of after-tax unfavorable net prior year development and a $356.9 million increase in receivable bad debt reserves, prompting a capital plan.
  3. Loews purchased $750.0 million of CNA convertible preferred stock in November 2003 and committed up to $500.0 million of additional surplus note support, plus $150.0 million more by March 31, 2004.
  4. CNA sold most of its Group Benefits business to Hartford on December 31, 2003 for approximately $530.0 million, and agreed in February 2004 to sell its individual life business to Swiss Re for approximately $690.0 million.
  5. Lorillard revenues fell $548.4 million (14.3%) and net income fell $178.2 million (23.3%) in 2003, with Newport accounting for 90.2% of its sales.
  6. Tobacco litigation remains significant, including the vacated Engle judgment and a U.S. government RICO action seeking $280.0 billion; Lorillard made roughly $800.0 million of State Settlement Agreement payments in 2003.
  7. Loews acquired Texas Gas Transmission in May 2003 for a transaction value of approximately $1.05 billion.

03—Questions

Frequently Asked Questions

  1. Why did Loews report a net loss in 2003?

    The net loss of $610.7 million was primarily driven by CNA's reserve strengthening. CNA recorded $1,667.4 million of after-tax unfavorable net prior year development and a $356.9 million increase in bad debt reserves for reinsurance and insurance receivables. Lower results at Lorillard also contributed.

  2. What is CNA doing to address its capital position?

    CNA developed a capital plan to replenish statutory capital of its property and casualty subsidiaries. Actions include the sale of its Group Benefits business, an agreement to sell its individual life business to Swiss Re for approximately $690.0 million, withdrawal from assumed reinsurance, and expense reduction. Loews provided capital through CNA preferred stock and surplus note purchases.

  3. How is Carolina Group stock tied to Lorillard?

    Carolina Group stock is a tracking stock reflecting the economic performance of a notional group that includes Loews' 100% ownership of Lorillard, an $2.0 billion intergroup note, and tobacco-related liabilities. It represents a 33.43% economic interest in the Carolina Group. In 2003 it earned $115.2 million, or $2.76 per share, and paid cash dividends of $1.81 per share.

  4. What are the main tobacco risks disclosed?

    Lorillard faces numerous product liability cases (about 4,275 pending industry-wide, with about 3,875 against Lorillard), including a West Virginia consolidated trial set for March 2005. The Engle class judgment was vacated and the class decertified, though plaintiffs are seeking Florida Supreme Court review. The U.S. government seeks $280.0 billion in disgorgement in a RICO action scheduled for trial in September 2004. Management says it cannot estimate loss from unfavorable outcomes beyond State Settlement Agreement obligations.

04—Continue

← View all 10-K filings