01—Abstract
Summary
Summary of the 10-K filed February 9, 2021. Cited figures are marked; the original filing is the authoritative source.
Loews Corporation is a holding company whose subsidiaries operate in commercial property and casualty insurance (CNA Financial Corporation, an 89.6%a owned subsidiary, accounting for 86.0% of consolidated total revenue in 2020), natural gas and NGL transportation and storage (Boardwalk Pipeline Partners, LP, wholly owned, 10.3% of revenue), hotels (Loews Hotels Holding Corporation, 2.2% of revenue), and rigid plastic packaging (Altium Packaging LLC, 99% owned, 8.1% of revenue).
For 2020, Loews reported a net loss attributable to Loews Corporation of $931 millionb, or $3.32 per diluted share, compared with net income of $932 million, or $3.07 per share, in 2019. The loss was driven primarily by a $1.2 billion ($957 million after tax) investment loss from the deconsolidation of Diamond Offshore after its April 26, 2020 Chapter 11 filing, Diamond Offshore drilling rig impairment charges of $774 million, operating losses at Loews Hotels, lower net investment income, and higher catastrophe losses at CNA. Total revenues were $12.58 billion in 2020 versus $14.93 billion in 2019.
The filing shows the COVID-19 pandemic materially affected Loews Hotels & Co, which temporarily suspended operations at most owned and operated hotels beginning in March 2020 and expects to need additional funding from Loews Corporation in 2021. CNA recorded net catastrophe losses of $550 millionc in 2020, including $195 million related to COVID-19, compared with $179 million in 2019. Boardwalk Pipelines reported net income attributable to Loews of $206 million, and Altium Packaging revenues were $1,022 million.
At year end, Loews reported total assets of $80.2 billiond, debt of $10.1 billion, and shareholders' equity of $17.9 billion. Parent Company cash and investments, net of receivables and payables, were $3.5 billion.
Subsequent events include the February 5, 2021 closing of CNA's retroactive reinsurance transaction with Cavello Bay Reinsurance, covering approximately $690 million of legacy excess workers' compensation liabilities, and Altium Packaging's $1.05 billion seven-year secured term loan issued on February 3, 2021. The company repurchased $923 million of its own stock in 2020 and paid $0.25 per share in dividends.
02—Key points
Key Highlights
- 2020 net loss attributable to Loews Corporation of $931 million ($3.32 per diluted share), versus net income of $932 million ($3.07 per share) in 2019.
- Diamond Offshore was deconsolidated after its April 26, 2020 Chapter 11 filing, producing a $1.2 billion ($957 million after tax) investment loss; Diamond Offshore also recorded a $774 million rig impairment in the first quarter of 2020.
- CNA net catastrophe losses rose to $550 million in 2020 from $179 million in 2019, including $195 million related to COVID-19, and net investment income fell to $1.94 billion from $2.12 billion.
- Loews Hotels & Co posted a $212 million net loss in 2020 as most hotels resumed operations at much lower occupancy, with five hotels suspended as of February 5, 2021.
- Boardwalk Pipelines contributed $206 million of net income in 2020, with approximately 90% of its revenues derived from capacity reservation fees under firm contracts.
- Parent Company cash and investments were $3.5 billion at year-end 2020, and Loews repurchased $923 million of its common stock during 2020.
- Subsequent events: CNA's Cavello Bay retroactive reinsurance transaction closed February 5, 2021, and Altium Packaging issued a $1.05 billion seven-year secured term loan on February 3, 2021.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 9, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $12.58B$14.93B | −15.7% |
| Interest Expense | $515.00M$591.00M | −12.9% |
| Net Income | -$931.00M$932.00M | −199.9% |
| EPS (Basic) | $-3.32$3.08 | −207.8% |
| EPS (Diluted) | $-3.32$3.07 | −208.1% |
| Shares Outstanding (Basic) | 280.32M302.70M | −7.4% |
| Shares Outstanding (Diluted) | 280.32M303.35M | −7.6% |
05—Questions
Frequently Asked Questions
Why did Loews report a net loss in 2020 after a profit in 2019?
The 2020 net loss of $931 million was driven mainly by a $1.2 billion ($957 million after tax) investment loss from deconsolidating Diamond Offshore after its bankruptcy filing, plus Diamond Offshore rig impairments of $774 million, operating losses at Loews Hotels, lower net investment income at CNA and the parent company, and higher catastrophe losses at CNA.
How did the COVID-19 pandemic affect Loews' businesses?
Loews Hotels & Co temporarily suspended operations at most owned and operated hotels beginning in March 2020, and occupancy remained considerably lower than prior-year levels, with five hotels suspended as of February 5, 2021. CNA recorded $195 million of net catastrophe losses related to COVID-19 in 2020 and a reduction in estimated audit premiums. The filing states that Boardwalk Pipelines' operations were considered essential critical infrastructure and were not significantly affected.
What is Loews' capital and liquidity position?
At December 31, 2020, Loews had total assets of $80.2 billion, debt of $10.1 billion, and shareholders' equity of $17.9 billion. Parent Company cash and investments, net of receivables and payables, totaled $3.5 billion. In 2020 the parent received $947 million in dividends from subsidiaries, including a $485 million special dividend from CNA, and expects $275 million of dividends from CNA in March 2021.
What significant events occurred after year-end 2020?
On February 5, 2021, CNA closed a retroactive reinsurance transaction with Cavello Bay Reinsurance Limited, ceding approximately $690 million of net excess workers' compensation liabilities with an aggregate limit of $1 billion, and expects a loss of about $11 million after tax and noncontrolling interests in the first quarter of 2021. On February 3, 2021, Altium Packaging issued a $1.05 billion seven-year secured term loan and paid a $200 million dividend.
What is the status of the Boardwalk Pipelines class action lawsuit?
The lawsuit, filed in May 2018 in the Delaware Court of Chancery over the General Partner's 2018 purchase of publicly held Boardwalk Pipelines common units, survived a partial motion to dismiss in October 2019 with certain aspects proceeding to trial. The case was set for trial in February 2021. The filing states that management does not believe the outcome will materially affect the Company's results of operations or equity.
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