01—Abstract
Summary
Summary of the 10-K filed February 8, 2022. Cited figures are marked; the original filing is the authoritative source.
Loews Corporation is a holding company with four reportable segments: CNA Financial (an 89.6%a owned commercial property and casualty insurer), Boardwalk Pipelines (natural gas and NGL transportation and storage), Loews Hotels & Co (a chain of 26 hotels), and the Corporate segment.
CNA accounted for 81.2% of consolidated total revenue in 2021. For 2021, net income attributable to Loews Corporation was $1,578 millionb, or $6.07 per diluted share, compared with a net loss of $931 million, or $3.32 per share, in 2020. The filing attributes the improvement mainly to better current accident year underwriting results at CNA, higher net investment income, and a rebound in leisure travel at Loews Hotels & Co. Net catastrophe losses at CNA declined to $397 million from $550 million.
The 2021 results include a $555 millionc pretax gain on the April 1, 2021 sale of 47% of Altium Packaging for $420 million in cash. Altium Packaging was deconsolidated and is now accounted for under the equity method, with Loews retaining a 52.7% interest. The company repurchased 21.1 million shares of its common stock in 2021 at an aggregate cost of $1.1 billion.
Parent Company cash and investments, net of receivables and payables, totaled $3.4 billiond at December 31, 2021. The filing also discloses material contingent exposure at Boardwalk Pipelines. The Delaware Court of Chancery awarded plaintiffs approximately $690 million plus pre-judgment interest of approximately $166 million, and both sides have appealed.
Management says it is reasonably possible that a loss has occurred but cannot estimate it, and no liability has been recorded. CNA also disclosed a March 2021 ransomware attack, which the company does not believe will have a material impact.
02—Key points
Key Highlights
- Net income attributable to Loews Corporation was $1,578 million ($6.07 per diluted share) in 2021, versus a net loss of $931 million ($3.32 per share) in 2020.
- CNA Financial, 89.6% owned, produced net income attributable to Loews of $1,077 million in 2021 versus $618 million in 2020, with net catastrophe losses of $397 million compared with $550 million.
- The April 1, 2021 sale of 47% of Altium Packaging for $420 million in cash produced a pretax gain of $555 million ($438 million after tax); Loews retains a 52.7% interest accounted for under the equity method.
- Boardwalk Pipelines faces a Delaware Court of Chancery award of approximately $690 million plus about $166 million of pre-judgment interest; appeals are pending, a loss is reasonably possible but not estimable, and no liability is recorded.
- Loews repurchased 21.1 million shares for $1.1 billion in 2021 and paid $65 million in common dividends; Parent Company cash and investments were $3.4 billion at year-end.
- Loews Hotels & Co returned to a smaller net loss of $14 million in 2021 from $212 million in 2020 as leisure travel recovered, though occupancy has not returned to pre-pandemic levels.
- CNA's combined ratio for Property & Casualty Operations was 96.2% in 2021 versus 100.1% in 2020, and CNA had an active-life long term care reserve margin of approximately $72 million at September 30, 2021.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 8, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $14.66B$12.58B | +16.5% |
| Interest Expense | $424.00M$515.00M | −17.7% |
| Net Income | $1.56B-$931.00M | +267.8% |
| EPS (Basic) | $6.02$-3.32 | +281.3% |
| EPS (Diluted) | $6.00$-3.32 | +280.7% |
| Shares Outstanding (Basic) | 259.67M280.32M | −7.4% |
| Shares Outstanding (Diluted) | 260.20M280.32M | −7.2% |
05—Questions
Frequently Asked Questions
What drove the swing from a 2020 net loss to 2021 net income?
The filing attributes the improvement to better current accident year underwriting results and higher net investment income at CNA, the absence of 2020's Diamond Offshore deconsolidation loss, the $555 million Altium Packaging gain in 2021, a recovery in leisure travel at Loews Hotels & Co, and higher Boardwalk Pipelines revenue from growth projects.
What is the status of the Boardwalk Pipelines litigation?
On November 12, 2021, the Trial Court held that the General Partner breached the Limited Partnership Agreement and awarded plaintiffs approximately $690 million plus about $166 million of pre-judgment interest, with post-judgment interest and attorneys' fees. Defendants appealed on January 3, 2022 and plaintiffs cross-appealed on January 17, 2022. Loews says the ruling contains errors, may range from zero up to the full award or more, and has recorded no liability.
How does the Altium Packaging transaction affect future results?
Altium Packaging was deconsolidated on April 1, 2021, so its revenues and expenses no longer appear in consolidated lines. Loews now records its 52.7% share of Altium's results as equity income in operating expenses and other. The filing notes that amortization of finite-lived intangibles and goodwill attributed to the retained stake will reduce that equity income.
What are the main capital return and liquidity items for the parent company?
In 2021 Loews received $853 million in cash dividends from subsidiaries, including a $182 million special CNA dividend and a $199 million Altium dividend. It spent $1.1 billion on treasury stock purchases and $65 million on dividends, and CNA was scheduled to pay $584 million to Loews in March 2022. Ratings were A (S&P), A3 (Moody's) and A (Fitch), all with stable outlooks.
What is CNA's exposure to the March 2021 cybersecurity attack?
CNA suffered a ransomware attack in March 2021 that disrupted its network, and an unauthorized party copied some personal information of employees, contractors, dependents and some policyholders. CNA notified individuals and regulators in July 2021. The company does not expect a material impact, although its cyber insurance will not cover all costs and it expects higher premiums for future cyber coverage.
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