Loews Corporation 2023 Form 10-K Summary
Business context and reporting period
Loews Corporation is a holding company reporting for the fiscal year ended December 31, 2023. Its consolidated businesses are CNA Financial (approximately 92% owned), Boardwalk Pipeline Partners and Loews Hotels & Co; it also owns approximately 53% of Altium Packaging, accounted for under the equity method. CNA generated 83.6% of consolidated revenue. The 2022 comparative figures were adjusted for adoption of the long-duration insurance accounting standard ASU 2018-12.
Financial performance and condition
| Metric | 2023 | 2022 |
|---|---|---|
| Consolidated revenue | $15.901 billion | $14.044 billion |
| Income before tax | $1.996 billion | $1.114 billion |
| Net income attributable to Loews | $1.434 billion | $822 million |
| Diluted earnings per share | $6.29 | $3.38 |
| Operating cash flow | $3.907 billion | $3.314 billion |
| Investing cash flow | $(2.745) billion | $(2.347) billion |
| Financing cash flow | $(1.300) billion | $(1.037) billion |
| Total assets | $79.197 billion | $75.567 billion |
| Total debt, net of discounts and issuance costs | $9.003 billion | $9.019 billion |
| Shareholders’ equity | $15.704 billion | $14.349 billion |
Consolidated cash was $399 million at year-end, versus $532 million a year earlier. Parent-company cash and investments, net of receivables and payables, were $2.6 billion, down from $3.2 billion. The parent received $1.0 billion of subsidiary dividends in 2023. Loews repurchased 14.0 million of its shares for approximately $849 million and paid $57 million in common dividends.
- CNA: Revenue was $13.299 billion versus $11.879 billion; net income attributable to Loews was $1.094 billion versus $612 million. P&C combined ratio was 93.5%, compared with 93.2%; core income increased to $1.505 billion from $1.240 billion. Net investment income rose to $2.264 billion from $1.805 billion.
- Boardwalk Pipelines: Revenue was $1.636 billion versus $1.446 billion; net income attributable to Loews was $283 million versus $247 million. EBITDA, a non-GAAP measure, was $929 million versus $892 million.
- Loews Hotels: Revenue was $852 million versus $721 million; net income attributable to Loews was $147 million versus $117 million. 2023 included a $46 million pretax gain from consolidating a previously unconsolidated hotel joint venture.
- Corporate: Net loss narrowed to $90 million from $154 million, primarily reflecting improved investment returns, partly offset by a pension-plan settlement charge.
Material changes and unusual items
- Net income increased 74% year over year, principally from stronger CNA investment and underwriting results, a smaller impact from its 2022 long-term-care reserve review, improved parent investment returns, and Boardwalk revenue growth.
- CNA’s 2022 annual long-term-care assumption review increased reserves by $186 million pretax; the corresponding 2023 review increased reserves by $8 million pretax. CNA’s 2023 Other Insurance Operations also included $193 million of long-term-care policy buyout payments and a $56 million charge for unfavorable legacy mass-tort reserve development.
- Boardwalk acquired Bayou Ethane for $355 million cash in September 2023. It reported $166 million of growth projects placed into service and expects approximately $310 million of growth projects under construction through 2025.
- Loews Hotels recorded $12 million of impairment charges in 2023, versus $25 million in 2022. The parent recorded a $47 million pension settlement expense pretax ($37 million after tax).
- ASU 2018-12 changed measurement and presentation of long-duration contract reserves; historical periods were adjusted. The filing states adoption did not affect statutory capital and surplus, cash flows, or underlying business economics.
Outlook, risks and contingencies
- The filing provides no consolidated earnings or revenue guidance. Boardwalk expects approximately $420 million of 2024 capital expenditures, including $215 million maintenance and $205 million growth; it separately expects approximately $505 million for maintenance, regulatory compliance and emissions work, including $215 million maintenance capital. The filing presents these spending estimates on different scopes.
- Boardwalk expects existing capital resources to fund 2024 operations and capital expenditures. It had $25 million drawn and $975 million available on its revolving facility at year-end; $600 million of notes mature in December 2024, which it expects to refinance or retire using available resources.
- Loews Hotels intended to refinance or extend $532 million of mortgage loans maturing within twelve months of year-end. A Loews-managed Arlington hotel was expected to open in Q1 2024; three Universal Orlando hotels were expected to open in 2025.
- Key risks include CNA reserve uncertainty, long-term-care assumptions, catastrophe losses, mass-tort claims, reinsurance collectibility and investment volatility; pipeline regulation, safety, climate-related rules, project execution, customer credit and leverage; and hotel demand, labor, insurance, Florida concentration and development costs. Loews is dependent on subsidiary distributions, which may be constrained by regulation, debt covenants or subsidiary cash needs.
- A Delaware lawsuit related to the 2018 Boardwalk unit acquisition remains pending on remanded issues, with a hearing scheduled for April 2024. The Delaware Supreme Court reversed an earlier damages ruling; management did not expect pending litigation to materially affect results or equity. CNA’s potential guarantees on structured-settlement annuities were approximately $1.5 billion, but CNA said payment was not considered likely because of trust collateral.
- Management identified material estimation uncertainty in insurance reserves. For example, a 9% increase in estimated severity for specified professional, management-liability and surety reserves could increase net reserves by approximately $500 million; a 100-basis-point increase in workers’ compensation claim-cost inflation could increase net reserves by approximately $250 million.
Most important facts for investors to verify
- Whether CNA’s P&C reserve development, long-term-care assumptions and premium-rate approvals remain consistent with reported estimates.
- How sustainable CNA’s higher investment income and underwriting improvement are, including catastrophe and mass-tort exposure.
- Boardwalk’s refinancing of 2024 maturities, leverage and covenant headroom, project spending and delivery, and exposure to evolving pipeline and methane regulations.
- Loews Hotels’ refinancing or extensions of near-term mortgages, hotel occupancy and joint-venture performance, and progress on announced openings.
- Parent-company liquidity and subsidiary dividend capacity, including regulatory limits on CNA distributions and ongoing share repurchases.
- The outcome of the remanded Boardwalk litigation and whether any developments change management’s assessment of contingencies.
The independent auditor issued an unqualified opinion on the financial statements and internal control over financial reporting as of December 31, 2023. The audit highlighted P&C claim reserves and long-term-care future policy benefits as critical audit matters.