Edgar Filing: LOEWS CORP

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

Commission File Number 1-6541

LOEWS CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		13-2646102
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

667 Madison Avenue, New York, N.Y. 10065-8087

(Address of principal executive offices) (Zip Code)

(212) 521-2000

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes X No Not Applicable

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer X Accelerated filer Non-accelerated filer Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No X


Class				Outstanding at April 22, 2013
Common stock, $0.01 par value				388,965,441 shares

INDEX


	Page No.

Part I. Financial Information

Item 1. Financial Statements (unaudited)

Consolidated Condensed Balance Sheets March 31, 2013 and December 31, 2012		3

Consolidated Condensed Statements of Income Three months ended March 31, 2013 and 2012		4

Consolidated Condensed Statements of Comprehensive Income Three months ended March 31, 2013 and 2012		5

Consolidated Condensed Statements of Equity Three months ended March 31, 2013 and 2012		6

Consolidated Condensed Statements of Cash Flows Three months ended March 31, 2013 and 2012		7

Notes to Consolidated Condensed Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		32

Item 3. Quantitative and Qualitative Disclosures about Market Risk		56

Item 4. Controls and Procedures		56

Part II. Other Information		57

Item 1. Legal Proceedings		57

Item 1A. Risk Factors		57

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		57

Item 6. Exhibits		58

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)


	March 31, 2013		December 31, 2012

(Dollar amounts in millions, except per share data)

Assets:

Investments:
Fixed maturities, amortized cost of $38,668 and $38,324	$	42,912	$	42,765
Equity securities, cost of $709 and $893		691		898
Limited partnership investments		3,207		3,090
Other invested assets, primarily mortgage loans		473		460
Short term investments		5,901		5,835

Total investments		53,184		53,048
Cash		179		228
Receivables		9,605		9,366
Property, plant and equipment		14,204		13,935
Goodwill		993		996
Other assets		1,529		1,538
Deferred acquisition costs of insurance subsidiaries		641		598
Separate account business		279		312

Total assets	$	80,614	$	80,021


Liabilities and Equity:

Insurance reserves:
Claim and claim adjustment expense	$	24,511	$	24,763
Future policy benefits		11,469		11,475
Unearned premiums		3,759		3,610
Policyholders’ funds		154		157

Total insurance reserves		39,893		40,005
Payable to brokers		738		205
Short term debt		19		19
Long term debt		9,418		9,191
Deferred income taxes		895		840
Other liabilities		4,654		4,773
Separate account business		279		312

Total liabilities		55,896		55,345

Preferred stock, $0.10 par value:
Authorized – 100,000,000 shares
Common stock, $0.01 par value:
Authorized – 1,800,000,000 shares
Issued – 392,242,941 and 392,054,766 shares		4		4
Additional paid-in capital		3,589		3,595
Retained earnings		15,410		15,192
Accumulated other comprehensive income		566		678

		19,569		19,469
Less treasury stock, at cost (2,344,500 and 249,600 shares)		(102)		(10)

Total shareholders’ equity		19,467		19,459
Noncontrolling interests		5,251		5,217

Total equity		24,718		24,676

Total liabilities and equity	$	80,614	$	80,021

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited)


Three Months Ended March 31	2013			2012

(In millions, except per share data)

Revenues:
Insurance premiums	$	1,764		$	1,649
Net investment income		641			726
Investment gains (losses):
Other-than-temporary impairment losses		(18	)		(15)
Portion of other-than-temporary impairment losses recognized in Other comprehensive income (loss)					(12)

Net impairment losses recognized in earnings		(18	)		(27)
Other net investment gains		42			59

Total investment gains		24			32
Contract drilling revenues		700			755
Other		605			582

Total		3,734			3,744


Expenses:
Insurance claims and policyholders’ benefits		1,429			1,381
Amortization of deferred acquisition costs		328			295
Contract drilling expenses		375			397
Other operating expenses		982			819
Interest		108			111

Total		3,222			3,003

Income before income tax		512			741
Income tax expense		(114	)		(222)

Net income		398			519
Amounts attributable to noncontrolling interests		(156	)		(152)

Net income attributable to Loews Corporation	$	242		$	367


Basic net income per share	$	0.62		$	0.93


Diluted net income per share	$	0.62		$	0.92


Dividends per share	$	0.0625		$	0.0625


Weighted-average shares outstanding:
Shares of common stock		391.39			396.77
Dilutive potential shares of common stock		0.77			0.67

Total weighted-average shares outstanding assuming dilution		392.16			397.44

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


Three Months Ended March 31	2013			2012

(In millions)

Net income	$	398		$	519


Other comprehensive income (loss), after tax
Changes in:
Net unrealized gains on investments with other-than-temporary impairments		14			40
Net other unrealized gains (losses) on investments		(62	)		217

Total unrealized gains (losses) on available-for-sale investments		(48	)		257
Unrealized gains (losses) on cash flow hedges		(21	)		15
Pension liability		4			7
Foreign currency		(61	)		21


Other comprehensive income (loss)		(126	)		300


Comprehensive income		272			819

Amounts attributable to noncontrolling interests		(142	)		(183)


Total comprehensive income attributable to Loews Corporation	$	130		$	636

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF EQUITY

(Unaudited)


				Loews Corporation Shareholders

	Total			Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Common Stock Held in Treasury			Noncontrolling Interests

(In millions)

Balance, January 1, 2012	$	23,203		$	4	$	3,494	$	14,890	$	384	$	-		$	4,431
Net income		519							367							152
Other comprehensive income		300									269					31
Dividends paid		(133	)						(25)							(108)
Issuance of equity securities by subsidiary		222					36				1					185
Issuance of Loews common stock		5					5
Stock-based compensation		6					5									1
Other		(1	)				(2)									1

Balance, March 31, 2012	$	24,121		$	4	$	3,538	$	15,232	$	654	$	-		$	4,693


Balance, January 1, 2013	$	24,676		$	4	$	3,595	$	15,192	$	678	$	(10	)	$	5,217
Net income		398							242							156
Other comprehensive loss		(126	)								(112)					(14)
Dividends paid		(146	)						(24)							(122)
Purchase of Loews treasury stock		(92	)										(92	)
Issuance of Loews common stock		3					3
Stock-based compensation		4					(9)									13
Other		1														1

Balance, March 31, 2013	$	24,718		$	4	$	3,589	$	15,410	$	566	$	(102	)	$	5,251

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


Three Months Ended March 31	2013			2012

(In millions)

Operating Activities:

Net income	$	398		$	519
Adjustments to reconcile net income to net cash provided (used) by operating activities, net		335			270
Changes in operating assets and liabilities, net:
Receivables		(68	)		142
Deferred acquisition costs		(40	)		(15)
Insurance reserves		79			99
Other assets		(3	)		(6)
Other liabilities		(101	)		(187)
Trading securities		8			(494)

Net cash flow operating activities		608			328


Investing Activities:

Purchases of fixed maturities		(2,720	)		(2,842)
Proceeds from sales of fixed maturities		1,409			1,929
Proceeds from maturities of fixed maturities		866			683
Purchases of equity securities		(12	)		(12)
Proceeds from sales of equity securities		51			19
Purchases of limited partnership investments		(41	)		(66)
Proceeds from sales of limited partnership investments		58			97
Purchases of property, plant and equipment		(602	)		(238)
Dispositions		5			41
Change in short term investments		375			(88)
Other, net		(22	)		(36)

Net cash flow investing activities		(633	)		(513)


Financing Activities:

Dividends paid		(24	)		(25)
Dividends paid to noncontrolling interests		(122	)		(108)
Purchases of treasury shares		(95	)
Issuance of common stock		3			5
Proceeds from sale of subsidiary stock		1			245
Principal payments on debt		(196	)		(331)
Issuance of debt		420			370
Other, net		(4	)		(2)

Net cash flow financing activities		(17	)		154


Effect of foreign exchange rate on cash		(7	)		1


Net change in cash		(49	)		(30)
Cash, beginning of period		228			129

Cash, end of period	$	179		$	99

See accompanying Notes to Consolidated Condensed Financial Statements.

Loews Corporation and Subsidiaries

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

Loews Corporation is a holding company. Its subsidiaries are engaged in the following lines of business: commercial property and casualty insurance (CNA Financial Corporation (“CNA”), a 90% owned subsidiary); the operation of offshore oil and gas drilling rigs (Diamond Offshore Drilling, Inc. (“Diamond Offshore”), a 50.4% owned subsidiary); transportation and storage of natural gas and natural gas liquids and gathering and processing of natural gas (Boardwalk Pipeline Partners, LP (“Boardwalk Pipeline”), a 55% owned subsidiary); exploration, production and marketing of natural gas and oil (including condensate and natural gas liquids), (HighMount Exploration & Production LLC (“HighMount”), a wholly owned subsidiary); and the operation of a chain of hotels (Loews Hotels Holding Corporation (“Loews Hotels”), a wholly owned subsidiary). Unless the context otherwise requires, the terms “Company,” “Loews” and “Registrant” as used herein mean Loews Corporation excluding its subsidiaries and the term “Net income (loss) attributable to Loews Corporation” as used herein means Net income (loss) attributable to Loews Corporation shareholders.

In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 2013 and December 31, 2012 and the results of operations, comprehensive income and changes in shareholders’ equity and cash flows for the three months ended March 31, 2013 and 2012.

Net income for the first quarter of each of the years is not necessarily indicative of net income for that entire year.

Reference is made to the Notes to Consolidated Financial Statements in the 2012 Annual Report on Form 10-K which should be read in conjunction with these Consolidated Condensed Financial Statements.

The Company presents basic and diluted net income per share on the Consolidated Condensed Statements of Income. Basic net income per share excludes dilution and is computed by dividing net income (loss) attributable to common stock by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Stock appreciation rights (“SARs”) of 2.0 million and 2.2 million shares were not included in the diluted weighted average shares amount for the three months ended March 31, 2013 and 2012 due to the exercise price being greater than the average stock price.

Impairment of Natural Gas and Oil Properties – For the three months ended March 31, 2013 and 2012, HighMount recorded a non-cash ceiling test impairment charge of $145 million and $44 million ($92 million and $28 million after tax) related to the carrying value of its natural gas and oil properties. The impairments were recorded within Other operating expenses and as credits to Accumulated depreciation, depletion and amortization. The 2013 write-down was attributable to reduced average natural gas liquids (“NGL”) and oil prices used in the ceiling test calculation and negative reserve revisions. Had the effects of HighMount’s cash flow hedges not been considered in calculating the ceiling limitation, the impairments would have been $195 million and $69 million ($124 million and $44 million after tax) for the three months ended March 31, 2013 and 2012. As a result of the ceiling test impairment charge, HighMount performed a goodwill impairment test and no impairment charge was required.

2. Investments

Net investment income is as follows:


Three Months Ended March 31	2013			2012

(In millions)

Fixed maturity securities	$	499		$	516
Short term investments		2			3
Limited partnership investments		146			143
Equity securities		3			4
Income (loss) from trading portfolio (a)		(3	)		70
Other		6			4

Total investment income		653			740
Investment expenses		(12	)		(14)

Net investment income	$	641		$	726

(a)	Includes net unrealized gains (losses) related to changes in fair value on trading securities still held of $(15) million and $36 million for the three months ended March 31, 2013 and 2012.

Investment gains (losses) are as follows:


Three Months Ended March 31	2013			2012

(In millions)

Fixed maturity securities	$	32		$	30
Equity securities		(13	)		1
Derivative instruments		2			(1)
Short term investments and other		3			2

Investment gains (a)	$	24		$	32

(a)	Includes gross realized gains of $46 million and $72 million and gross realized losses of $27 million and $41 million on available-for-sale securities for the three months ended March 31, 2013 and 2012.

The components of other-than-temporary impairment (“OTTI”) losses recognized in earnings by asset type are as follows:


Three Months Ended March 31	2013		2012

(In millions)

Fixed maturity securities available-for-sale:
Corporate and other bonds	$	3	$	10
Asset-backed:
Residential mortgage-backed				14
U.S. Treasury and obligations of government-sponsored enterprises				1

Total fixed maturities available-for-sale		3		25

Equity securities available-for-sale:
Common stock				2
Preferred stock		15

Total equity securities available-for-sale		15		2

Net OTTI losses recognized in earnings	$	18	$	27

A security is impaired if the fair value of the security is less than its cost adjusted for accretion, amortization and previously recorded OTTI losses, otherwise defined as an unrealized loss. When a security is impaired, the impairment is evaluated to determine whether it is temporary or other-than-temporary.

Significant judgment is required in the determination of whether an OTTI loss has occurred for a security. CNA follows a consistent and systematic process for determining and recording an OTTI loss. CNA has established a committee responsible for the OTTI process. This committee, referred to as the Impairment Committee, is made up of three officers appointed by CNA’s Chief Financial Officer. The Impairment Committee is responsible for evaluating all securities in an unrealized loss position on at least a quarterly basis.

The Impairment Committee’s assessment of whether an OTTI loss has occurred incorporates both quantitative and qualitative information. Fixed maturity securities that CNA intends to sell, or it more likely than not will be required to sell before recovery of amortized cost, are considered to be other-than-temporarily impaired and the entire difference between the amortized cost basis and fair value of the security is recognized as an OTTI loss in earnings. The remaining fixed maturity securities in an unrealized loss position are evaluated to determine if a credit loss exists. The factors considered by the Impairment Committee include: (i) the financial condition and near term prospects of the issuer, (ii) whether the debtor is current on interest and principal payments, (iii) credit ratings of the securities and (iv) general market conditions and industry or sector specific outlook. CNA also considers results and analysis of cash flow modeling for asset-backed securities, and when appropriate, other fixed maturity securities.

The focus of the analysis for asset-backed securities is on assessing the sufficiency and quality of underlying collateral and timing of cash flows based on scenario tests. If the present value of the modeled expected cash flows equals or exceeds the amortized cost of a security, no credit loss is judged to exist and the asset-backed security is deemed to be temporarily impaired. If the present value of the expected cash flows is less than amortized cost, the security is judged to be other-than-temporarily impaired for credit reasons and that shortfall, referred to as the credit

component, is recognized as an OTTI loss in earnings. The difference between the adjusted amortized cost basis and fair value, referred to as the non-credit component, is recognized as OTTI in Other comprehensive income. In subsequent reporting periods, a change in intent to sell or further credit impairment on a security whose fair value has not deteriorated will cause the non-credit component originally recorded as OTTI in Other comprehensive income to be recognized as an OTTI loss in earnings.

CNA performs the discounted cash flow analysis using stressed scenarios to determine future expectations regarding recoverability. For asset-backed securities, significant assumptions enter into these cash flow projections including delinquency rates, probable risk of default, loss severity upon a default, over collateralization and interest coverage triggers and credit support from lower level tranches.

CNA applies the same impairment model as described above for the majority of non-redeemable preferred stock securities on the basis that these securities possess characteristics similar to debt securities and that the issuers maintain their ability to pay dividends. For all other equity securities, in determining whether the security is other-than-temporarily impaired, the Impairment Committee considers a number of factors including, but not limited to: (i) the length of time and the extent to which the fair value has been less than amortized cost, (ii) the financial condition and near term prospects of the issuer, (iii) the intent and ability of CNA to retain its investment for a period of time sufficient to allow for an anticipated recovery in value and (iv) general market conditions and industry or sector specific outlook.

The amortized cost and fair values of securities are as follows:

March 31, 2013

Cost or
Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair Value

Unrealized
OTTI Losses
(Gains)

(In millions)

Fixed maturity securities:

Corporate and other bonds

$ 19,747

$ 2,562

$ 18

$22,291

States, municipalities and political subdivisions

9,599

1,408

10,948

Asset-backed:

Residential mortgage-backed

5,518

235

5,683

$ (49)

Commercial mortgage-backed

1,853

147

1,990

(3)

Other asset-backed

932

955

Total asset-backed

8,303

405

8,628

(52)

U.S. Treasury and obligations of government-sponsored enterprises

170

181

Foreign government

528

552

Redeemable preferred stock

123

136

Fixed maturities available-for-sale

38,470

4,424

158

42,736

(52)

Fixed maturities, trading

198

176

Total fixed maturities

38,668

4,424

180

42,912

(52)

Equity securities:

Common stock

Preferred stock

139

146

Equity securities available-for-sale

177

201

Equity securities, trading

532

490

Total equity securities

709

691

Total

$ 39,377

$ 4,499

$ 273

$43,603

$ (52)


December 31, 2012	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Unrealized OTTI Losses (Gains)

(In millions)

Fixed maturity securities:
Corporate and other bonds	$	19,530		$ 2,698	$	21	$	22,207
States, municipalities and political subdivisions		9,372		1,455		44		10,783
Asset-backed:
Residential mortgage-backed		5,745		246		71		5,920	$	(28)
Commercial mortgage-backed		1,692		147		17		1,822		(3)
Other asset-backed		929		23				952

Total asset-backed		8,366		416		88		8,694		(31)
U.S. Treasury and obligations of government-sponsored enterprises		172		11		1		182
Foreign government		588		25				613
Redeemable preferred stock		113		13		1		125

Fixed maturities available-for-sale		38,141		4,618		155		42,604		(31)
Fixed maturities, trading		183				22		161

Total fixed maturities		38,324		4,618		177		42,765		(31)

Equity securities:
Common stock		38		14				52
Preferred stock		190		7				197

Equity securities available-for-sale		228		21		-		249		-
Equity securities, trading		665		80		96		649

Total equity securities		893		101		96		898		-

Total	$	39,217		$ 4,719	$	273	$	43,663	$	(31)

The net unrealized gains on investments included in the tables above are recorded as a component of Accumulated Other Comprehensive Income (“AOCI”). When presented in AOCI, these amounts are net of tax and noncontrolling interests and any required Shadow Adjustments. At March 31, 2013 and December 31, 2012, the net unrealized gains on investments included in AOCI were net of Shadow Adjustments of $1.3 billion and $1.4 billion. To the extent that unrealized gains on fixed income securities supporting certain products within CNA’s Life & Group Non-Core segment would result in a premium deficiency if realized, a related decrease in Deferred acquisition costs, and/or increase in Insurance reserves is recorded, net of tax and noncontrolling interests, as a reduction of net unrealized gains (losses) through Other comprehensive income (Shadow Adjustments).

The available-for-sale securities in a gross unrealized loss position are as follows:

Less than

12 Months

or Longer

Total

Gross

Estimated

Unrealized

Estimated

Unrealized

Estimated

Unrealized

March 31, 2013

Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

(In millions)

Fixed maturity securities:

Corporate and other bonds

951

1,001

States, municipalities and political subdivisions

683

121

804

Asset-backed:

Residential mortgage-backed

920

347

1,267

Commercial mortgage-backed

155

141

296

Total asset-backed

1,075

488

1,563

Redeemable preferred stock

Total

2,743

659

107

3,402

158


	Less than				12 Months
	12 Months				or Longer				Total

			Gross				Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
December 31, 2012	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses

(In millions)

Fixed maturity securities:
Corporate and other bonds	$	846	$	13	$	108	$	8	$	954	$	21
States, municipalities and political subdivisions		254		5		165		39		419		44
Asset-backed:
Residential mortgage-backed		583		5		452		66		1,035		71
Commercial mortgage-backed		85		2		141		15		226		17

Total asset-backed		668		7		593		81		1,261		88
U.S. Treasury and obligations of government- sponsored enterprises		23		1						23		1
Redeemable preferred stock		28		1						28		1

Total	$	1,819	$	27	$	866	$	128	$	2,685	$	155

The amount of pretax net realized gains on available-for-sale securities reclassified out of AOCI into earnings was $19 million and $32 million for the three months ended March 31, 2013 and 2012.

Based on current facts and circumstances, the Company believes the unrealized losses presented in the table above are primarily attributable to broader economic conditions, changes in interest rates and credit spreads, market illiquidity and other market factors, but are not indicative of the ultimate collectibility of the current amortized cost of the securities. The Company has no current intent to sell these securities, nor is it more likely than not that it will be required to sell prior to recovery of amortized cost; accordingly, the Company has determined that there are no additional OTTI losses to be recorded at March 31, 2013.

The following table summarizes the activity for the three months ended March 31, 2013 and 2012 related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held at March 31, 2013 and 2012 for which a portion of an OTTI loss was recognized in Other comprehensive income.


Three Months Ended March 31	2013			2012

(In millions)

Beginning balance of credit losses on fixed maturity securities	$	95		$	92
Additional credit losses for securities for which an OTTI loss was previously recognized					11
Credit losses for securities for which an OTTI loss was not previously recognized					1
Reductions for securities sold during the period		(3	)		(4)

Ending balance of credit losses on fixed maturity securities	$	92		$	100

Contractual Maturity

The following table summarizes available-for-sale fixed maturity securities by contractual maturity at March 31, 2013 and December 31, 2012. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid with or without call or prepayment penalties. Securities not due at a single date are allocated based on weighted average life.

March 31, 2013

December 3 1, 2012

Cost or

Estimated

Cost or

Estimated

Amortized

Fair

Amortized

Fair

Cost

Value

Cost

Value

(In millions)

Due in one year or less

1,783

1,819

1,648

1,665

Due after one year through five years

12,916

13,731

13,603

14,442

Due after five years through ten years

9,430

10,267

8,726

9,555

Due after ten years

14,341

16,919

14,164

16,942

Total

38,470

42,736

38,141

42,604

Investment Commitments

As of March 31, 2013, the Company had committed approximately $247 million to future capital calls from various third-party limited partnership investments in exchange for an ownership interest in the related partnerships.

The Company invests in various privately placed debt securities, including bank loans, as part of its overall investment strategy and has committed to additional future purchases, sales and funding. As of March 31, 2013, the Company had commitments to purchase or fund additional amounts of $167 million and sell $210 million under the terms of such securities.

3. Fair Value

Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable:

—

Level 1 – Quoted prices for identical instruments in active markets.

—

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

—

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs are not observable.

The type of financial instruments being measured and the methodologies and inputs used at March 31, 2013 were consistent with those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2012.

Prices may fall within Level 1, 2 or 3 depending upon the methodologies and inputs used to estimate fair value for each specific security. In general, the Company seeks to price securities using third party pricing services. Securities not priced by pricing services are submitted to independent brokers for valuation and, if those are not available, internally developed pricing models are used to value assets using methodologies and inputs the Company believes market participants would use to value the assets.

The Company performs control procedures over information obtained from pricing services and brokers to ensure prices received represent a reasonable estimate of fair value and to confirm representations regarding whether inputs are observable or unobservable. Procedures include (i) the review of pricing service or broker pricing methodologies, (ii) back-testing, where past fair value estimates are compared to actual transactions executed in the market on similar dates, (iii) exception reporting, where changes in price, period-over-period, are reviewed and challenged with the pricing service or broker based on exception criteria, (iv) detailed analysis, where the Company independently validates information regarding inputs and assumptions for individual securities and (v) pricing validation, where prices received are compared to prices independently estimated by the Company.

The fair values of CNA’s life settlement contracts are included in Other assets on the Consolidated Condensed Balance Sheets. Equity options purchased are included in Equity securities, and all other derivative assets are included in Receivables. Derivative liabilities are included in Payable to brokers. Assets and liabilities measured at fair value on a recurring basis are summarized in the tables below:

March 31, 2013

Level 1

Level 2

Level 3

Total

(In millions)

Fixed maturity securities:

Corporate and other bonds

21,980

283

22,291

States, municipalities and political subdivisions

10,819

129

10,948

Asset-backed:

Residential mortgage-backed

5,233

450

5,683

Commercial mortgage-backed

1,813

177

1,990

Other asset-backed

559

396

955

Total asset-backed

7,605

1,023

8,628

U.S. Treasury and obligations of government-sponsored enterprises

155

181

Foreign government

104

448

552

Redeemable preferred stock

136

Fixed maturities available-for-sale

338

40,937

1,461

42,736

Fixed maturities, trading

107

176

Total fixed maturities

342

41,002

1,568

42,912

Equity securities available-for-sale

120

201

Equity securities, trading

487

490

Total equity securities

607

691

Short term investments

5,448

397

5,850

Other invested assets

Receivables

Life settlement contracts

Separate account business

266

279

Payable to brokers

(379

)

(18

)

(402)


December 31, 2012	Level 1			Level 2			Level 3			Total

(In millions)

Fixed maturity securities:
Corporate and other bonds	$	6		$	21,982		$	219		$	22,207
States, municipalities and political subdivisions					10,687			96			10,783
Asset-backed:
Residential mortgage-backed					5,507			413			5,920
Commercial mortgage-backed					1,693			129			1,822
Other asset-backed					584			368			952

Total asset-backed					7,784			910			8,694
U.S. Treasury and obligations of government-sponsored enterprises		158			24						182
Foreign government		140			473						613
Redeemable preferred stock		40			59			26			125

Fixed maturities available-for-sale		344			41,009			1,251			42,604
Fixed maturities, trading					72			89			161

Total fixed maturities	$	344		$	41,081		$	1,340		$	42,765


Equity securities available-for-sale	$	117		$	98		$	34		$	249
Equity securities, trading		642						7			649

Total equity securities	$	759		$	98		$	41		$	898


Short term investments	$	4,990		$	799		$	6		$	5,795
Other invested assets					58			1			59
Receivables					32			11			43
Life settlement contracts								100			100
Separate account business		4			306			2			312
Payable to brokers		(95	)		(11	)		(6	)		(112)

The tables below present reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2013 and 2012:


2013	Balance, January 1		Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)				Purchases		Sales		Settlements		Transfers into Level 3		Transfers out of Level 3		Balance, March 31		Unrealized Gains (Losses) Recognized in Net Income on Level 3 Assets and Liabilities


			Included in Net Income		Included in OCI														Held at March 31

(In millions)

Fixed maturity securities:
Corporate and other bonds	$	219			$	2	$	91	$	(17)	$	(20)	$	26	$	(18)	$	283	$	(1)
States, municipalities and political subdivisions		96	$	(3)				85		(47)		(2)						129
Asset-backed:
Residential mortgage-backed		413		3				61				(11)				(16)		450
Commercial mortgage- backed		129		1		5		73				(7)				(24)		177
Other asset-backed		368		3		1		136		(99)		(13)						396

Total asset-backed		910		7		6		270		(99)		(31)		-		(40)		1,023		-
Redeemable preferred stock		26																26

Fixed maturities available-for-sale		1,251		4		8		446		(163)		(53)		26		(58)		1,461		(1)
Fixed maturities, trading		89		1				19		(2)								107		1

Total fixed maturities	$	1,340	$	5	$	8	$	465	$	(165)	$	(53)	$	26	$	(58)	$	1,568	$	-


Equity securities available-for-sale	$	34	$	(15)	$	1									$	(1)	$	19	$	(15)
Equity securities trading		7		(3)					$	(1)								3		(3)

Total equity securities	$	41	$	(18)	$	1	$	-	$	(1)	$	-	$	-	$	(1)	$	22	$	(18)


Short term investments	$	6							$	(1)							$	5
Other invested assets		1								(1)								-
Life settlement contracts		100	$	7							$	(12)						95
Separate account business		2																2
Derivative financial instruments, net		5		3	$	(4)				1		(3)						2


				Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)														Transfers		Transfers						Unrealized Gains (Losses) Recognized in Net Income on Level 3 Assets and Liabilities
2012	Balance, January 1			Included in Net Income			Included in OCI			Purchases		Sales			Settlements			into Level 3		out of Level 3			Balance, March 31			Held at March 31

(In millions)

Fixed maturity securities:
Corporate and other bonds	$	482		$	3		$	4		$	78	$	(86	)	$	(19	)	$	33	$	(10	)	$	485
States, municipalities and political subdivisions		171						2																173
Asset-backed:
Residential mortgage-backed		452			1			(4	)		38					(7	)				(33	)		447
Commercial mortgage- backed		59						4			42													105
Other asset-backed		343			4			4			176		(77	)		(25	)				(41	)		384

Total asset-backed		854			5			4			256		(77	)		(32	)		-		(74	)		936
Redeemable preferred stock		-									53													53

Fixed maturities available-for-sale		1,507			8			10			387		(163	)		(51	)		33		(84	)		1,647
Fixed maturities, trading		101			(7	)					7													101		$	(7)

Total fixed maturities	$	1,608		$	1		$	10		$	394	$	(163	)	$	(51	)	$	33	$	(84	)	$	1,748		$	(7)


Equity securities available-for-sale	$	67					$	(3	)	$	11	$	(1	)									$	74		$	(2)
Equity securities trading		14		$	(3	)																		11			(3)

Total equity securities	$	81		$	(3	)	$	(3	)	$	11	$	(1	)	$	-		$	-	$	-		$	85		$	(5)


Short term investments	$	27								$	12				$	(39	)						$	-
Other invested assets		11																						11
Life settlement contracts		117		$	3											(5	)							115		$	(1)
Separate account business		23										$	(19	)										4
Derivative financial instruments, net		(15	)		(6	)	$	13			1		(5	)		4								(8	)		1

Net realized and unrealized gains and losses are reported in Net income as follows:


Major Category of Assets and Liabilities		Consolidated Condensed Statements of Income Line Items


Fixed maturity securities available-for-sale		Investment gains (losses)
Fixed maturity securities, trading		Net investment income
Equity securities available-for-sale		Investment gains (losses)
Equity securities, trading		Net investment income
Other invested assets		Investment gains (losses) and Net investment income
Derivative financial instruments held in a trading portfolio		Net investment income
Derivative financial instruments, other		Investment gains (losses) and Other revenues
Life settlement contracts		Other revenues

Securities shown in the Level 3 tables may be transferred in or out of Level 3 based on the availability of observable market information used to determine the fair value of the security. The availability of observable market information varies based on market conditions and trading volume and may cause securities to move in and out of Level 3 from reporting period to reporting period. There were no transfers between Level 1 and Level 2 during the three months ended March 31, 2013 and 2012. The Company’s policy is to recognize transfers between levels at the beginning of quarterly reporting periods.

Significant Unobservable Inputs

The table below presents quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurements of Level 3 assets. Valuations for assets and liabilities not presented in the table below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of unobservable inputs from these broker quotes is neither provided nor reasonably available to the Company.

March 31, 2013

Fair Value

Valuation
Technique(s)

Unobservable

Input(s)

Range

(Weighted

Average)

(In millions)

Assets

Fixed maturity securities

Discounted cash
flow

Expected call date

3.0 – 4.6 years (4.0 years)

Credit spread adjustment

0.02% – 0.48% (0.17%)

Market approach

Private offering price

$34.70 – $122.09 ($102.97)

Equity securities

Market approach

Private offering price

$33.73 –$3,970.99 per share

($1,114.32 per share)

Life settlement contracts

Discounted cash
flow

Discount rate risk premium

Mortality assumption

69% – 883% (209.2%)

December 31, 2012

Assets

Fixed maturity securities

121

Discounted cash flow

Expected call date

3.3 – 5.3 years (4.3 years)

Credit spread adjustment

0.02% – 0.48% (0.17%)

Market approach

Private offering price

$42.39 – $102.32 ($100.11)

Equity securities

Market approach

Private offering price

$4.54 – $3,842.00 per share

($571.17 per share)

Life settlement contracts

100

Discounted cash flow

Discount rate risk premium

Mortality assumption

69% – 883% (208.9%)

For fixed maturity securities, an increase to the expected call date assumption and credit spread adjustment or decrease in the private offering price would result in a lower fair value measurement. For equity securities, an increase in the private offering price would result in a higher fair value measurement. For life settlement contracts, an increase in the discount rate risk premium or decrease in the mortality assumption would result in a lower fair value measurement.

Financial Assets and Liabilities Not Measured at Fair Value

The methods and assumptions used to estimate the fair value for financial assets and liabilities not measured at fair value were consistent with those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2012.

The carrying amount, estimated fair value and the level of the fair value hierarchy of the Company’s financial instrument assets and liabilities which are not measured at fair value on the Consolidated Condensed Balance Sheets are listed in the tables below. The carrying amounts reported on the Consolidated Condensed Balance Sheets for cash and short term investments not carried at fair value and certain other assets and liabilities approximate fair value due to the short term nature of these items.


	Carrying		Estimated Fair Value
March 31, 2013	Amount		Level 1	Level 2		Level 3		Total
(In millions)

Financial Assets:
Other invested assets, primarily mortgage loans	$	425				$	449	$	449

Financial Liabilities:
Premium deposits and annuity contracts		96					100		100
Short term debt		19		$	13		6		19
Long term debt		9,418			10,216		350		10,566

December 31, 2012

Financial Assets:
Other invested assets, primarily mortgage loans	$	401				$	418	$	418

Financial Liabilities:
Premium deposits and annuity contracts		100					104		104
Short term debt		19		$	13		6		19
Long term debt		9,191			10,170		202		10,372

4. Derivative Financial Instruments

A summary of the aggregate contractual or notional amounts and gross estimated fair values related to derivative financial instruments follows. The contractual or notional amounts for derivatives are used to calculate the exchange of contractual payments under the agreements and may not be representative of the potential for gain or loss on these instruments.


	March 31, 2013						December 31, 2012

	Contractual/ Notional		Estimated Fair Value				Contractual/ Notional		Estimated Fair Value

	Amount		Asset		(Liability)		Amount		Asset		(Liability)

(In millions)

With hedge designation:

Interest rate risk:
Interest rate swaps	$	300			$	(5)	$	300			$	(6)
Commodities:
Forwards – short		319	$	20		(14)		288	$	39		(3)
Foreign exchange:
Currency forwards – short		125		3		(1)		144		4

Without hedge designation:

Equity markets:
Options – purchased		972		19				255		19
– written		866				(13)		374				(11)
Equity swaps and warrants
– long		13		3				14		6

Interest rate risk:
Credit default swaps
– purchased protection		73				(3)		78				(2)
– sold protection		27						33				(2)
Foreign exchange:
Currency forwards – long		63		1				404				(2)
– short		72						128

Gross estimated fair values of derivative positions are currently presented in Equity securities, Receivables and Payable to brokers on the Consolidated Condensed Balance Sheets. There would be no significant difference in the balance included in such accounts if the estimated fair values were presented net for the periods ended March 31, 2013 and December 31, 2012.

For derivative financial instruments without hedge designation, changes in the fair value of derivatives not held in a trading portfolio are reported in Investment gains (losses) and changes in the fair value of derivatives held for trading purposes are reported in Net investment income on the Consolidated Condensed Statements of Income. Gains of $2 million and losses of $1 million were included in Investment gains (losses) for the three months ended March 31, 2013 and 2012. Losses of $13 million and $4 million were included in Net investment income for the three months ended March 31, 2013 and 2012.

The Company’s derivative financial instruments with cash flow hedge designation hedge variable price risk associated with the purchase and sale of natural gas and other energy-related products, exposure to foreign currency losses on future foreign currency expenditures, as well as risks attributable to changes in interest rates on long term debt. Losses of $18 million and gains of $34 million were recognized in OCI related to these cash flow hedges for the three months ended March 31, 2013 and 2012. Gains of $13 million and $9 million were reclassified from AOCI into income for the three months ended March 31, 2013 and 2012. As of March 31, 2013, the estimated amount of net unrealized gains associated with these cash flow hedges that will be reclassified from AOCI into earnings during the next twelve months was $4 million. The net amounts recognized due to ineffectiveness were less than $1 million for the three months ended March 31, 2013 and 2012.

5. Claim and Claim Adjustment Expense Reserves

CNA’s property and casualty insurance claim and claim adjustment expense reserves represent the estimated amounts necessary to resolve all outstanding claims, including claims that are incurred but not reported (“IBNR”) as of the reporting date. CNA’s reserve projections are based primarily on detailed analysis of the facts in each case, CNA’s experience with similar cases and various historical development patterns. Consideration is given to such historical patterns as field reserving trends and claims settlement practices, loss payments, pending levels of unpaid claims and product mix, as well as court decisions, economic conditions including inflation and public attitudes. All of these factors can affect the estimation of claim and claim adjustment expense reserves.

Establishing claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves for catastrophic events that have occurred, is an estimation process. Many factors can ultimately affect the final settlement of a claim and, therefore, the necessary reserve. Changes in the law, results of litigation, medical costs, the cost of repair materials and labor rates can all affect ultimate claim costs. In addition, time can be a critical part of reserving determinations since the longer the span between the incidence of a loss and the payment or settlement of the claim, the more variable the ultimate settlement amount can be. Accordingly, short-tail claims, such as property damage claims, tend to be more reasonably estimable than long-tail claims, such as workers’ compensation, general liability and professional liability claims. Adjustments to prior year reserve estimates, if necessary, are reflected in the results of operations in the period that the need for such adjustments is determined. There can be no assurance that CNA’s ultimate cost for insurance losses will not exceed current estimates.

Catastrophes are an inherent risk of the property and casualty insurance business and have contributed to material period-to-period fluctuations in CNA’s results of operations and/or equity. CNA reported catastrophe losses, net of reinsurance, of $39 million and $28 million for the three months ended March 31, 2013 and 2012. Catastrophe losses in the first quarter of 2013 related primarily to U.S. storms.

Net Prior Year Development

The following tables and discussion include the net prior year development recorded for CNA Specialty, CNA Commercial and Other.


	CNA		CNA
Three Months Ended March 31, 2013	Specialty		Commercial		Other		Total

(In millions)

Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development	$	(15)	$	(11)			$	(26)
Pretax (favorable) unfavorable premium development		(8)		(10)	$	5		(13)

Total pretax (favorable) unfavorable net prior year development	$	(23)	$	(21)	$	5	$	(39)


Three Months Ended March 31, 2012


Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development	$	(6)	$	(14)	$	2	$	(18)
Pretax (favorable) unfavorable premium development		(9)		(17)		1		(25)

Total pretax (favorable) unfavorable net prior year development	$	(15)	$	(31)	$	3	$	(43)

For the three months ended March 31, 2013 and 2012, favorable premium development was recorded for CNA Commercial primarily due to premium adjustments on auditable policies arising from increased exposures.

CNA Specialty

The following table and discussion provide further detail of the net prior year claim and allocated claim adjustment expense reserve development (“development”) recorded for the CNA Specialty segment:


Three Months Ended March 31	2013		2012

(In millions)

Medical professional liability	$	(3)	$	(6)
Other professional liability		(1)		4
Surety		1		1
Warranty				(1)
Other		(12)		(4)

Total pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development	$	(15)	$	(6)

2013

Overall, favorable development for medical professional liability reflects favorable experience in accident years 2009 and prior. Unfavorable development was recorded for accident years 2010 and 2011 due to higher than expected large loss activity.

Other includes standard property and casualty coverages provided to CNA Specialty customers. Favorable development for other coverages was primarily due to better than expected loss emergence in property coverages in accident years 2010 and subsequent.

2012

Favorable development for medical professional liability was primarily due to reductions in the estimated frequency of large losses in accident years 2008 and prior.

CNA Commercial

The following table and discussion provide further detail of the development recorded for the CNA Commercial segment:


Three Months Ended March 31	2013		2012

(In millions)

Commercial auto	$	(5)
General liability		(21)	$	8
Workers’ compensation		25		(19)
Property and other		(10)		(3)

Total pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development	$	(11)	$	(14)

2013

Favorable development in the general liability coverages was primarily due to better than expected loss emergence in accident years 2002 and prior.

Unfavorable development for workers’ compensation was primarily due to higher than expected large losses and increased severity in the state of California in accident year 2010.

2012

Overall, favorable development for workers’ compensation reflects favorable experience in accident years 2001 and prior. Unfavorable development was recorded in accident year 2010 related to increased medical severity.

6. Accumulated Other Comprehensive Income (“AOCI”)

The table below presents the change in AOCI by component for the three months ended March 31, 2013.


																						Total
							Cash Flow Hedges															Accumulated

	Unrealized Gains (Losses) On Investments			OTTI Gains (Losses)			Interest Rate Swaps			Commodity Hedges			Foreign Currency Forwards			Pension Liability			Foreign Currency Translation			Other Comprehensive Income (Loss)

(In millions)

Balance, January 1, 2013	$	1,233		$	18		$	(9	)	$	24		$	1		$	(732	)	$	143		$	678

Other comprehensive income (loss) before reclassifications, after tax of $29, $(7), $0, $6, $0, $0 and $0		(49	)		14			1			(13	)								(61	)		(108)
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $6, $0,$(1), $4, $1, $(3) and $0		(13	)					(1	)		(7	)		(1	)		4						(18)

Other comprehensive income (loss)		(62	)		14			-			(20	)		(1	)		4			(61	)		(126)
Amounts attributable to noncontrolling interests		5			(1	)					2			1			1			6			14

Balance, March 31, 2013	$	1,176		$	31		$	(9	)	$	6		$	1		$	(727	)	$	88		$	566

Amounts reclassified from AOCI shown above are reported in Net income as follows:


Major Category of AOCI		Affected Line Item


Unrealized gains (losses) on investments		Investment gains (losses)
OTTI gains (losses)		Investment gains (losses)
Cash flow hedges
Interest rate swaps		Interest expense
Commodity hedges		Other revenues
Foreign currency forwards		Contract drilling expenses
Pension liability		Other operating expenses

7. Benefit Plans

Pension Plans - The Company has several non-contributory defined benefit plans for eligible employees. Benefits for certain plans are determined annually based on a specified percentage of annual earnings (based on the participant’s age or years of service) and a specified interest rate (which is established annually for all participants) applied to accrued balances. The benefits for another plan which cover salaried employees are based on formulas which include, among others, years of service and average pay. The Company’s funding policy is to make contributions in accordance with applicable governmental regulatory requirements.

Other Postretirement Benefit Plans - The Company has several postretirement benefit plans covering eligible employees and retirees. Participants generally become eligible after reaching age 55 with required years of service. Actual requirements for coverage vary by plan. Benefits for retirees who were covered by bargaining units vary by each unit and contract. Benefits for certain retirees are in the form of a Company health care account.

Benefits for retirees reaching age 65 are generally integrated with Medicare. Other retirees, based on plan provisions, must use Medicare as their primary coverage, with the Company reimbursing a portion of the unpaid amount; or are reimbursed for the Medicare Part B premium or have no Company coverage. The benefits provided by the Company are basically health and, for certain retirees, life insurance type benefits.

The Company funds certain of these benefit plans and accrues postretirement benefits during the active service of those employees who would become eligible for such benefits when they retire.

The components of net periodic benefit cost are as follows:


	Pension Benefits				Other Postretirement Benefits

Three Months Ended March 31	2013		2012		2013		2012

(In millions)

Service cost		$ 6		$ 6
Interest cost		34		38		$ 1		$ 1
Expected return on plan assets		(49)		(47)		(1)		(1)
Amortization of unrecognized net loss		14		11
Amortization of unrecognized prior service benefit						(6)		(6)

Net periodic benefit cost		$ 5		$ 8		$ (6)		$ (6)

8. Business Segments

The Company’s reportable segments are primarily based on its individual operating subsidiaries. Each of the principal operating subsidiaries are headed by a chief executive officer who is responsible for the operation of its business and has the duties and authority commensurate with that position. Investment gains (losses) and the related income taxes, excluding those of CNA, are included in the Corporate and other segment.

CNA’s results are reported in four business segments: CNA Specialty, CNA Commercial, Life & Group Non-Core and Other. CNA Specialty provides a broad array of professional, financial and specialty property and casualty products and services, primarily through insurance brokers and managing general underwriters. CNA Commercial includes property and casualty coverages sold to small businesses and middle market entities and organizations primarily through an independent agency distribution system. CNA Commercial also includes commercial insurance and risk management products sold to large corporations primarily through insurance brokers. Life & Group Non-Core primarily includes the results of the life and group lines of business that are in run-off. Other includes the operations of Hardy Underwriting Bermuda Limited (“Hardy”) since its acquisition date of July 2, 2012, corporate expenses, including interest on corporate debt, and the results of certain property and casualty business primarily in run-off, including CNA Re and asbestos and environmental pollution. Hardy is a specialized Lloyd’s of London underwriter primarily of short-tail exposures in marine and aviation, non-marine property, specialty lines and property treaty reinsurance.

Diamond Offshore owns and operates offshore drilling rigs that are chartered on a contract basis for fixed terms by companies engaged in exploration and production of hydrocarbons. Offshore rigs are mobile units that can be relocated based on market demand. Diamond Offshore’s fleet consists of 44 drilling rigs, including four new-build rigs which are under construction and two rigs being constructed utilizing the hulls of Diamond Offshore’s existing mid-water floaters. On March 31, 2013, Diamond Offshore’s drilling rigs were located offshore 12 countries in addition to the United States.

Boardwalk Pipeline is engaged in the interstate transportation and storage of natural gas and natural gas liquids (“NGLs”) and gathering and processing of natural gas. This segment consists of interstate natural gas pipeline systems originating in the Gulf Coast region, Oklahoma and Arkansas, and extending north and east through the midwestern states of Tennessee, Kentucky, Illinois, Indiana and Ohio, natural gas storage facilities in four states and NGL pipelines and storage facilities in Louisiana, with approximately 14,410 miles of pipeline.

HighMount is engaged in the exploration, production and marketing of natural gas and oil (including condensate and NGLs), primarily located in the Permian Basin in West Texas as well as the Mississippian Lime in Oklahoma and the Texas Panhandle regions.

Loews Hotels operates a chain of 19 hotels, 17 of which are in the United States and two are in Canada.

The Corporate and other segment consists primarily of corporate investment income, corporate interest expense and other unallocated expenses.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. In addition, CNA does not maintain a distinct investment portfolio for every insurance segment, and accordingly, allocation of assets to each segment is not performed. Therefore, a significant portion of net investment income and investment gains (losses) are allocated based on each segment’s carried insurance reserves, as adjusted.

The following tables set forth the Company’s consolidated revenues and income (loss) by business segment:


Three Months Ended March 31	2013			2012

(In millions)

Revenues (a):

CNA Financial:
CNA Specialty	$	956		$	945
CNA Commercial		1,101			1,088
Life and Group Non-Core		363			350
Other		83			18

Total CNA Financial		2,503			2,401
Diamond Offshore		732			796
Boardwalk Pipeline		329			314
HighMount		68			76
Loews Hotels		94			80
Corporate and other		8			77

Total	$	3,734		$	3,744


Income (loss) before income tax and noncontrolling interests (a):

CNA Financial:
CNA Specialty	$	215		$	209
CNA Commercial		198			227
Life and Group Non-Core		(9	)		(37)
Other		(40	)		(33)

Total CNA Financial		364			366
Diamond Offshore		205			252
Boardwalk Pipeline		99			92
HighMount		(139	)		(34)
Loews Hotels					7
Corporate and other		(17	)		58

Total	$	512		$	741


Three Months Ended March 31	2013			2012

(In millions)

Net income (loss) (a):

CNA Financial:
CNA Specialty	$	128		$	125
CNA Commercial		115			131
Life and Group Non-Core		8			(10)
Other		(25	)		(20)

Total CNA Financial		226			226
Diamond Offshore		82			87
Boardwalk Pipeline		33			35
HighMount		(88	)		(22)
Loews Hotels					4
Corporate and other		(11	)		37

Total	$	242		$	367

(a)	Investment gains included in Revenues, Income before income tax and noncontrolling interests and Net income are as follows:


Three Months Ended March 31	2013		2012


Revenues and Income before income tax and noncontrolling interests:

CNA Financial:
CNA Specialty	$	3	$	8
CNA Commercial		4		11
Life and Group Non-Core		14		13
Other		3

Total	$	24	$	32


Net income:

CNA Financial:
CNA Specialty	$	2	$	5
CNA Commercial		2		6
Life and Group Non-Core		8		7
Other		2		1

Total	$	14	$	19

9. Legal Proceedings

The Company and its subsidiaries are parties to litigation arising in the ordinary course of business. The outcome of this litigation will not, in the opinion of management, materially affect the Company’s results of operations or equity.

10. Commitments and Contingencies

Guarantees

In the course of selling business entities and assets to third parties, CNA has agreed to indemnify purchasers for losses arising out of breaches of representation and warranties with respect to the business entities or assets being sold, including, in certain cases, losses arising from undisclosed liabilities or certain named litigation. Such indemnification provisions generally survive for periods ranging from nine months following the applicable closing date to the expiration of the relevant statutes of limitation. As of March 31, 2013, the aggregate amount of quantifiable indemnification agreements in effect for sales of business entities, assets and third party loans was $724 million.

In addition, CNA has agreed to provide indemnification to third party purchasers for certain losses associated with sold business entities or assets that are not limited by a contractual monetary amount. As of March 31, 2013, CNA had outstanding unlimited indemnifications in connection with the sales of certain of its business entities or assets that included tax liabilities arising prior to a purchaser’s ownership of an entity or asset, defects in title at the time of

sale, employee claims arising prior to closing and in some cases losses arising from certain litigation and undisclosed liabilities. These indemnification agreements survive until the applicable statutes of limitation expire, or until the agreed upon contract terms expire.

Offshore Rig Purchase Obligations

Diamond Offshore has entered into four turnkey construction contracts with Hyundai Heavy Industries, Co. Ltd. for the construction of four dynamically positioned, ultra-deepwater drillships, the first two of which are expected to be delivered in the second and fourth quarters of 2013. Diamond Offshore expects the aggregate cost of the construction of its drillships, including commissioning, spares and project management costs, to be approximately $2.6 billion, of which approximately $650 million in contractual installment payments have been paid. These amounts are included in Construction in process within Property, plant and equipment in the Consolidated Condensed Balance Sheets. Diamond Offshore expects to pay a total of approximately $790 million as the two drillships are delivered in 2013.

In December of 2011 and August of 2012, Diamond Offshore entered into agreements for the construction of two moored semisubmersible deepwater rigs with expected completion dates in the third quarter of 2013 and the second quarter of 2014. The rigs will be constructed utilizing the hulls of two of Diamond Offshore’s mid-water floaters and the aggregate cost of the two rigs, including commissioning, spares and project management costs, is estimated to be approximately $690 million, of which $121 million in contractual installment payments have been paid.

In February of 2013, Diamond Offshore entered into a vessel modification agreement for enhancements to a mid-water floater that will enable the rig to work in the North Sea. The contracted price with the shipyard is $29 million, of which $6 million has been paid. The total cost of the project is estimated to be approximately $120 million, including shipyard costs, owner-furnished equipment and labor, commissioning and spares, with an expected completion date in the first quarter of 2014.

Boardwalk Pipeline

Boardwalk Pipeline’s future capital commitments are comprised of binding commitments under purchase orders for materials ordered but not received and firm commitments under binding construction service agreements. The commitments as of March 31, 2013 were approximately $130 million, all of which are expected to be settled within the next twelve months.

Loews Hotels

Loews Hotels has commitments aggregating approximately $285 million for development and renovation of hotel properties.

11. Consolidating Financial Information

The following schedules present the Company’s consolidating balance sheet information at March 31, 2013 and December 31, 2012, and consolidating statements of income information for the three months ended March 31, 2013 and 2012. These schedules present the individual subsidiaries of the Company and their contribution to the Consolidated Condensed Financial Statements. Amounts presented will not necessarily be the same as those in the individual financial statements of the Company’s subsidiaries due to adjustments for purchase accounting, income taxes and noncontrolling interests. In addition, many of the Company’s subsidiaries use a classified balance sheet which also leads to differences in amounts reported for certain line items.

The Corporate and Other column primarily reflects the parent company’s investment in its subsidiaries, invested cash portfolio and corporate long term debt. The elimination adjustments are for intercompany assets and liabilities, interest and dividends, the parent company’s investment in capital stocks of subsidiaries, and various reclasses of debit or credit balances to the amounts in consolidation. Purchase accounting adjustments have been pushed down to the appropriate subsidiary.

Loews Corporation

Consolidating Balance Sheet Information

March 31, 2013

CNA
Financial

Diamond
Offshore

Boardwalk
Pipeline

HighMount

Loews
Hotels

Corporate
and Other

Eliminations

Total

(In millions)

Assets:

Investments

$ 47,593

$ 1,433

$ 10

$ 63

$ 4,085

$ 53,184

Cash

123

$ 4

179

Receivables

8,861

489

101

$ (6

)

9,605

Property, plant and equipment

295

4,973

7,250

1,055

585

14,204

Deferred income taxes

794

(840

)

Goodwill

115

271

584

993

Investments in capital stocks of subsidiaries

17,094

(17,094

)

Other assets

735

338

317

1,529

Deferred acquisition costs of insurance subsidiaries

641

Separate account business

279

Total assets

$ 58,688

$ 7,277

$ 7,929

$ 2,517

$ 780

$ 21,354

$ (17,931

)

$ 80,614

Liabilities and Equity:

Insurance reserves

$ 39,893

Payable to brokers

325

$ 1

$ 5

$ 14

$ 393

738

Short term debt

$ 6

Long term debt

2,558

1,489

3,607

720

350

694

9,418

Deferred income taxes

492

635

561

$ (831

)

895

Other liabilities

3,254

643

379

122

239

)

4,654

Separate account business

279

Total liabilities

46,322

2,625

4,626

856

417

1,887

(837

)

55,896

Total shareholders’ equity

11,129

2,357

1,586

1,661

361

19,467

(17,094

)

19,467

Noncontrolling interests

1,237

2,295

1,717

5,251

Total equity

12,366

4,652

3,303

1,661

363

19,467

(17,094

)

24,718

Total liabilities and equity

$ 58,688

$ 7,277

$ 7,929

$ 2,517

$ 780

$ 21,354

$ (17,931

)

$ 80,614

Loews Corporation

Consolidating Balance Sheet Information


December 31, 2012	CNA Financial		Diamond Offshore		Boardwalk Pipeline		HighMount		Loews Hotels		Corporate and Other		Eliminations			Total

(In millions)

Assets:

Investments	$	47,636	$	1,435	$	1		$ 8	$	33	$	3,935				$	53,048
Cash		156		53		3		2		10		4					228
Receivables		8,516		503		89		69		25		183		$ (19	)		9,366
Property, plant and equipment		297		4,870		7,252		1,136		333		47					13,935
Deferred income taxes		119						734						(853	)		-
Goodwill		118		20		271		584		3							996
Investments in capital stocks of subsidiaries												16,936		(16,936	)		-
Other assets		730		366		330		22		84		4		2			1,538
Deferred acquisition costs of insurance subsidiaries		598															598
Separate account business		312															312

Total assets	$	58,482	$	7,247	$	7,946		$ 2,555	$	488	$	21,109		$ (17,806	)	$	80,021


Liabilities and Equity:

Insurance reserves	$	40,005														$	40,005
Payable to brokers		61						$ 10			$	134					205
Short term debt		13							$	6							19
Long term debt		2,557	$	1,489	$	3,539		710		203		693					9,191
Deferred income taxes				483		619				37		552		$ (851	)		840
Other liabilities		3,260		675		432		120		42		263		(19	)		4,773
Separate account business		312															312

Total liabilities		46,208		2,647		4,590		840		288		1,642		(870	)		55,345

Total shareholders’ equity		11,058		2,331		1,624		1,715		200		19,467		(16,936	)		19,459
Noncontrolling interests		1,216		2,269		1,732											5,217

Total equity		12,274		4,600		3,356		1,715		200		19,467		(16,936	)		24,676

Total liabilities and equity	$	58,482	$	7,247	$	7,946		$ 2,555	$	488	$	21,109		$ (17,806	)	$	80,021

Loews Corporation

Consolidating Statement of Income Information

Three Months Ended March 31, 2013

CNA
Financial

Diamond
Offshore

Boardwalk
Pipeline

HighMount

Loews
Hotels

Corporate
and Other

Eliminations

Total

(In millions)

Revenues:

Insurance premiums

1,764

Net investment income

633

641

Intercompany interest and dividends

182

$ (182

)

Investment gains

Contract drilling revenues

700

Other

329

$ 68

605

Total

2,503

732

329

190

(182

)

3,734

Expenses:

Insurance claims and policyholders’ benefits

1,429

Amortization of deferred acquisition costs

328

Contract drilling expenses

375

Other operating expenses

340

144

190

202

982

Interest

108

Total

2,139

527

230

207

3,222

Income (loss) before income tax

364

205

(139

)

165

(182

)

512

Income tax (expense) benefit

(113

)

(36

)

(22

)

(114)

Net income (loss)

251

169

(88

)

171

(182

)

398

Amounts attributable to noncontrolling interests

(25

)

(87

)

(44

)

(156)

Net income (loss) attributable to Loews Corporation

226

$ (88

)

171

$ (182

)

242

Loews Corporation

Consolidating Statement of Income Information


Three Months Ended March 31, 2012	CNA Financial			Diamond Offshore			Boardwalk Pipeline			HighMount			Loews Hotels			Corporate and Other			Eliminations			Total

(In millions)

Revenues:

Insurance premiums	$	1,649																				$	1,649
Net investment income		648		$	2											$	76						726
Intercompany interest and dividends																	170		$	(170	)		-
Investment gains		32																					32
Contract drilling revenues					755																		755
Other		72			39		$	314		$	76		$	80			2			(1	)		582

Total		2,401			796			314			76			80			248			(171	)		3,744


Expenses:

Insurance claims and policyholders’ benefits		1,381																					1,381
Amortization of deferred acquisition costs		295																					295
Contract drilling expenses					397																		397
Other operating expenses		317			132			181			107			71			12			(1	)		819
Interest		42			15			41			3			2			10			(2	)		111

Total		2,035			544			222			110			73			22			(3	)		3,003

Income (loss) before income tax		366			252			92			(34	)		7			226			(168	)		741
Income tax (expense) benefit		(115	)		(73	)		(22	)		12			(3	)		(21	)					(222)

Net income (loss)		251			179			70			(22	)		4			205			(168	)		519
Amounts attributable to noncontrolling interests		(25	)		(92	)		(35	)														(152)

Net income (loss) attributable to Loews Corporation	$	226		$	87		$	35		$	(22	)	$	4		$	205		$	(168	)	$	367

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with our Consolidated Condensed Financial Statements included in Item 1 of this Report, Risk Factors included in Part II, Item 1A of this Report, and the Consolidated Financial Statements, Risk Factors, and MD&A included in our Annual Report on Form 10-K for the year ended December 31, 2012. This MD&A is comprised of the following sections:


		Page No.

Overview		32
Consolidated Financial Results		32
Parent Company Structure		33
Critical Accounting Estimates		33
Results of Operations by Business Segment		34
CNA Financial		34
Diamond Offshore		36
Boardwalk Pipeline		40
HighMount		42
Loews Hotels		45
Corporate and Other		46
Liquidity and Capital Resources		47
CNA Financial		47
Diamond Offshore		47
Boardwalk Pipeline		48
HighMount		49
Loews Hotels		49
Corporate and Other		49
Investments		50
Forward-Looking Statements		53

OVERVIEW

We are a holding company. Our subsidiaries are engaged in the following lines of business:

—

commercial property and casualty insurance (CNA Financial Corporation (“CNA”), a 90% owned subsidiary);

—

operation of offshore oil and gas drilling rigs (Diamond Offshore Drilling, Inc. (“Diamond Offshore”), a 50.4% owned subsidiary);

—

transportation and storage of natural gas and natural gas liquids and gathering and processing of natural gas (Boardwalk Pipeline Partners, LP (“Boardwalk Pipeline”), a 55% owned subsidiary);

—

exploration, production and marketing of natural gas and oil (including condensate and natural gas liquids), (HighMount Exploration & Production LLC (“HighMount”), a wholly owned subsidiary); and

—

operation of a chain of hotels (Loews Hotels Holding Corporation (“Loews Hotels”), a wholly owned subsidiary).

Unless the context otherwise requires, references in this Report to “Loews Corporation,” “the Company,” “Parent Company,” “we,” “our,” “us” or like terms refer to the business of Loews Corporation excluding its subsidiaries.

Consolidated Financial Results

Net income for the first quarter of 2013 amounted to $242 million, or $0.62 per share as compared to $367 million, or $0.92 per share, in the first quarter of 2012. Net income in the first quarter of 2013 includes an after tax ceiling test impairment charge of $92 million at HighMount related to the carrying value of its natural gas and oil properties as compared to an impairment charge of $28 million in the prior year quarter. Excluding the non-cash ceiling test impairment charges, the decrease in net income is primarily due to reduced Parent Company investment income as a result of lower performance for the trading portfolio.

CNA’s earnings were essentially unchanged from the prior year primarily due to improved current year non-catastrophe underwriting results offset by lower investment income, higher catastrophe losses and decreased net favorable prior year development.

Diamond Offshore’s earnings decreased due to lower utilization primarily from fewer revenue earning days due to increased rig surveys.

Book value per share increased to $49.93 at March 31, 2013 compared to $49.67 at December 31, 2012.

Parent Company Structure

We are a holding company and derive substantially all of our cash flow from our subsidiaries. We rely upon our invested cash balances and distributions from our subsidiaries to generate the funds necessary to meet our obligations and to declare and pay any dividends to our shareholders. The ability of our subsidiaries to pay dividends is subject to, among other things, the availability of sufficient earnings and funds in such subsidiaries, applicable state laws, including in the case of the insurance subsidiaries of CNA, laws and rules governing the payment of dividends by regulated insurance companies and compliance with covenants in their respective loan agreements. Claims of creditors of our subsidiaries will generally have priority as to the assets of such subsidiaries over our claims and those of our creditors and shareholders.

CRITICAL ACCOUNTING ESTIMATES

The preparation of the consolidated condensed financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the related notes. Actual results could differ from those estimates.

The consolidated condensed financial statements and accompanying notes have been prepared in accordance with GAAP, applied on a consistent basis. We continually evaluate the accounting policies and estimates used to prepare the consolidated condensed financial statements. In general, our estimates are based on historical experience, evaluation of current trends, information from third party professionals and various other assumptions that we believe are reasonable under the known facts and circumstances.

We consider the accounting policies discussed below to be critical to an understanding of our consolidated condensed financial statements as their application places the most significant demands on our judgment.

—

Insurance Reserves

—

Reinsurance and Other Receivables

—

Litigation

—

Valuation of Investments and Impairment of Securities

—

Long Term Care Products

—

Payout Annuity Contracts

—

Pension and Postretirement Benefit Obligations

—

Valuation of HighMount’s Proved Reserves

—

Impairment of Long-Lived Assets

—

Goodwill

—

Income Taxes

Due to the inherent uncertainties involved with these types of judgments, actual results could differ significantly from estimates, which may have a material adverse impact on our results of operations or equity. See the Critical Accounting Estimates section and the Results of Operations by Business Segment – CNA Financial – Reserves – Estimates and Uncertainties section of our MD&A included under Item 7 of our Form 10-K for the year ended December 31, 2012 for further information.

RESULTS OF OPERATIONS BY BUSINESS SEGMENT

Unless the context otherwise requires, references to net operating income (loss), net realized investment results and net income (loss) reflect amounts attributable to Loews Corporation shareholders.

CNA Financial

The following table summarizes the results of operations for CNA for the three months ended March 31, 2013 and 2012 as presented in Note 11 of the Notes to Consolidated Condensed Financial Statements included in Item 1 of this Report:


Three Months Ended March 31	2013		2012

(In millions)

Revenues:
Insurance premiums		$ 1,764		$ 1,649
Net investment income		633		648
Investment gains		24		32
Other		82		72

Total		2,503		2,401

Expenses:
Insurance claims and policyholders’ benefits		1,429		1,381
Amortization of deferred acquisition costs		328		295
Other operating expenses		340		317
Interest		42		42

Total		2,139		2,035

Income before income tax		364		366
Income tax expense		(113)		(115)
Amounts attributable to noncontrolling interests		(25)		(25)

Net income attributable to Loews Corporation		$ 226		$ 226

Net income for the three months ended March 31, 2013 was essentially flat compared to 2012. Insurance premiums increased $115 million and includes $64 million from Hardy, which was acquired in July of 2012. In addition, non-catastrophe current accident year underwriting results improved as compared to the prior year. These favorable impacts were offset by lower net investment income and investment gains, higher catastrophe losses and decreased favorable net prior year development. See the Investments section of this MD&A for further discussion of net realized investment results and net investment income.

CNA Property and Casualty Insurance Operations

CNA’s property and casualty insurance operations consist of professional, financial, specialty property and casualty products and services and commercial insurance and risk management products.

In the evaluation of the results of the property and casualty businesses, CNA utilizes the loss ratio, the expense ratio, the dividend ratio and the combined ratio. These ratios are calculated using GAAP financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders’ dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios.

The following tables summarize the results of CNA’s property and casualty operations for the three months ended March 31, 2013 and 2012.

Three Months Ended March 31, 2013

CNA
Specialty

CNA
Commercial

Hardy

Total

(In millions, except %)

Net written premiums

803

918

1,776

Net earned premiums

723

837

1,624

Net investment income

170

250

421

Net operating income (loss)

126

113

(7)

232

Net realized investment gains

Net income (loss)

128

115

(6)

237

Ratios:

Loss and loss adjustment expense

64.3%

71.7%

48.7%

67.5%

Expense

30.5

35.0

56.8

33.8

Dividend

0.2

0.1

0.2

Combined

95.0%

106.8%

105.5%

101.5%


Three Months Ended March 31, 2012	CNA Specialty		CNA Commercial		Total


Net written premiums	$	765	$	843	$	1,608
Net earned premiums		706		803		1,509
Net investment income		175		265		440
Net operating income		120		125		245
Net realized investment gains		5		6		11
Net income		125		131		256

Ratios:
Loss and loss adjustment expense		66.3%		70.7%		68.6%
Expense		31.3		35.1		33.3
Dividend		(0.3)		0.4		0.1

Combined		97.3%		106.2%		102.0%

Net written premiums increased $168 million for the three months ended March 31, 2013 as compared with the same period in 2012. Net written premiums for 2013 included $55 million related to Hardy. Excluding Hardy, the increase in net written premiums was primarily driven by increased rate. Net earned premiums increased $115 million for the three months ended March 31, 2013 as compared with the same period in 2012, including $64 million related to Hardy. Excluding Hardy, the increase in net earned premiums was primarily driven by the increase in net written premiums over recent quarters.

CNA Specialty’s average rate increased 7% for the three months ended March 31, 2013 as compared with an increase of 3% for the three months ended March 31, 2012, for policies that renewed in each period. Retention of 86% was achieved in each period. CNA Commercial’s average rate increased 9% for the three months ended March 31, 2013, as compared with an increase of 5% for the three months ended March 31, 2012 for policies that renewed in each period. Retention of 78% and 77% was achieved in each period.

Net operating income decreased $13 million for the three months ended March 31, 2013 as compared with the same period in 2012. The decrease in net operating income was primarily due to lower net investment income and higher catastrophe losses for CNA Commercial. These unfavorable impacts were partially offset by improved underwriting results for CNA Specialty and improved non-catastrophe current accident year underwriting results for CNA Commercial. Catastrophe losses were $23 million (after tax and noncontrolling interests) for the three months ended March 31, 2013 as compared to catastrophe losses of $16 million (after tax and noncontrolling interests) for the same period in 2012.

CNA Specialty’s combined ratio improved 2.3 points for the three months ended March 31, 2013 as compared with the same period in 2012. The loss ratio decreased 2.0 points, due to both higher favorable net prior year development and an improved current accident year loss ratio. The expense ratio improved 0.8 points for the three

months ended March 31, 2013 as compared with the same period in 2012, primarily due to the impact of a higher net earned premium base.

CNA Commercial’s combined ratio increased 0.6 points for the three months ended March 31, 2013 as compared with the same period in 2012. The loss ratio increased 1.0 point, primarily due to the impacts of higher catastrophe losses and decreased favorable net prior year development, partially offset by an improved current accident year non-catastrophe loss ratio.

Favorable net prior year development of $41 million and $46 million was recorded for the three months ended March 31, 2013 and 2012. Further information on net prior year development is included in Note 5 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Life & Group Non-Core and Other Operations

Life & Group Non-Core primarily includes the results of the life and group lines of business that are in run-off. Other primarily includes certain CNA corporate expenses, including interest on corporate debt and the results of certain property and casualty business in run-off, including CNA Re and asbestos and environmental pollution (“A&EP”).

The following tables summarize the results of CNA’s Life & Group Non-Core and Other operations for the three months ended March 31, 2013 and 2012.

Three Months Ended March 31, 2013

Life & Group
Non-Core

Other

Total

(In millions)

Net earned premiums

$ 141

Net investment income

204

$ 8

212

Net operating loss

(20)

Net realized investment gains

Net income (loss)

(19)

(11)


Three Months Ended March 31, 2012


Net earned premiums	$ 141		$ 141
Net investment income	198	$ 10	208
Net operating loss	(17)	(21)	(38)
Net realized investment gains	7	1	8
Net loss	(10)	(20)	(30)

Net earned premiums, which relate primarily to the individual and group long term care businesses, were unchanged for the three months ended March 31, 2013 as compared with the same period in 2012. Premiums in the current period were affected by the lapsing of policies and rate increase actions in CNA’s run-off individual long term care business.

Net loss decreased $19 million for the three months ended March 31, 2013 as compared with the same period in 2012. While this decrease reflects favorable mortality outcomes across all of CNA’s life businesses, they were primarily attributable to favorable morbidity and persistency in CNA’s long term care business.

Diamond Offshore

The ultra-deepwater and deepwater floater markets are generally strong, particularly in the ultra-deepwater segment where there are only a few uncontracted rigs available to work in 2013, inclusive of the expected 2013 newbuild deliveries. Regionally, the offshore basins of West Africa, Brazil and the Gulf of Mexico continue to be an area of significant ultra-deepwater and deepwater activity, where demand is strong with potential for further growth, and in which dayrates are expected to remain steady throughout 2013. According to industry analysts, demand offshore Brazil is fueled primarily by aggressive exploration and development goals of Petróleo Brasileiro S.A. (“Petrobras”), as well as significant discoveries in the pre-salt and post-salt formations offshore Brazil. Similarly, pre-salt discoveries offshore Angola have led to a significant increase in deepwater demand in the area.

On the Outer Continental Shelf of the Gulf of Mexico, drilling activity has surpassed pre-Macondo levels, and industry analysts predict that the market will continue to strengthen in 2013 and beyond, particularly in the ultra-

deepwater market. Demand in the U.S. GOM is tending more to newer deepwater and ultra-deepwater rigs due to new regulations, deeper waters and more challenging formations.

Despite the strong ultra-deepwater and deepwater markets, Diamond Offshore’s ability to meet strong demand in the near term is limited due to its contracted backlog in 2013 (100% and 98% for its ultra-deepwater and deepwater fleets). In addition, the robust outlook for the ultra-deepwater and deepwater markets has led to a significant number of newbuild floater orders from established drilling contractors, as well as new entrants into the industry, which is expected to lead to increased competition. Based on recent industry analyst data, the total number of newbuild floaters on order or announced was reported to be in excess of 90 rigs, although newbuild orders have slowed in 2013 with only three orders having been placed in the first quarter of 2013. Excluding an estimated 29 rigs to be built on behalf of Petrobras, which is currently Diamond Offshore’s most significant customer, 17% and 85% of the newbuilds scheduled for delivery in 2013 and 2014 are not yet contracted for future work, including two of Diamond Offshore’s newbuild drillships and one of its semisubmersible rigs under construction, all of which are scheduled for delivery in 2014.

Market demand for mid-water floaters is generally stable. In both the U.K. and Norway sectors of the North Sea, the mid-water market is particularly strong, with record dayrates being achieved. The mid-water market in other regions remains mixed but relatively stable. In the Mediterranean region, demand remains solid, where recent gas discoveries have led to increased interest in the region. The Southeast Asia and Australia markets also remain steady with indications of possible strengthening.

Diamond Offshore has six actively-marketed jack-up rigs, four of which are currently operating in the Mexican waters of the Gulf of Mexico, where drilling activity remains stable and additional tendering activity is ongoing. Another jack-up rig is contracted under a two-year bareboat charter offshore Ecuador through August of 2014. Diamond Offshore’s other jack-up rig is actively seeking work in the GOM, where contracts are generally well-to-well or short term in duration.

Contract Drilling Backlog

The following table reflects Diamond Offshore’s contract drilling backlog as of April 25, 2013 and February 1, 2013 (the date reported in our Annual Report on Form 10-K for the year ended December 31, 2012). Contract drilling backlog is calculated by multiplying the contracted operating dayrate by the firm contract period and adding one half of any potential rig performance bonuses. Diamond Offshore’s calculation also assumes full utilization of its drilling equipment for the contract period (excluding scheduled shipyard and survey days); however, the amount of actual revenue earned and the actual periods during which revenues are earned will be different than the amounts and periods shown in the tables below due to various factors. Utilization rates, which generally approach 92% - 98% during contracted periods, can be adversely impacted by downtime due to various operating factors including, but not limited to, weather conditions and unscheduled repairs and maintenance. Contract drilling backlog excludes revenues for mobilization, demobilization, contract preparation and customer reimbursables. No revenue is generally earned during periods of downtime for regulatory surveys. Changes in Diamond Offshore’s contract drilling backlog between periods are a function of the performance of work on term contracts, as well as the extension or modification of existing term contracts and the execution of additional contracts.


	April 25,		February 1,
	2013		2013

(In millions)

Floaters:
Ultra-Deepwater (a)		$ 4,257		$ 4,422
Deepwater (b)		1,143		1,229
Mid-Water (c)		2,436		2,649

Total Floaters		7,836		8,300
Jack-ups		249		272

Total		$ 8,085		$ 8,572

(a)	As of April 25, 2013, for ultra-deepwater floaters includes (i) $1.2 billion attributable to contracted operations offshore Brazil for the years 2013 to 2015, and (ii) $1.8 billion attributable to future work for two drillships under construction for the years 2013 to 2019.

(b)	As of April 25, 2013, for deepwater floaters includes (i) $503 million attributable to contracted operations offshore Brazil for the years 2013 to 2016 and (ii) $179 million for the years 2013 to 2014 attributable to future work for the Ocean Onyx which is under construction.

(c)	As of April 25, 2013, for mid-water floaters includes $787 million attributable to contracted operations offshore Brazil for the years 2013 to 2015.

The following table reflects the amount of Diamond Offshore’s contract drilling backlog by year as of April 25, 2013:

Year Ended December 31

Total

2013 (a)

2014

2015

2016 - 2019

(In millions)

Floaters:

Ultra-Deepwater (b)

4,257

764

1,156

1,099

$ 1,238

Deepwater (c)

1,143

450

456

175

Mid-Water (d)

2,436

890

949

404

193

Total Floaters

7,836

2,104

2,561

1,678

1,493

Jack-ups

249

109

Total

8,085

2,213

2,633

1,726

$ 1,513

(a)	Represents a nine month period beginning April 1, 2013.

(b)

As of April 25, 2013, for ultra-deepwater floaters includes (i) $395 million, $473 million and $324 million for the years 2013 to 2015 attributable to contracted operations offshore Brazil, and (ii) $14 million, $300 million and $361 million for the years 2013, 2014 and 2015, and $1.1 billion in the aggregate for the years 2016 to 2019 attributable to future work for two drillships under construction.

(c)

As of April 25, 2013, for deepwater floaters includes $158 million, $149 million, $134 million and $62 million for the years 2013 to 2016, attributable to contracted operations offshore Brazil and (ii) $45 million and $134 million for the years 2013 and 2014 attributable to future work for the Ocean Onyx which is under construction.

(d)	As of April 25, 2013, for mid-water floaters includes $366 million, $342 million and $79 million for the years 2013 to 2015 attributable to contracted operations offshore Brazil.

The following table reflects the percentage of rig days committed by year as of April 25, 2013. The percentage of rig days committed is calculated as the ratio of total days committed under contracts, as well as scheduled shipyard, survey and mobilization days for all rigs in Diamond Offshore’s fleet, to total available days (number of rigs multiplied by the number of days in a particular year). Total available days have been calculated based on the expected final commissioning dates for rigs under construction.

Year Ended December 31

2013 (a) (b)

2014 (b)

2015

2016 - 2019

Floaters:

Ultra-Deepwater

100%

86%

60%

15%

Deepwater

98%

45%

18%

Mid-Water

75%

50%

18%

Total Floaters

85%

56%

30%

Jack-ups

69%

39%

20%

(a)	Represents a nine month period beginning April 1, 2013.

(b)	As of April 25, 2013, includes approximately 1,060, 830, 70 and 70 currently known, scheduled shipyard, survey and mobilization days for 2013, 2014, 2015 and 2016.

Dayrate and Utilization Statistics


Three Months Ended March 31	2013		2012


Revenue earning days (a)
Floaters:
Ultra-Deepwater		526		620
Deepwater		423		400
Mid-Water		1,042		1,124
Jack-ups (b)		448		522

Utilization (c)
Floaters:
Ultra-Deepwater		73%		85%
Deepwater		94%		88%
Mid-Water		64%		65%
Jack-ups (d)		71%		44%

Average daily revenue (e)
Floaters:
Ultra-Deepwater	$	360,400		$ 364,000
Deepwater		389,100		358,900
Mid-Water		261,600		266,200
Jack-ups		85,200		86,700

(a)	A revenue earning day is defined as a 24-hour period during which a rig earns a dayrate after commencement of operations and excludes mobilization, demobilization and contract preparation days.

(b)	Revenue earning days for the quarter ended March 31, 2012 included approximately 87 days earned by Diamond Offshore’s jack-up rigs during the period prior to being sold in 2012.

(c)	Utilization is calculated as the ratio of total revenue earnings days divided by the total calendar days in the period for all rigs in Diamond Offshore’s fleet (including cold stacked rigs).

(d)	Utilization for Diamond Offshore’s jack-up rigs would have been 68% for the quarter ended March 31, 2012, excluding revenue earning days and total calendar days associated with rigs that were sold in 2012.

(e)	Average daily revenue is defined as contract drilling revenue (excluding revenue for mobilization, demobilization and contract preparation) per revenue earning day.

Results of Operations

The following table summarizes the results of operations for Diamond Offshore for the three months ended March 31, 2013 and 2012 as presented in Note 11 of the Notes to Consolidated Condensed Financial Statements included in Item 1 of this Report:


Three Months Ended March 31	2013		2012

(In millions)

Revenues:
Contract drilling revenues		$ 700		$ 755
Net investment income		1		2
Other		31		39

Total		732		796

Expenses:
Contract drilling expenses		375		397
Other operating expenses		144		132
Interest		8		15

Total		527		544

Income before income tax		205		252
Income tax expense		(36)		(73)
Amounts attributable to noncontrolling interests		(87)		(92)

Net income attributable to Loews Corporation		$ 82		$ 87

Contract drilling revenue decreased $55 million as compared to the first quarter of 2012, while contract drilling expense decreased $22 million during the same period. Contract drilling revenue for the first quarter of 2013 was

negatively impacted by a decrease in revenue earning days earned by Diamond Offshore’s ultra-deepwater, mid-water and jack-up fleets, partially offset by favorable revenue variances for its deepwater floaters. The decrease in contract drilling expense for the first quarter of 2013 reflects lower mobilization costs, partially offset by higher repair and inspection costs and additional labor costs associated with crews for the newbuild drillships.

Revenue generated by ultra-deepwater floaters decreased $53 million during the first quarter of 2013 as compared with 2012, primarily due to decreased utilization of $34 million, decreased amortized mobilization fees of $17 million and decreased average daily revenue of $2 million. Utilization decreased in the first quarter of 2013 primarily due to scheduled surveys and unplanned downtime for repairs. Amortized mobilization fees decreased in the first quarter of 2013 as compared with 2012 primarily due to the recognition of mobilization revenue in the 2012 period associated with the Ocean Monarch’s mobilization to Vietnam and the Ocean Rover’s demobilization from Indonesia to Malaysia.

Revenue generated by deepwater floaters increased $18 million during the first quarter of 2013 as compared with 2012, primarily due to higher average daily revenue of $13 million and increased utilization of $8 million, partially offset by lower amortized mobilization fees of $3 million. Average daily revenue increased in the first quarter of 2013 primarily due to the Ocean Valiant and Ocean Victory both working at significantly higher dayrates than those rigs earned during the first quarter of 2012. Revenue earning days increased during the first quarter of 2013 primarily due to fewer planned non-operating days for surveys and shipyard projects.

Revenue generated by mid-water floaters decreased $13 million during the first quarter of 2013 as compared with 2012, primarily due to decreased utilization of $22 million and lower average daily revenue of $5 million, partially offset by a $13 million increase in mobilization and contract preparation fees. Revenue earning days decreased in the first quarter of 2013 as compared with 2012, primarily due to an increase in planned downtime for shipyard projects and surveys, incremental unplanned downtime between contracts, partially offset by a reduction in mobilization days.

Revenue earned by jack-up rigs decreased $7 million for the first quarter of 2013 as compared with 2012, primarily due to the sale of six jack-up rigs. These rigs earned aggregate revenue of $5 million during the three months ended March 31, 2012.

Net income decreased $5 million for the three months ended March 31, 2013 as compared with the 2012 period reflecting the decline in revenue as discussed above, partially offset by the decrease in contract drilling expense as discussed above and lower income taxes. Net income for the three months ended March 31, 2012 also included a $9 million gain (after tax and noncontrolling interests) on the sale of a jack-up rig.

Diamond Offshore’s effective tax rate decreased for the three months ended March 31, 2013 as compared with 2012. The lower effective tax rate in the current quarter is primarily due to a $28 million reduction in tax expense during the current quarter as a result of the American Taxpayer Relief Act of 2012 which was signed into law on January 2, 2013. The Act extends through 2013 several expired temporary business provisions, commonly referred to as “extenders” which were retroactively extended to the beginning of 2012.

Boardwalk Pipeline

Boardwalk Pipeline derives revenues primarily from the transportation and storage of natural gas and natural gas liquids (“NGLs”) and gathering and processing of natural gas for third parties. Transportation services consist of firm natural gas transportation, where the customer pays a capacity reservation charge to reserve pipeline capacity at certain receipt and delivery points along pipeline systems, plus a commodity and fuel charge on the volume of natural gas actually transported, and interruptible natural gas transportation, where the customer pays to transport gas only when capacity is available and used. Boardwalk Pipeline also offers firm natural gas storage services where the customer reserves and pays for a specific amount of storage capacity, including injection and withdrawal rights, and interruptible storage and parking and lending (“PAL”) services where the customer receives and pays for capacity only when it is available and used. Some PAL agreements are paid for at inception of the service and revenues for these agreements are recognized as service is provided over the term of the agreement. Boardwalk Pipeline’s NGL contracts are generally fee-based and are dependent on actual volumes transported or stored, although in some cases minimum volume requirements apply. Boardwalk Pipeline is not in the business of buying and selling natural gas and NGLs other than for system management purposes, but changes in the level of natural gas and NGL prices may impact the volumes of gas transported and stored on its pipeline systems. Boardwalk Pipeline’s operating costs and expenses typically do not vary significantly based upon the amount of products transported, with the exception of fuel consumed at its compressor stations.

Key drivers that influence the rates and terms of Boardwalk Pipeline’s transportation contracts are the current and anticipated basis spreads - generally meaning the difference in the price of natural gas at receipt and delivery points

on its natural gas pipeline systems - which influence how much customers are willing to pay to transport gas between those points. Basis differentials can be affected by, among other things, the availability and supply of natural gas, competition from other pipelines, including pipelines under development, available transportation and storage capacity, storage inventories, regulatory developments, weather and general market demand in markets served by Boardwalk Pipeline’s pipeline systems. As new sources of natural gas have been identified and developed, including the Marcellus and the Utica Shales which are closer to the traditional high value markets served by interstate pipelines like Boardwalk Pipeline, and pipeline infrastructure has been developed to move the new sources of gas to market areas, changes in pricing dynamics between supply basins, pooling points and market areas have occurred. As a result of the new sources of supply and related pipeline infrastructure, basis spreads on Boardwalk Pipeline’s pipeline systems have narrowed significantly over the past several years, reducing the transportation rates Boardwalk Pipeline can typically negotiate with its customers on contracts due for renewal for its firm transportation services.

As of March 31, 2013, a substantial portion of Boardwalk Pipeline’s transportation capacity was contracted for under firm transportation agreements having a weighted-average remaining life of approximately 6.0 years. Each year a portion of Boardwalk Pipeline’s firm transportation agreements expire and must be renewed or replaced. Due to the factors noted above, in recent years the rates Boardwalk Pipeline has been able to obtain under firm and interruptible transportation agreements has declined and the amount of capacity that Boardwalk Pipeline has been able to contract for under firm transportation agreements has also declined. The amount of Boardwalk Pipeline’s transportation capacity under agreements which expires in 2013 is greater than in recent years. In light of the market conditions discussed above, Boardwalk Pipeline expects that transportation contracts renewed or entered into in 2013 will be at lower rates than current contracts and any remaining available capacity will be marketed and sold on a short term firm or interruptible basis, which will also be at lower rates. Boardwalk Pipeline expects that these circumstances will negatively affect transportation revenues and distributable cash flows in 2013.

The market for storage and PAL services is also impacted by the factors discussed above, as well as by natural gas price differentials between time periods, such as winter to summer (time period price spreads). Based on current forward pricing curves Boardwalk Pipeline believes that time period price spreads for 2013 may not be as favorable as they were in 2012. However, forward pricing curves change frequently as a result of a variety of market factors, including weather, levels of storage gas and available capacity, among others and as such may not be a reliable predictor of actual future events. Accordingly, Boardwalk Pipeline cannot predict its future revenues from interruptible storage and PAL services due to the uncertainty and volatility in market conditions discussed above.

In the first quarter of 2013, Boardwalk Pipeline announced that it is pursuing, with Williams Companies, Inc. (“Williams”), the joint development of an NGL pipeline, to be named the Bluegrass Pipeline, which would transport Marcellus and Utica mixed-NGL production from Pennsylvania, West Virginia and Ohio to growing petrochemical markets on the U.S. Gulf Coast. The project would include the development of pipeline, storage and fractionation assets and potentially a new liquefied petroleum gas export terminal. At this juncture, Boardwalk Pipeline is continuing to work through cost assessments, due diligence and other pre-development activities, as well as negotiating the terms of the joint venture and related agreements with Williams. There are a number of conditions that must be met for this project to be approved, including Boardwalk Pipeline completing negotiations and executing definitive joint venture and related agreements, executing customer contracts sufficient to support the project, receipt of regulatory approvals and approvals by the boards of both Boardwalk Pipeline and Williams.

Results of Operations

The following table summarizes the results of operations for Boardwalk Pipeline for the three months ended March 31, 2013 and 2012 as presented in Note 11 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report:


Three Months Ended March 31	2013		2012

(In millions)

Revenues:
Other revenue, primarily operating	$	329	$	314

Total		329		314

Expenses:
Operating		190		181
Interest		40		41

Total		230		222

Income before income tax		99		92
Income tax expense		(22)		(22)
Amounts attributable to noncontrolling interests		(44)		(35)

Net income attributable to Loews Corporation	$	33	$	35

Total revenues increased $15 million for the three months ended March 31, 2013, compared to the same period in 2012. This increase is primarily due to $19 million of revenues earned from Louisiana Midstream, acquired in October of 2012, an increase in fuel revenues of $7 million primarily due to higher natural gas prices and an increase in PAL revenues of $3 million due to improved market conditions at the time the transactions were entered into. The increase in revenues was partially offset by lower transportation revenues, excluding fuel, of $14 million resulting primarily from lower firm and interruptible revenues due to the market conditions and lower contract renewal rates discussed above.

Operating expenses increased $9 million for the three months ended March 31, 2013, compared to the same period in 2012. This increase is primarily due to $13 million of expenses incurred by Louisiana Midstream and increased fuel costs of $4 million due to higher natural gas prices, partially offset by lower general and administration costs of $5 million as a result of cost management activities.

Net income decreased $2 million for the three months ended March 31, 2013, compared with the 2012 period reflecting higher revenues offset by increased operating expenses as discussed above and amounts attributable to noncontrolling interests. The amount of income attributable to noncontrolling interests increased as a result of equity offerings in 2012 by Boardwalk Pipeline, decreasing the ownership percentage from 62% for the three months ended March 31, 2012 to 55% for the three months ended March 31, 2013.

HighMount

We use the following terms throughout this discussion of HighMount’s results of operations, with “equivalent” volumes computed with oil and natural gas liquid (“NGL”) quantities converted to Mcf, on an energy equivalent ratio of one barrel to six Mcf:


Bbl		- Barrel (of oil or NGLs)
Bcf		- Billion cubic feet (of natural gas)
Bcfe		- Billion cubic feet of natural gas equivalent
Mbbl		- Thousand barrels (of oil or NGLs)
Mcf		- Thousand cubic feet (of natural gas)
Mcfe		- Thousand cubic feet of natural gas equivalent
MMBtu		- Million British thermal units

HighMount’s revenues and profitability depend substantially on natural gas and oil prices and HighMount’s ability to increase its natural gas and oil production. Natural gas and NGL prices remain at low levels due to an increase in the supply of natural gas and NGL resulting from new sources of supply recoverable from shale formations, primarily the result of technological advancements in horizontal drilling and hydraulic fracturing. As a result, HighMount continues to focus its capital investments primarily on potential oil producing properties, which led to a reduction in natural gas and NGL production and an increase in oil production. Revenues from the sale of

oil, including the impact of hedges, amounted to 21% of HighMount’s total revenues for the three months ended March 31, 2013 as compared to 10% of its total revenue for the three months ended March 31, 2012. Low natural gas and NGL prices, as well as higher drilling and completion costs of horizontal wells targeting oil reserves negatively impacted HighMount’s net cash flow. The price HighMount realizes for its production is also affected by HighMount’s hedging activities, as well as locational differences in market prices.

During the first quarter of 2013, HighMount recorded a ceiling test impairment charge, due to reduced average oil and NGL prices used in the ceiling test calculation and negative reserve revisions. Reserve revisions in the first quarter of 2013 were due to the continued deferral of well repair activity in the Sonora field given low natural gas and NGL prices and due to the Oklahoma Mississippian lime evaluation where HighMount is testing different horizontal target zones and hydraulic fracture designs resulting in some variability in well performance. As a result of the ceiling test impairment charge, HighMount performed a goodwill impairment test and no impairment charge was required.

HighMount’s operating expenses consist primarily of production expenses, production and ad valorem taxes, as well as depreciation, depletion and amortization (“DD&A”) expenses. Production expenses represent costs incurred to operate and maintain wells, related equipment and facilities and transportation costs. Production and ad valorem taxes increase or decrease primarily when prices of natural gas and oil increase or decrease, but they are also affected by changes in production and state incentive programs, as well as appreciated property values. HighMount calculates depletion using the units-of-production method, which depletes the capitalized costs and future development costs associated with evaluated properties based on the ratio of production volumes for the current period to total remaining reserve volumes for the evaluated properties. HighMount’s depletion expense is affected by its capital spending program and projected future development costs, as well as reserve changes resulting from drilling programs, well performance and revisions due to changing commodity prices.

Production and Sales Statistics

Presented below are production and sales statistics related to HighMount’s operations for the three months ended March 31, 2013 and 2012:


Three Months Ended March 31	2013		2012


Gas production (Bcf)		8.6		10.3
Gas sales (Bcf)		8.0		9.7
Oil production/sales (Mbbls)		158.3		81.0
NGL production/sales (Mbbls)		503.4		632.8
Equivalent production (Bcfe)		12.6		14.6
Equivalent sales (Bcfe)		12.0		14.0

Average realized prices without hedging results:
Gas (per Mcf)	$	3.17		$ 2.57
NGL (per Bbl)		31.03		45.54
Oil (per Bbl)		87.14		96.33
Equivalent (per Mcfe)		4.58		4.41

Average realized prices with hedging results:
Gas (per Mcf)	$	4.10		$ 4.22
NGL (per Bbl)		37.33		39.79
Oil (per Bbl)		90.60		95.00
Equivalent (per Mcfe)		5.50		5.28

Average cost per Mcfe:
Production expenses	$	1.46		$ 1.29
Production and ad valorem taxes		0.30		0.29
General and administrative expenses		0.86		0.71
Depletion expense		1.39		1.55

Results of Operations

The following table summarizes the results of operations for HighMount for the three months ended March 31, 2013 and 2012 as presented in Note 11 of the Notes to Consolidated Condensed Financial Statements included in Item 1 of this Report:


Three Months Ended March 31	2013		2012

(In millions)

Revenues:
Other revenue, primarily operating	$	68		$ 76

Total		68		76

Expenses:
Other operating expenses
Impairment of natural gas and oil properties		145		44
Operating		57		63
Interest		5		3

Total		207		110

Loss before income tax benefit		(139)		(34)
Income tax benefit		51		12

Net loss attributable to Loews Corporation	$	(88)		$ (22)

HighMount’s operating revenues decreased $8 million for the three months ended March 31, 2013 as compared with 2012 primarily due to reduced sales volumes. Average prices realized per Mcfe were $5.50 for the three months ended March 31, 2013 compared to $5.28 in the 2012 period. HighMount sold 12.0 Bcfe for the three months ended March 31, 2013 compared to 14.0 Bcfe in 2012. The decrease in sales volume was primarily due to the continued reduction in capital spending on natural gas drilling since 2008.

HighMount had hedges in place as of March 31, 2013 that cover approximately 64.6% and 32.2% of total estimated 2013 and 2014 natural gas equivalent production at a weighted average price of $6.48 and $5.89 per Mcfe.

For the three months ended March 31, 2013 and 2012, HighMount recorded a non-cash ceiling test impairment charge of $145 million and $44 million ($92 million and $28 million after tax) related to the carrying value of its natural gas and oil properties. The 2013 write-down was attributable to reduced average NGL and oil prices used in the ceiling test calculation and negative reserve revisions. The ceiling test calculation was based on average 12-month prices of $2.95 per MMBtu for natural gas, $37.16 per Bbl for NGLs and $92.63 per Bbl for oil. Had the effects of HighMount’s cash flow hedges not been considered in calculating the ceiling limitation, the impairments would have been $195 million and $69 million ($124 million and $44 million after tax) for the three months ended March 31, 2013 and 2012.

Operating expenses were $57 million and $63 million for the three months ended March 31, 2013 and 2012. Production expenses and production and ad valorem taxes were $24 million for the three months ended March 31, 2013, compared to $25 million for the 2012 period. DD&A expenses were $22 million for the three months ended March 31, 2013, compared to $27 million in 2012. The decrease in DD&A expenses was due to reduced production volumes and lower depletion rate, primarily due to the impairment of natural gas and oil properties recorded in 2012.

Loews Hotels

The following table summarizes the results of operations for Loews Hotels for the three months ended March 31, 2013 and 2012, as presented in Note 11 of the Notes to Consolidated Condensed Financial Statements included in Item 1 of this Report:


Three Months Ended March 31	2013		2012

(In millions)

Revenues:
Other revenue, primarily operating	$	94		$ 80

Total		94		80

Expenses:
Other operating expenses
Operating		92		74
Depreciation		8		7
Equity income from joint ventures		(9)		(10)
Interest		3		2

Total		94		73

Income before income tax		-		7
Income tax expense				(3)

Net income attributable to Loews Corporation	$	-		$ 4


EBITDA	$	11		$ 16

Earnings before interest, tax, depreciation and amortization (“EBITDA”) is an indicator of operating performance used by Loews Hotels to measure its ability to service debt, fund capital expenditures and expand its business. EBITDA is a non-GAAP financial measure that is not meant to replace net income as defined by GAAP. The following table reconciles EBITDA to Net income attributable to Loews Corporation for the three months ended March 31, 2013 and 2012.


Three Months Ended March 31	2013		2012

(In millions)

EBITDA	$	11		$ 16
Depreciation		(8)		(7)
Interest		(3)		(2)
Income tax expense				(3)

Net income attributable to Loews Corporation	$	-		$ 4

Revenues and operating expenses for the three months ended March 31, 2013 include $13 million of cost reimbursements from joint venture and managed properties, relating mainly to payroll incurred on behalf of the owners of hotel properties managed by us.

Revenues excluding reimbursables for the three months ended March 31, 2013 are essentially unchanged from the 2012 period. Revenues increased due to the addition of the Loews Madison Hotel and the Loews Boston Back Bay Hotel to the portfolio of owned properties during the first quarter of 2013. These increases were offset by a decrease in revenues due to the 2013 closure of the Loews Regency Hotel for renovation.

Revenue per available room (“RevPAR”) is an industry measure of the combined effect of occupancy rates and average room rates on room revenues. Other hotel operating revenues primarily include guest charges for food and beverages. RevPAR, occupancy rates and average room rates as discussed below are for owned hotels only. RevPAR decreased $2.16 to $153.15 for the three months ended March 31, 2013 as compared to the 2012 period, reflecting a decrease in occupancy rates, partially offset by an increase in average room rates. Occupancy rates decreased to 65.7% in the three months ended March 31, 2013, from 67.8% in the 2012 period. Average room rates increased by $4.10, or 1.8%, in the three months ended March 31, 2013, as compared to the 2012 period.

Operating expenses excluding reimbursables, as discussed above, increased $5 million for the three months ended March 31, 2013 as compared to the 2012 period, primarily due to expenses from the Loews Madison Hotel and the Loews Boston Back Bay Hotel, including acquisition and transition related costs, partially offset by a decrease in expenses due to the closure of the Loews Regency Hotel.

Net results decreased $4 million for the three months ended March 31, 2013 as compared to the 2012 period, primarily due to the increase in operating expenses discussed above.

Corporate and Other

Corporate and Other operations consist primarily of investment income at the Parent Company, corporate interest expenses and other corporate administrative costs. Investment income includes earnings on cash and short term investments held at the Parent Company level to meet current and future liquidity needs, as well as results of limited partnership investments and the trading portfolio managed to take advantage of potential market opportunities.

The following table summarizes the results of operations for Corporate and Other for the three months ended March 31, 2013 and 2012, as presented in Note 11 of the Notes to Consolidated Condensed Financial Statements included in Item 1 of this Report:


Three Months Ended March 31	2013		2012

(In millions)

Revenues:
Net investment income	$	7	$	76
Other		1		2

Total		8		78

Expenses:
Operating		15		12
Interest		10		10

Total		25		22

Income (loss) before income tax		(17)		56
Income tax (expense) benefit		6		(21)

Net income (loss) attributable to Loews Corporation	$	(11)	$	35

Revenues decreased by $70 million for the three months ended March 31, 2013 as compared to the 2012 period. Investment income decreased primarily due to lower performance of equity based investments, partially offset by improved performance of fixed income investments in the trading portfolio.

Net results decreased by $46 million for the three months ended March 31, 2013 as compared to the 2012 period. This change was due primarily to the change in revenues discussed above and reduced corporate overhead expenses allocated to our subsidiaries.

LIQUIDITY AND CAPITAL RESOURCES

CNA Financial

CNA’s primary operating cash flow sources are premiums and investment income from its insurance subsidiaries. CNA’s primary operating cash flow uses are payments for claims, policy benefits and operating expenses, including interest expense on corporate debt. Additionally, cash may be paid or received for income taxes.

For the three months ended March 31, 2013, net cash provided by operating activities was $191 million as compared with $312 million for the same period in 2012. Cash provided by operating activities in 2012 was favorably affected by a $75 million tax refund. Additionally, because cash receipts and cash payments resulting from purchases and sales of trading securities are reported as cash flows related to operating activities, during 2013 operating cash flows were decreased by $48 million as compared to a decrease of $6 million during 2012 related to trading activity.

Cash flows from investing activities include the purchase and disposition of available-for-sale financial instruments. Additionally, cash flows from investing activities may include the purchase and sale of businesses, land, buildings, equipment and other assets not generally held for resale.

For the three months ended March 31, 2013, net cash used by investing activities was $161 million as compared with $287 million for the same period in 2012. The cash flow from investing activities is affected by various factors such as the anticipated payment of claims, financing activity, asset/liability management and individual security buy and sell decisions made in the normal course of portfolio management.

Cash flows from financing activities may include proceeds from the issuance of debt and equity securities, outflows for stockholder dividends or repayment of debt and outlays to reacquire equity instruments.

For the three months ended March 31, 2013, net cash used by financing activities was $56 million as compared with $42 million for the same period in 2012. Net cash used by financing activities in both periods was primarily related to the payment of dividends to common stockholders.

CNA believes that its present cash flows from operations, investing activities and financing activities are sufficient to fund its current and expected working capital and debt obligation needs and CNA does not expect this to change in the near term. There are currently no amounts outstanding under CNA’s $250 million senior unsecured revolving credit facility.

Diamond Offshore

Cash and investments totaled $1.5 billion at March 31, 2013 and December 31, 2012. During the first three months of 2013, Diamond Offshore paid cash dividends totaling $122 million, consisting of aggregate regular cash dividends of $17 million and aggregate special cash dividends of $105 million. On April 24, 2013, Diamond Offshore declared a regular quarterly dividend of $0.125 per share and a special dividend of $0.75 per share.

Cash provided by operating activities for the three months ended March 31, 2013 decreased $74 million compared to the 2012 period, primarily due to lower earnings resulting from an aggregate reduction in average utilization of ultra-deepwater, mid-water and jack-up fleets, and higher cash income taxes paid.

Diamond Offshore is currently obligated under various agreements in connection with the construction of two semisubmersible rigs and four new ultra-deepwater drillships. Diamond Offshore estimates that the aggregate cost for the construction of the two semisubmersible rigs and the four new drillships, including commissioning, spares and project management, to be approximately $690 million and $2.6 billion. During the first three months of 2013, Diamond Offshore spent $160 million towards the construction of these four new drillships and the two semisubmersible rigs. In addition, Diamond Offshore spent approximately $24 million during the period related to its ongoing capital maintenance programs.

For 2013, Diamond Offshore has budgeted approximately $1.8 billion for capital expenditures of which approximately $1.3 billion will be spent towards the construction of its new drillships and semisubmersible rigs and approximately $120 million will be spent on the North Sea enhancement project for the Ocean Patriot. The remainder will be spent on Diamond Offshore’s ongoing rig equipment enhancement/replacement program. Diamond Offshore expects to finance its 2013 capital expenditures through the use of existing cash balances and cash flows from operations.

In addition, Diamond Offshore may, from time to time, issue debt or equity securities, or a combination thereof, to finance capital expenditures, the acquisition of assets and businesses or for general corporate purposes. Diamond Offshore’s ability to access the capital markets by issuing debt or equity securities will be dependent on its results of operations, current financial condition, current market conditions and other factors beyond its control.

A substantial portion of Diamond Offshore’s cash flows has been and is expected to continue to be invested in the enhancement of its drilling fleet. Diamond Offshore determines the amount of cash required to meet its capital commitments by evaluating its rig construction obligations, the need to upgrade rigs to meet specific customer requirements and its ongoing rig equipment enhancement and replacement programs. As a result of Diamond Offshore’s intention to indefinitely reinvest the earnings of its wholly owned subsidiary, Diamond Offshore International Limited (“DOIL”), to finance its foreign activities, Diamond Offshore does not expect such earnings to be available for distribution to its stockholders or to finance its domestic activities. However, Diamond Offshore believes that the operating cash flows generated by and cash reserves of DOIL, and the operating cash flows available to and cash reserves of Diamond Offshore Drilling, Inc. will be sufficient to meet both its working capital requirements and its capital commitments over the next twelve months. Diamond Offshore will, however, continue to make periodic assessments based on industry conditions and will adjust capital spending programs if required.

Boardwalk Pipeline

At March 31, 2013 and December 31, 2012, cash and investments amounted to $4 million. Funds from operations for the three months ended March 31, 2013 amounted to $129 million, compared to $110 million in the 2012 period. For the three months ended March 31, 2013 and 2012, Boardwalk Pipeline’s capital expenditures were $71 million and $26 million.

Boardwalk Pipeline’s ability to access the capital markets for debt and equity financing under reasonable terms depends on its financial condition, credit ratings and market conditions. Boardwalk Pipeline anticipates that its existing capital resources, including the revolving credit facility and future cash flows generated from operations will be adequate to fund its operations, including its maintenance capital expenditures. Boardwalk Pipeline may seek to access the capital markets to fund some or all of its growth capital expenditures, acquisitions or for general corporate purposes, including to refinance all or a portion of its indebtedness, a significant amount of which matures in the next five years.

As of March 31, 2013, Boardwalk Pipeline had $370 million of loans outstanding under its revolving credit facility with a weighted-average interest rate of 1.3% and had no letters of credit issued. As of March 31, 2013, Boardwalk Pipeline was in compliance with all covenant requirements under the credit facility and had available borrowing capacity of $630 million.

Boardwalk Pipeline expects total capital expenditures to be approximately $350 million in 2013, including approximately $100 million for maintenance capital. The 2013 growth capital expenditures primarily relate to the Eagle Ford and Choctaw Brine Supply Expansion Projects discussed in the Annual Report on Form 10-K for the year ended December 31, 2012.

HighMount

At March 31, 2013 and December 31, 2012, cash and investments amounted to $17 million and $10 million. Net cash flows provided by operating activities were $16 million and $31 million for the three months ended March 31, 2013 and 2012. Key drivers of net operating cash flows are commodity prices, production volumes and operating costs.

Cash used in investing activities for the three months ended March 31, 2013, was $68 million, compared to $67 million for the 2012 period. The primary driver of cash used in investing activities was capital spent developing HighMount’s natural gas and oil reserves. HighMount spent $42 million and $46 million on capital expenditures for its drilling program in the three months ended March 31, 2013 and 2012. HighMount expects to spend approximately $270 million on capital expenditures in 2013 developing its natural gas and oil reserves, with a focus on oil drilling opportunities. Funds for capital expenditures and working capital requirements are expected to be provided from operating activities, the available capacity under the revolving credit facility and capital contributions from us.

At March 31, 2013, HighMount had $600 million of term loans outstanding and $120 million was outstanding under HighMount’s $250 million revolving credit facility, of which approximately $20 million is available to borrow under existing covenants. HighMount’s credit agreement governing its term loans and revolving credit facility contains financial covenants typical for these types of agreements, including a maximum debt to capitalization ratio and a minimum ratio of net present value of its projected future cash flows from its proved natural gas and oil reserves to total debt. The calculation of net present value, performed at least annually, is based on commodity prices determined by the lenders. A change in commodity prices will impact HighMount’s borrowing capacity under its credit agreement. Due to the current limited capacity of HighMount’s credit agreement, we made a $49 million capital contribution to HighMount in the first quarter of 2013, which was used for capital expenditures. The credit agreement also contains customary restrictions or limitations on HighMount’s ability to engage in certain transactions, including transactions with affiliates. At March 31, 2013, HighMount was in compliance with all of its covenants under the credit agreement.

Loews Hotels

Funds from operations continue to exceed operating requirements. Cash and investments totaled $73 million at March 31, 2013 as compared to $43 million at December 31, 2012.

Loews Hotels added two properties to its portfolio in 2013, the Loews Madison Hotel and the Loews Boston Back Bay Hotel. These acquisitions were funded with existing cash balances, debt and capital contributions by us.

Committed and planned capital expenditures for renovations, capital improvements and development of new properties are estimated to be approximately $170 million for the remainder of 2013. Funds for future capital expenditures, including acquisitions of new properties, renovations and working capital requirements are expected to be provided from operations, newly incurred debt, existing cash balances and advances or capital contributions from us.

Corporate and Other

Parent Company cash and investments, net of receivables and payables, at March 31, 2013 totaled $3.7 billion as compared to $3.9 billion at December 31, 2012. During the three months ended March 31, 2013, we made capital contributions of approximately $209 million to our subsidiaries, paid $92 million to fund treasury stock purchases and paid $24 million of cash dividends to our shareholders. These cash outflows were partially offset by the receipt of $182 million in interest and dividends from our subsidiaries.

As of March 31, 2013, there were 389,898,441 shares of Loews common stock outstanding. Depending on market and other conditions, we may purchase shares of our and our subsidiaries’ outstanding common stock in the open market or otherwise. During the three months ended March 31, 2013, we purchased 2.1 million shares of Loews common stock at an aggregate cost of $92 million.

We have an effective Registration Statement on Form S-3 registering the future sale of an unlimited amount of our debt and equity securities. From time to time we consider issuance of Parent Company indebtedness under this registration statement.

We continue to pursue conservative financial strategies while seeking opportunities for responsible growth. These include the expansion of existing businesses, full or partial acquisitions and dispositions, and opportunities for efficiencies and economies of scale.

INVESTMENTS

Investment activities of non-insurance subsidiaries primarily include investments in fixed income securities, including short term investments. The Parent Company portfolio also includes equity securities, including short sales and derivative instruments, and investments in limited partnerships. These types of investments generally present greater volatility, less liquidity and greater risk than fixed income investments and are included within Results of Operations – Corporate and Other.

We enter into short sales and invest in certain derivative instruments that are used for asset and liability management activities, income enhancements to our portfolio management strategy and to benefit from anticipated future movements in the underlying markets. If such movements do not occur as anticipated, then significant losses may occur. Monitoring procedures include senior management review of daily detailed reports of existing positions and valuation fluctuations to ensure that open positions are consistent with our portfolio strategy.

Credit exposure associated with non-performance by the counterparties to derivative instruments is generally limited to the uncollateralized change in fair value of the derivative instruments recognized in the Consolidated Condensed Balance Sheets. We mitigate the risk of non-performance by monitoring the creditworthiness of counterparties and diversifying derivatives to multiple counterparties. We occasionally require collateral from our derivative investment counterparties depending on the amount of the exposure and the credit rating of the counterparty.

Insurance

CNA maintains a large portfolio of fixed maturity and equity securities, including large amounts of corporate and government issued debt securities, residential and commercial mortgage-backed securities, and other asset-backed securities and investments in limited partnerships which pursue a variety of long and short investment strategies across a broad array of asset classes. CNA’s investment portfolio supports its obligation to pay future insurance claims and provides investment returns which are an important part of CNA’s overall profitability.

Net Investment Income

The significant components of CNA’s net investment income are presented in the following table:


Three Months Ended March 31	2013			2012

(In millions)

Fixed maturity securities	$	499		$	516
Short term investments		1			1
Limited partnership investments		131			130
Equity securities		3			4
Trading portfolio		5			7
Other		6			4

Gross investment income		645			662
Investment expense		(12	)		(14	)

Net investment income	$	633		$	648

Net investment income for the three months ended March 31, 2013 decreased $15 million as compared with the same period in 2012. The decrease was primarily driven by lower fixed maturity securities income due to the effect of purchasing investments at lower interest rates, partially offset by a higher invested asset base.

The fixed maturity investment portfolio provided a pretax effective income yield of 5.2% and 5.5% for the three months ended March 31, 2013 and 2012. Tax-exempt municipal bonds generated $69 million of net investment income for the three months ended March 31, 2013 compared with $66 million of net investment income for the 2012 period.

Net Realized Investment Gains (Losses)

The components of CNA’s net realized investment results are presented in the following table:


Three Months Ended March 31	2013			2012

(In millions)

Realized investment gains (losses):
Fixed maturity securities:
Corporate and other bonds	$	31		$	23
States, municipalities and political subdivisions		(2	)		15
Asset-backed		3			(12	)
U.S. Treasury and obligations of government-sponsored enterprises					1
Foreign government					3

Total fixed maturity securities		32			30
Equity securities		(13	)		1
Derivative securities		2			(1	)
Short term investments and other		3			2

Total realized investment gains		24			32
Income tax expense		(8	)		(11	)
Amounts attributable to noncontrolling interests		(2	)		(2	)

Net realized investment gains attributable to Loews Corporation	$	14		$	19

Net realized investment results decreased $5 million for the three months ended March 31, 2013 as compared with the 2012 period. The decrease was primarily driven by lower realized gains on sales of securities partially offset by lower OTTI losses recognized in earnings. Further information on CNA’s realized gains and losses, including CNA’s OTTI losses and impairment decision process, is set forth in Note 2 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Portfolio Quality

CNA’s fixed maturity portfolio consists primarily of high quality bonds, 91.4% and 91.6% of which were rated as investment grade (rated BBB- or higher) at March 31, 2013 and December 31, 2012. The classification between investment grade and non-investment grade is based on a ratings methodology that takes into account ratings from Standard & Poor’s (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”) in that order of preference. If a security is not rated by these rating agencies, CNA formulates an internal rating. At March 31, 2013 and December 31, 2012, approximately 98% of the fixed maturity portfolio was rated by S&P or Moody’s, or was issued or guaranteed by the U.S. Government, Government agencies or Government-sponsored enterprises.

The following table summarizes the ratings of CNA’s fixed maturity portfolio at fair value:


	March 31, 2013			December 31, 2012

(In millions of dollars)

U.S. Government, Government agencies and Government-sponsored enterprises	$	4,230	9.9%	$	4,540	10.6%
AAA		3,128	7.3		3,224	7.6
AA and A		19,875	46.4		19,305	45.3
BBB		11,911	27.8		11,997	28.1
Non-investment grade		3,655	8.6		3,567	8.4

Total	$	42,799	100.0%	$	42,633	100.0%

Non-investment grade fixed maturity securities, as presented in the table below, include high-yield securities rated below BBB- by bond rating agencies and other unrated securities that, according to CNA’s analysis, are below investment grade. Non-investment grade securities generally involve a greater degree of risk than investment grade securities. The amortized cost of CNA’s non-investment grade fixed maturity bond portfolio was $3.4 billion at March 31, 2013 and December 31, 2012. The following table summarizes the ratings of this portfolio at fair value.


	March 31, 2013			December 31, 2012

(In millions of dollars)

BB	$	1,593	43.6%	$	1,529	42.9%
B		1,087	29.7		1,075	30.1
CCC-C		757	20.7		724	20.3
D		218	6.0		239	6.7

Total	$	3,655	100.0%	$	3,567	100.0%

The following table summarizes available-for-sale fixed maturity securities in a gross unrealized loss position by ratings distribution:

March 31, 2013

Estimated
Fair value

Gross
Unrealized
Losses

(In millions of dollars)

U.S. Government, Government agencies and Government-sponsored enterprises

864

25.4%

31.6%

AAA

185

5.4

5.7

600

17.6

31.6

412

12.1

3.8

BBB

774

22.8

15.8

Non-investment grade

567

16.7

11.5

Total

3,402

100.0%

158

100.0%

The following table provides the maturity profile for these available-for-sale fixed maturity securities. Securities not due to mature on a single date are allocated based on weighted average life:

March 31, 2013

Estimated
Fair value

Gross
Unrealized
Losses

(In millions of dollars)

Due in one year or less

206

6.1%

2.5%

Due after one year through five years

914

26.9

15.8

Due after five years through ten years

1,182

34.7

38.6

Due after ten years

1,100

32.3

43.1

Total

3,402

100.0%

158

100.0%

Duration

A primary objective in the management of the investment portfolio is to optimize return relative to corresponding liabilities and respective liquidity needs. CNA’s views on the current interest rate environment, tax regulations, asset class valuations, specific security issuer and broader industry segment conditions, and the domestic and global economic conditions, are some of the factors that enter into an investment decision. CNA also continually monitors exposure to issuers of securities held and broader industry sector exposures and may from time to time adjust such exposures based on its views of a specific issuer or industry sector.

A further consideration in the management of the investment portfolio is the characteristics of the corresponding liabilities and the ability to align the duration of the portfolio to those liabilities and to meet future liquidity needs, minimize interest rate risk and maintain a level of income sufficient to support the underlying insurance liabilities. For portfolios where future liability cash flows are determinable and typically long term in nature, CNA segregates

investments for asset/liability management purposes. The segregated investments support the liabilities in Life & Group Non-Core including annuities, structured settlements and long term care products.

The effective durations of fixed maturity securities, short term investments and interest rate derivatives are presented in the table below. Short term investments are net of accounts payable and receivable amounts for securities purchased and sold, but not yet settled.


	March 31, 2013				December 31, 2012

	Fair Value		Effective Duration (Years)		Fair Value		Effective Duration (Years)

(In millions of dollars)

Investments supporting Life & Group
Non-Core	$	15,723		11.1	$	15,590		11.3
Other interest sensitive investments		28,651		4.1		28,855		3.9

Total	$	44,374		6.6	$	44,445		6.5

The investment portfolio is periodically analyzed for changes in duration and related price change risk. Additionally, CNA periodically reviews the sensitivity of the portfolio to the level of foreign exchange rates and other factors that contribute to market price changes. A summary of these risks and specific analysis on changes is included in the Quantitative and Qualitative Disclosures about Market Risk in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2012.

Short Term Investments

The carrying value of the components of CNA’s short term investment portfolio is presented in the following table:


	March 31, 2013		December 31, 2012

(In millions)

Short term investments:
Commercial paper	$	345	$	751
U.S. Treasury securities		771		617
Money market funds		249		301
Other		190		163

Total short term investments	$	1,555	$	1,832

FORWARD-LOOKING STATEMENTS

Investors are cautioned that certain statements contained in this Report as well as some statements in periodic press releases and some oral statements made by our officials and our subsidiaries during presentations about us, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, events, performance or achievements, and may contain the words “expect,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “will be,” “will continue,” “will likely result,” and similar expressions. In addition, any statement concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible actions taken by us or our subsidiaries, which may be provided by management are also forward-looking statements as defined by the Act.

Forward-looking statements are based on current expectations and projections about future events and are inherently subject to a variety of risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from those anticipated or projected. These risks and uncertainties include, among others:

Risks and uncertainties primarily affecting us and our insurance subsidiaries

—

the risks and uncertainties associated with CNA’s loss reserves, as outlined under “Results of Operations by Business Segment – CNA Financial – Reserves – Estimates and Uncertainties” in our Annual Report on

Form 10-K for the year ended December 31, 2012, including the sufficiency of the reserves and the possibility for future increases, which would be reflected in the results of operations in the period that the need for such adjustment is determined;

—

the risk that the other parties to the transaction in which, subject to certain limitations, CNA ceded its legacy A&EP liabilities will not fully perform their obligations to CNA, the uncertainty in estimating loss reserves for A&EP liabilities and the possible continued exposure of CNA to liabilities for A&EP claims that are not covered under the terms of the transaction;

—

the performance of reinsurance companies under reinsurance contracts with CNA;

—

the impact of competitive products, policies and pricing and the competitive environment in which CNA operates, including changes in CNA’s book of business;

—

product and policy availability and demand and market responses, including the level of ability to obtain rate increases and decline or non-renew underpriced accounts, to achieve premium targets and profitability and to realize growth and retention estimates;

—

general economic and business conditions, including recessionary conditions that may decrease the size and number of CNA’s insurance customers and create additional losses to CNA’s lines of business, especially those that provide management and professional liability insurance, as well as surety bonds, to businesses engaged in real estate, financial services and professional services, and inflationary pressures on medical care costs, construction costs and other economic sectors that increase the severity of claims;

—

conditions in the capital and credit markets, including continuing uncertainty and instability in these markets, as well as the overall economy, and their impact on the returns, types, liquidity and valuation of CNA’s investments;

—

conditions in the capital and credit markets that may limit CNA’s ability to raise significant amounts of capital on favorable terms, as well as restrictions on the ability or willingness of the Company to provide additional capital support to CNA;

—

the possibility of changes in CNA’s ratings by ratings agencies, including the inability to access certain markets or distribution channels and the required collateralization of future payment obligations as a result of such changes, and changes in rating agency policies and practices;

—

regulatory limitations, impositions and restrictions upon CNA, including the effects of assessments and other surcharges for guaranty funds and second-injury funds, other mandatory pooling arrangements and future assessments levied on insurance companies as well as the new federal financial regulatory reform of the insurance industry established by the Dodd-Frank Wall Street Reform and Consumer Protection Act;

—

increased operating costs and underwriting losses arising from the Patient Protection and Affordable Care Act and the related amendments in the Health Care and Education Reconciliation Act, as well as health care reform proposals at the state level;

—

regulatory limitations and restrictions, including limitations upon CNA’s ability to receive dividends from its insurance subsidiaries imposed by regulatory authorities, including regulatory capital adequacy standards;

—

weather and other natural physical events, including the severity and frequency of storms, hail, snowfall and other winter conditions, natural disasters such as hurricanes and earthquakes, as well as climate change, including effects on weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, rain and snow;

—

regulatory requirements imposed by coastal state regulators in the wake of hurricanes or other natural disasters, including limitations on the ability to exit markets or to non-renew, cancel or change terms and conditions in policies, as well as mandatory assessments to fund any shortfalls arising from the inability of quasi-governmental insurers to pay claims;

—

man-made disasters, including the possible occurrence of terrorist attacks and the effect of the absence or insufficiency of applicable terrorism legislation on coverages;

—

the unpredictability of the nature, targets, severity or frequency of potential terrorist events, as well as the uncertainty as to CNA’s ability to contain its terrorism exposure effectively; and

—

the occurrence of epidemics.

Risks and uncertainties primarily affecting us and our energy subsidiaries

—

the impact of changes in worldwide demand for oil and natural gas and oil and gas price fluctuations on E&P activity, including possible write-downs of the carrying value of natural gas and NGL properties and impairments of goodwill and reduced demand for offshore drilling services;

—

the effects of the Macondo well blowout;

—

timing and cost of completion of rig upgrades, construction projects and other capital projects, including delivery dates and drilling contracts;

—

changes in foreign and domestic oil and gas exploration, development and production activity;

—

risks of international operations, compliance with foreign laws and taxation policies and expropriation or nationalization of equipment and assets;

—

government policies regarding exploration and development of oil and gas reserves;

—

market conditions in the offshore oil and gas drilling industry, including utilization levels and dayrates;

—

timing and duration of required regulatory inspections for offshore oil and gas drilling rigs;

—

the risk of physical damage to rigs and equipment caused by named windstorms in the U.S. Gulf of Mexico;

—

the availability, cost limits and adequacy of insurance and indemnification;

—

the impact of new pipelines or new gas supply sources on competition and basis spreads on Boardwalk Pipeline’s pipeline systems, which may impact its ability to maintain or replace expiring gas transportation and storage contracts and to sell short term capacity on its pipelines;

—

the costs of maintaining and ensuring the integrity and reliability of Boardwalk Pipeline’s pipeline systems;

—

the impact of current and future environmental laws and regulations and exposure to environmental liabilities including matters related to global climate change;

—

regulatory issues affecting natural gas transmission, including ratemaking and other proceedings particularly affecting Boardwalk Pipeline’s gas transmission subsidiaries;

—

the timing, cost, scope and financial performance of Boardwalk Pipeline’s recent, current and future acquisitions and growth projects, including the expansion into new product lines and geographical areas; and

—

the development of additional natural gas reserves and changes in reserve estimates.

Risks and uncertainties affecting us and our subsidiaries generally

—

general economic and business conditions;

—

risks of war, military operations, other armed hostilities, terrorist acts or embargoes;

—

potential changes in accounting policies by the Financial Accounting Standards Board, the Securities and Exchange Commission or regulatory agencies for any of our subsidiaries’ industries which may cause us or our subsidiaries to revise their financial accounting and/or disclosures in the future, and which may change the way analysts measure our and our subsidiaries’ business or financial performance;

—

the impact of regulatory initiatives and compliance with governmental regulations, judicial rulings and jury verdicts;

—

the results of financing efforts; by us and our subsidiaries, including any additional investments by us in our subsidiaries;

—

the ability of customers and suppliers to meet their obligations to us and our subsidiaries;

—

the consummation of contemplated transactions and agreements;

—

the successful integration, transition and management of acquired businesses;

—

the outcome of pending or future litigation, including any tobacco-related suits to which we are or may become a party;

—

possible casualty losses;

—

the availability of indemnification by Lorillard and its subsidiaries for any tobacco-related liabilities that we may incur as a result of tobacco-related lawsuits or otherwise, as provided in the Separation Agreement; and

—

potential future asset impairments.

Developments in any of these or other areas of risk and uncertainty, which are more fully described elsewhere in this Report and our other filings with the SEC, could cause our results to differ materially from results that have been or may be anticipated or projected. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of this Report and we expressly disclaim any obligation or undertaking to update these statements to reflect any change in our expectations or beliefs or any change in events, conditions or circumstances on which any forward-looking statement is based.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There were no material changes in our market risk components for the three months ended March 31, 2013. See the Quantitative and Qualitative Disclosures about Market Risk included in Item 7A of our Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2012 for further information. Additional information related to portfolio duration and market conditions is discussed in the Investments section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part I, Item 2.

Item 4. Controls and Procedures.

The Company maintains a system of disclosure controls and procedures which are designed to ensure that information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including this report, is recorded, processed, summarized and reported on a timely basis. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to the Company’s management on a timely basis to allow decisions regarding required disclosure.

The Company’s principal executive officer (“CEO”) and principal financial officer (“CFO”) undertook an evaluation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. The CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2013.

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the foregoing evaluation that occurred during the quarter ended March 31, 2013 that have materially affected or that are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Our Annual Report on Form 10-K for the year ended December 31, 2012 includes a detailed discussion of certain material risk factors facing our company. No updates or additions have been made to such risk factors as of March 31, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Items 2 (a) and (b) are inapplicable.


Period	(a) Total number of shares purchased		(b) Average price paid per share	(c) Total number of shares purchased as part of publicly announced plans or programs	(d) Maximum number of shares (or approximate dollar value) of shares that may yet be purchased under the plans or programs (in millions)


January 1, 2013 -
January 31, 2013		N/A	N/A	N/A	N/A

February 1, 2013 -
February 28, 2013		580,500	$43.25	N/A	N/A

March 1, 2013 -
March 31, 2013		1,514,400	$43.87	N/A	N/A

Item 6. Exhibits.


Description of Exhibit		Exhibit Number


Certification by the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) and Rule 15d-14(a)		31.1*

Certification by the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) and Rule 15d-14(a)		31.2*

Certification by the Chief Executive Officer of the Company pursuant to 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of 2002)		32.1*

Certification by the Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of 2002)		32.2*

XBRL Instance Document		101.INS *

XBRL Taxonomy Extension Schema		101.SCH *

XBRL Taxonomy Extension Calculation Linkbase		101.CAL *

XBRL Taxonomy Extension Definition Linkbase		101.DEF *

XBRL Taxonomy Label Linkbase		101.LAB *

XBRL Taxonomy Extension Presentation Linkbase		101.PRE *

*Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.


	LOEWS CORPORATION
	(Registrant)

Dated: April 30, 2013	By:	/s/ Peter W. Keegan
		PETER W. KEEGAN
		Senior Vice President and Chief Financial Officer
		(Duly authorized officer and principal financial officer)