LOEWS CORP

The following table summarizes the results of operations for CNA for the three months ended March 31, 2024 and 2023 as presented in Note 12 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report. For further discussion of Net investment income and Investment gains (losses), see the Investments section of this MD&A.

Net income attributable to Loews Corporation increased $42 million for the three months ended March 31, 2024 as compared with the comparable 2023 period due to higher net investment income and favorable net prior year loss reserve development, partially offset by higher catastrophe losses.

CNA’s Property & Casualty and Other Insurance Operations

CNA’s commercial property and casualty insurance operations (“Property & Casualty Operations”) include its Specialty, Commercial and International lines of business. CNA’s Other Insurance Operations outside of Property & Casualty Operations include its long-term care business that is in run-off, certain corporate expenses, including interest on CNA’s corporate debt, and the results of certain property and casualty businesses in run-off, including CNA Re, asbestos and environmental pollution (“A&EP”), a legacy portfolio of excess workers’ compensation (“EWC”) policies and certain legacy mass tort reserves. We believe the presentation of CNA as one reportable segment is appropriate in accordance with applicable accounting standards on segment reporting. However, for purposes of this discussion and analysis of the results of operations, we provide greater detail with respect to CNA’s Property & Casualty Operations and Other Insurance Operations to enhance the reader’s understanding and to provide further transparency into key drivers of CNA’s financial results.

In assessing its insurance operations, CNA utilizes the core income (loss) financial measure. Core income (loss) is calculated by excluding investment gains or losses from net income (loss). In addition, core income (loss) excludes the effects of noncontrolling interests. The calculation of core income (loss) excludes investment gains or losses because investment gains or losses are generally driven by economic factors that are not necessarily reflective of CNA’s primary insurance operations. Core income (loss) is deemed to be a non-GAAP financial measure and management believes some investors may find this measure useful to evaluate CNA’s insurance operations. Please see the non-GAAP reconciliation of net income (loss) to core income (loss) that follows in this MD&A.

Property & Casualty Operations

In evaluating the results of Property & Casualty Operations, CNA utilizes the loss ratio, the underlying loss ratio, the expense ratio, the dividend ratio, the combined ratio and the underlying 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 underlying loss ratio excludes the impact of catastrophe losses and development-related items from the loss ratio. Development-related items represent net prior year loss reserve and premium development, and includes the effects of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts. 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 underlying combined ratio is the sum of the underlying loss ratio, the expense ratio and the dividend ratio. In addition, renewal premium change, rate, retention and new business are also utilized in evaluating operating trends. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. Rate represents the average change in price on policies that renew excluding exposure change. For certain products within Small Business, where quantifiable, rate includes the influence of new business as well. Exposure represents the measure of risk used in the pricing of the insurance product. The change in exposure represents the change in premium dollars on policies that renew as a result of the change in risk of the policy. Retention represents the percentage of premium dollars renewed, excluding rate and exposure changes, in comparison to the expiring premium dollars from policies available to renew. New business represents premiums from policies written with new customers and additional policies written with existing customers. Gross written premiums, excluding third-party captives, excludes business which is ceded to third-party captives, including business related to large warranty programs. CNA uses underwriting gain (loss), calculated using GAAP financial results, to monitor insurance operations. Underwriting gain (loss) is pretax and is calculated as net earned premiums less total insurance expenses, which includes insurance claims and policyholders’ benefits, amortization of deferred acquisition costs and other insurance related expenses. Underlying underwriting gain (loss) represents underwriting results excluding catastrophe losses and development-related items.

The following tables summarize the results of CNA’s Property & Casualty Operations for the three months ended March 31, 2024 and 2023.

Gross written premiums, excluding third-party captives, for Specialty decreased $6 million for the three months ended March 31, 2024 as compared with the comparable 2023 period driven by lower new business, partially offset by favorable rate. Net written premiums for Specialty increased $4 million for the three months ended March 31, 2024 as compared with the comparable 2023 period. The increase in net earned premiums for the three months ended March 31, 2024 was consistent with the trend in net written premiums for Specialty.

Gross written premiums for Commercial increased $244 million for the three months ended March 31, 2024 as compared with the comparable 2023 period driven by favorable renewal premium change and higher new business. Net written premiums for Commercial increased $150 million for the three months ended March 31, 2024 as compared with the comparable 2023 period. The increase in net earned premiums for the three months ended March 31, 2024 was consistent with the trend in net written premiums for Commercial.

Gross written premiums for International decreased $24 million for the three months ended March 31, 2024 as compared with the comparable 2023 period. Excluding the effect of foreign currency exchange rates, gross written premiums decreased $31 million driven by lower new business. Net written premiums for International decreased $11 million for the three months ended March 31, 2024 as compared with the comparable 2023 period. Excluding the effect of foreign currency exchange rates, net written premiums decreased $16 million for the three months ended March 31, 2024 as compared with the comparable 2023 period. The increase in net earned premiums for the three months ended March 31, 2024 was consistent with the trend in net written premiums in recent quarters for International.

Core income for Property & Casualty Operations increased $26 million for the three months ended March 31, 2024 as compared with the comparable 2023 period driven by higher net investment income and favorable net prior year loss reserve development partially offset by higher catastrophe losses.

Catastrophe losses for Property & Casualty Operations were $88 million for the three months ended March 31, 2024 as compared with $52 million for the comparable 2023 period. For the three months ended March 31, 2024 and 2023, Specialty had no catastrophe losses, Commercial had catastrophe losses of $82 million and $44 million and International had catastrophe losses of $6 million and $8 million.

Favorable net prior year loss reserve development for Property & Casualty Operations of $7 million was recorded for the three months ended March 31, 2024 as compared with unfavorable net prior year loss reserve development of $13 million for the three months ended March 31, 2023. For the three months ended March 31, 2024 and 2023, Specialty recorded favorable net prior year loss reserve development of $5 million and no net prior year loss reserve development, Commercial recorded favorable net prior year loss reserve development of $2 million in each period and International recorded no net prior year loss reserve development and unfavorable net prior year loss reserve development of $15 million. Further information on net prior year loss reserve development is included in Note 4 of the Notes to Consolidated Condensed Financial Statements included under Item 1 of this Report.

Specialty’s combined ratio increased 0.7 points for the three months ended March 31, 2024 as compared with the comparable 2023 period due to a 0.4 point increase in the expense ratio and a 0.2 point increase in the loss ratio. The increase in the expense ratio was driven by higher acquisition costs. The increase in the loss ratio was due to an increase in the underlying loss ratio partially offset by favorable net prior year loss reserve development.

Commercial’s combined ratio increased 1.6 points for the three months ended March 31, 2024 as compared with the comparable 2023 period primarily due to a 3.1 point increase in the loss ratio, partially offset by a 1.6 point improvement in the expense ratio. The increase in the loss ratio was primarily driven by higher catastrophe losses, which were 6.8 points of the loss ratio for the three months ended March 31, 2024 as compared with 4.2 points of the loss ratio in the comparable 2023 period. The improvement in the expense ratio was driven by higher net earned premiums and lower acquisition costs partially offset by higher employee related costs.

International’s combined ratio improved 3.9 points for the three months ended March 31, 2024 as compared with the comparable 2023 period due to a 5.3 point improvement in the loss ratio, partially offset by a 1.4 point increase in the expense ratio. The improvement in the loss ratio for the three months ended March 31, 2024 was driven by unfavorable net prior year loss reserve development recorded for the comparable 2023 period. Catastrophe losses were 2.0 points of the loss ratio for the three months ended March 31, 2024, as compared with 2.8 points of the loss ratio in the comparable 2023 period. The increase in the expense ratio was driven by higher employee related costs partially offset by higher net earned premiums.

Other Insurance Operations

The following table summarizes the results of CNA’s Other Insurance Operations for the three months ended March 31, 2024 and 2023.

Core results for Other Insurance Operations improved $4 million for the three months ended March 31, 2024 as compared with the comparable 2023 period, primarily due to higher net investment income, partially offset by a $5 million charge related to office consolidation in the 2024 period.

Non-GAAP Reconciliation of Net Income Attributable to Loews Corporation to Core Income

The following table reconciles net income attributable to Loews Corporation to core income for the three months ended March 31, 2024 and 2023: