Loews : 2020 Letter to Shareholders

Letter to Shareholders

667 Madison Ave. New York, NY 10065 www.loews.com

L o e ws C o r p o r a t i o n

FINANCIAL HIGHLIGHTS

Year Ended December 31 ($ in millions, except per share data)

RESULTS OF OPERATIONS		2020		2019		2018	2017 (a)	2016 (a)
Revenues	$	12,583	$	14,931	$	14,066	$	13,735	$	13,105
Income (loss) before income tax	$	(1,464)	$	1,119	$	834	$	1,582	$	936
Net income (loss)	$	(1,291)	$	871	$	706	$	1,412	$	716
Amounts attributable to noncontrolling interests		360		61		(70)		(248)		(62)
Net income (loss) attributable to Loews Corporation	$	(931)	$	932	$	636	$	1,164	$	654
Diluted net income (loss) per share	$	(3.32)	$	3.07	$	1.99	$	3.45	$	1.93

FINANCIAL POSITION	2020	2019
Investments	$ 53,844	$ 51,250
Total assets	80,236	82,243
Debt: Parent Company	2,276	1,779
Debt: Subsidaries	7,833	9,754
Shareholders' equity	17,860	19,119
Cash dividends per share	0.25	0.25
Book value per share	66.34	65.71
Shares outstanding	269.21	290.97

RESULTS OF OPERATIONS

2018	2017 (a)	2016 (a)
$ 48,186	$ 52,226	$ 50,711
78,316	79,586	76,594
1,778	1,776	1,775
9,598	9,757	9,003
18,518	19,204	18,163
0.25	0.25	0.25
59.34	57.83	53.96
312.07	332.09	336.62

Consolidated net loss attributable to Loews Corporation for 2020 was $931 million, or $3.32 per share compared to net income of $932 million, or

$3.07 per share, in 2019.

The net loss in 2020 was primarily driven by Diamond Offshore and Loews Hotels & Co. Diamond Offshore was deconsolidated upon its bankruptcy filing on April 26, 2020. Through this date, Diamond Offshore contributed operating losses mostly due to drilling rig impairment charges. The deconsolidation resulted in an investment loss caused by the write down of the carrying value of our interest in the company. Loews Hotels & Co's operating revenues were severely impacted by the COVID-19 pandemic which led to significant operating losses in 2020. Together, Diamond Offshore and Loews Hotels & Co accounted for 77% of Loews's year-over-year decline in net income.

In addition, a reduction in CNA's and the parent company's net investment income, net investment losses at CNA in 2020 as compared to net investment gains in 2019, and higher catastrophe losses at CNA from weather-related events,

the COVID-19 pandemic and civil unrest also contributed to 2020's net loss.

Excluding these, Loews's 2020 operating results were strong when considering the economic disruption caused by the COVID -19 pandemic and measures to mitigate the spread of the virus. CNA's underlying combined ratio, which excludes catastrophes and prior year development,

improved by 1.7 points due to increased premiums and new business, and Boardwalk Pipelines operating revenues were down only slightly while also contending with numerous weather-related events during 2020.

The year ended December 31, 2020 as compared to 2019

CNA's earnings decreased in 2020 primarily due to higher net catastrophe losses, lower net investment income and net investment losses as compared to investment gains in 2019. Partially offsetting these declines were improved underlying underwriting income and lower net reserve charges in CNA's Life

• Group business, primarily from the recognition of a lower active life reserve premium deficiency in 2020. The decline in net investment income in 2020 was driven by lower effective income yields on CNA's fixed income portfolio and lower returns on limited partnership and common stock investments. Net investment losses in 2020 were driven by higher impairment losses on fixed income securities and the decline in the fair value of non-redeemable preferred stock.

Boardwalk Pipelines' earnings in 2020 were down slightly from 2019 as net operating revenues declined and expenses increased. Revenue from growth projects recently placed in service and higher storage and park and loan revenues did not fully offset revenue declines from expiring contracts replaced by contracts at lower overall average rates. Depreciation and property taxes rose, primarily due to an increased asset base from recently completed growth projects and the

expiration of property tax abatements, partially offset by a reduction in interest expense due to lower average interest rates.

Due to the COVID-19 pandemic and efforts to mitigate the spread of the virus, beginning in March of 2020, Loews Hotels & Co temporarily suspended operations at the majority of its owned and/or operated hotels. Since then, most hotels have resumed operations, but occupancy rates, consistent with market conditions, remain considerably lower than those from 2019. Although Loews Hotels & Co has enacted significant measures to adjust the operating cost structure of each hotel, deferred most capital expenditures and reduced the operating costs of its management company, these measures could not offset the impact of significant lost revenues. Loews Hotels & Co has therefore incurred significant operating losses since the start of the pandemic.

Income from the parent company investment portfolio declined in 2020 as limited partnership and equity investments generated lower returns as compared to 2019.

At December 31, 2020, excluding accumulated other comprehensive income, the book value per share of Loews common stock was $64.18 as compared to

$65.94 at December 31, 2019.

At December 31, 2020, there were 269.2 million shares of Loews common stock outstanding. In 2020, the Company purchased 22.0 million shares of its common stock at an aggregate cost of $917 million.

1. On January 1, 2018, the Company adopted Accounting Standard Update ("ASU") 2014- 09, "Revenue from Contracts with Customers (Topic 606)" and ASU 2016 - 01, "Financial Instruments
   - Overall (Subtopic 825-10); Recognition and Measurement of Financial Assets and Financial Liabilities." Prior period revenues were not adjusted for the adoption of either of these standards.

TO OUR SHAREHOLDERS

OUR PORTFOLIO OF BUSINESSES

BOARD OF DIRECTORS & OFFICERS

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L o e ws C o r p o r a t i o n

TO OUR

SHAREHOLDERS

The challenges that all of us-individuals, businesses, governments

and communities alike-faced during 2020 were truly without

precedent. The coronavirus altered our lives with astonishing speed,

and what began as a promising year quickly and dramatically

morphed into a global health and economic crisis. In addition to the severe toll on human lives and livelihoods, COVID-19 dramatically altered our everyday existence and brought about changes in society and business that are likely to be long-lasting.

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ANDREW H. TISCH

Co- Chairman of the Board of

Loews, and Chairman of the

Executive Committee of Loews

JONATHAN M. TISCH

Co- Chairman of the Board of Loews, Chairman and Chief Executive Officer of Loews Hotels & Co

JAMES S. TISCH

President and Chief

Executive Officer of Loews

Y et, the pandemic also revealed the selflessness of our fellow citizens and

the strength and resiliency of our institutions. It is important to acknowledge everyone on the front lines of the fight against this pandemic

• especially the medical professionals, first responders and workers in every industry who risked their own safety to provide essential products and services. While we can never thank them sufficiently for their bravery and compassion, Loews has donated $1 million to be shared among several organizations that provide direct assistance to frontline healthcare heroes. Additionally, our subsidiaries provided philanthropic support to various organizations supplying relief and aiding recovery efforts
  in their local communities. CNA Financial donated $1 million to organizations providing national and international relief and recovery efforts on the front lines as well
  as in communities where its colleagues live and work. Boardwalk Pipelines supported a range of community organizations, including local food banks, hospitals, schools and first responders. Altium Packaging instituted paid sick leave for team members impacted by COVID-19 and provided appreciation bonuses for all plant employees. And Loews Hotels
  & Co enacted several programs to assist impacted team members, including a multi- million dollar relief fund.

We also want to recognize all of our Loews corporate and subsidiary employees who rose to the challenge with determination, focus and professionalism. Across the organization, our people have done their part to make sure that businesses had insurance and claims were paid, that natural gas was available to heat homes and medical facilities, that packaging was available for water and medicine bottles, or that a meal was delivered to a family in a hotel room. In addition, numerous employees at Loews and our subsidiaries volunteered at food banks, sorted donated items, distributed protective gear or helped however they could.

Each of our subsidiaries went to great lengths to protect the health and safety of employees and customers. CNA's investment in technology

enabled a seamless shift to remote working, while the company reinforced its partnerships with agents and brokers by being available, collaborative and resourceful during the pandemic. Boardwalk implemented business continuity plans and increased measures

to safeguard employees while providing uninterrupted service to customers and maintaining pipeline and storage operations. Altium was deemed an essential business and continued to operate throughout the pandemic as a key link in the food and household goods supply chains while taking aggressive measures to prevent the spread of COVID-19 in its plants. With the hospitality industry experiencing particular hardship due to the pandemic, Loews Hotels temporarily suspended operations at most of it's locations and has since selectively and prudently resumed operations with significant new health and safety protocols. These efforts enabled us to meet the needs of customers and communities at a critical time while continuing to move Loews forward.

In view of the sacrifices made by all our colleagues and in solidarity with them, we in the Office of the President chose to reduce our salaries by 50% as of April 1st and our bonuses by 50% for 2020.

FINANCIAL STRENGTH

We should note that Loews and its subsidiaries continued to have ample access to the capital markets throughout the COVID-19 crisis. Loews, CNA and Boardwalk each issued $500 million in ten-year notes between May and August 2020, taking advantage of the attractive rates available in the credit markets. Altium Packaging completed a debt recapitalization in February of 2021, which resulted in a $199 million dividend to Loews - basically returning a third of our equity. This is our first dividend from Altium since acquiring the company

in 2017. The success of these offerings is a testament to the strength of Loews's corporate and subsidiary balance sheets and investors' confidence in their creditworthiness.

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