Item 8. Financial Statements and Supplementary Data.

Financial Statements and Supplementary Data are comprised of the following sections:

				Page No.
Management’s Report on Internal Control Over Financial Reporting				87
Reports of Independent Registered Public Accounting Firm				88
Consolidated Balance Sheets				90
Consolidated Statements of Income				92
Consolidated Statements of Comprehensive Income (Loss)				93
Consolidated Statements of Equity				94
Consolidated Statements of Cash Flows				96
Notes to Consolidated Financial Statements:				98
1.		Summary of Significant Accounting Policies		98
2.		Acquisitions and Divestitures		106
3.		Investments		108
4.		Fair Value		113
5.		Receivables		121
6.		Property, Plant and Equipment		121
7.		Goodwill and Other Intangible Assets		123
8.		Claim and Claim Adjustment Expense Reserves		123
9.		Leases		138
10.		Income Taxes		139
11.		Debt		143
12.		Shareholders’ Equity		146
13.		Statutory Accounting Practices		147
14.		Benefit Plans		148
15.		Reinsurance		155
16.		Quarterly Financial Data (Unaudited)		157
17.		Legal Proceedings		157
18.		Commitments and Contingencies		158
19.		Segments		159

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for us. Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements.

There are inherent limitations to the effectiveness of any control system, however well designed, including the possibility of human error and the possible circumvention or overriding of controls. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Management must make judgments with respect to the relative cost and expected benefits of any specific control measure. The design of a control system also is based in part upon assumptions and judgments made by management about the likelihood of future events, and there can be no assurance that a control will be effective under all potential future conditions. As a result, even an effective system of internal control over financial reporting can provide no more than reasonable assurance with respect to the fair presentation of financial statements and the processes under which they were prepared.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013). Based on this assessment, our management believes that, as of December 31, 2017, our internal control over financial reporting was effective.

Our independent registered public accounting firm, Deloitte & Touche LLP, has issued an audit report on the Company’s internal control over financial reporting. The report of Deloitte & Touche LLP follows this Report.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and Board of Directors of Loews Corporation

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Loews Corporation and subsidiaries (the “Company”) as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2017, of the Company and our report dated February 15, 2018, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s report on internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

New York, NY

February 15, 2018

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and Board of Directors of Loews Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Loews Corporation and subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of income, comprehensive income (loss), equity, and cash flows, for each of the three years in the period ended December 31, 2017, and the related notes and the schedules listed in the Index at Item 15(a)2 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 15, 2018, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ DELOITTE & TOUCHE LLP

New York, NY

February 15, 2018

We have served as the Company’s auditor since 1969.

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Loews Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS

Assets:
December 31		2017				2016
(Dollar amounts in millions, except per share data)
Investments:
Fixed maturities, amortized cost of $38,861 and $38,947		$	42,133			$	41,494
Equity securities, cost of $1,177 and $571			1,224				549
Limited partnership investments			3,278				3,220
Other invested assets, primarily mortgage loans			945				683
Short term investments			4,646				4,765
Total investments			52,226				50,711
Cash			472				327
Receivables			7,613				7,644
Property, plant and equipment			15,427				15,230
Goodwill			659				346
Other assets			2,555				1,736
Deferred acquisition costs of insurance subsidiaries			634				600
Total assets		$	79,586			$	76,594

See Notes to Consolidated Financial Statements.

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Loews Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS

Liabilities and Equity:
December 31		2017				2016
(Dollar amounts in millions, except per share data)
Insurance reserves:
Claim and claim adjustment expense		$	22,004			$	22,343
Future policy benefits			11,179				10,326
Unearned premiums			4,029				3,762
Total insurance reserves			37,212				36,431
Payable to brokers			60				150
Short term debt			280				110
Long term debt			11,253				10,668
Deferred income taxes			749				636
Other liabilities			5,466				5,238
Total liabilities			55,020				53,233
Commitments and contingent liabilities
Shareholders’ equity:
Preferred stock, $0.10 par value:
Authorized – 100,000,000 shares
Common stock, $0.01 par value:
Authorized – 1,800,000,000 shares
Issued – 332,487,815 and 336,621,358 shares			3				3
Additional paid-in capital			3,151				3,187
Retained earnings			16,096				15,196
Accumulated other comprehensive loss			(26	)			(223)
		19,224				18,163
Less treasury stock, at cost (400,000 shares)			(20	)
Total shareholders’ equity			19,204				18,163
Noncontrolling interests			5,362				5,198
Total equity			24,566				23,361
Total liabilities and equity		$	79,586			$	76,594

See Notes to Consolidated Financial Statements.

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Loews Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

Year Ended December 31		2017				2016				2015
(In millions, except per share data)
Revenues:
Insurance premiums		$	6,988			$	6,924			$	6,921
Net investment income			2,182				2,135				1,866
Investment gains (losses):
Other-than-temporary impairment losses			(14	)			(81	)			(156)
Other net investment gains			136				131				85
Total investment gains (losses)			122				50				(71)
Contract drilling revenues			1,451				1,525				2,360
Other revenues			2,992				2,471				2,339
Total			13,735				13,105				13,415
Expenses:
Insurance claims and policyholders’ benefits			5,310				5,283				5,384
Amortization of deferred acquisition costs			1,233				1,235				1,540
Contract drilling expenses			802				772				1,228
Other operating expenses (Note 6)			4,162				4,343				4,499
Interest			646				536				520
Total			12,153				12,169				13,171
Income before income tax			1,582				936				244
Income tax (expense) benefit			(170	)			(220	)			43
Net income			1,412				716				287
Amounts attributable to noncontrolling interests			(248	)			(62	)			(27)
Net income attributable to Loews Corporation		$	1,164			$	654			$	260
Basic net income per common share		$	3.46			$	1.93			$	0.72
Diluted net income per common share		$	3.45			$	1.93			$	0.72
Dividends per share		$	0.25			$	0.25			$	0.25
Basic weighted average number of shares outstanding			336.61				337.95				362.43
Diluted weighted average number of shares outstanding			337.50				338.31				362.69

See Notes to Consolidated Financial Statements

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Loews Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Year Ended December 31		2017				2016				2015
(In millions)
Net income		$	1,412			$	716			$	287
Other comprehensive income (loss), after tax
Changes in:
Net unrealized gains (losses) on investments with other-than-temporary impairments			(5)				3				(9)
Net other unrealized gains (losses) on investments			108				257				(557)
Total unrealized gains (losses) on available-for-sale investments			103				260				(566)
Unrealized gains on cash flow hedges			3				2				5
Pension liability			12				5				(18)
Foreign currency translation			100				(114)				(139)
Other comprehensive income (loss)			218				153				(718)
Comprehensive income (loss)			1,630				869				(431)
Amounts attributable to noncontrolling interests			(269)				(81)				53
Total comprehensive income (loss) attributable to Loews Corporation		$	1,361			$	788			$	(378)

See Notes to Consolidated Financial Statements.

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Loews Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF EQUITY

						Loews Corporation Shareholders
		Total				Common Stock				Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Common Stock Held in Treasury				Noncontrolling Interests
(In millions)
Balance, January 1, 2015		$	24,650			$	4			$	3,481			$	15,515			$	280			$	-			$	5,370
Net income			287												260												27
Other comprehensive loss			(718	)															(638	)							(80)
Dividends paid			(255	)											(90	)											(165)
Issuance of equity securities by subsidiary			115								(2	)							1								116
Purchases of subsidiary stock from noncontrolling interests			(31	)							5																(36)
Purchases of Loews treasury stock			(1,265	)																			(1,265	)
Retirement of treasury stock			-				(1	)			(311	)			(953	)							1,265
Issuance of Loews common stock			7								7
Stock-based compensation			26								23																3
Other			(6	)							(19	)			(1	)											14
Balance, December 31, 2015		$	22,810			$	3			$	3,184			$	14,731			$	(357	)		$	-			$	5,249
Net income			716												654												62
Other comprehensive income			153																134								19
Dividends paid			(218	)											(84	)											(134)
Purchases of subsidiary stock from noncontrolling interests			(9	)							3																(12)
Purchases of Loews treasury stock			(134	)																			(134	)
Retirement of treasury stock			-								(32	)			(102	)							134
Stock-based compensation			47								45																2
Other			(4	)							(13	)			(3	)											12
Balance, December 31, 2016		$	23,361			$	3			$	3,187			$	15,196			$	(223	)		$	-			$	5,198

See Notes to Consolidated Financial Statements.

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Loews Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF EQUITY

						Loews Corporation Shareholders
		Total				Common Stock				Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Common Stock Held in Treasury				Noncontrolling Interests
(In millions)
Balance, December 31, 2016		$	23,361			$	3			$	3,187			$	15,196			$	(223	)		$	-			$	5,198
Net income			1,412												1,164												248
Other comprehensive income			218																197								21
Dividends paid			(223	)											(84	)											(139)
Purchases of Loews treasury stock			(237	)																			(237	)
Retirement of treasury stock			1								(41	)			(175	)							217
Stock-based compensation			35								2																33
Other			(1	)							3				(5	)											1
Balance, December 31, 2017		$	24,566			$	3			$	3,151			$	16,096			$	(26	)		$	(20	)		$	5,362

See Notes to Consolidated Financial Statements.

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Loews Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31		2017				2016				2015
(In millions)
Operating Activities:
Net income		$	1,412			$	716			$	287
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Investment (gains) losses			(122	)			(50	)			71
Equity method investees			25				221				182
Amortization of investments			(40	)			(27	)			17
Depreciation and amortization			874				841				955
Impairment of goodwill											20
Asset impairments			106				697				865
Provision for deferred income taxes			(47	)			102				(225)
Other non-cash items			164				73				105
Changes in operating assets and liabilities, net:
Receivables			93				24				120
Deferred acquisition costs			(24	)			(8	)			311
Insurance reserves			22				237				241
Other assets			(95	)			(71	)			(43)
Other liabilities			114				26				(33)
Trading securities			108				(528	)			674
Net cash flow operating activities			2,590				2,253				3,547
Investing Activities:
Purchases of fixed maturities			(9,065	)			(9,827	)			(8,675)
Proceeds from sales of fixed maturities			5,438				5,332				4,390
Proceeds from maturities of fixed maturities			3,641				3,219				4,095
Purchases of limited partnership investments			(171	)			(355	)			(188)
Proceeds from sales of limited partnership investments			212				327				174
Purchases of property, plant and equipment			(1,031	)			(1,450	)			(1,555)
Acquisitions			(1,218	)			(79	)			(157)
Dispositions			79				330				33
Change in short term investments			(167	)			158				120
Other, net			(373	)			158				(172)
Net cash flow investing activities			(2,655	)			(2,187	)			(1,935)

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Loews Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31		2017				2016				2015
(In millions)
Financing Activities:
Dividends paid		$	(84	)		$	(84	)		$	(90)
Dividends paid to noncontrolling interests			(139	)			(134	)			(165)
Purchases of subsidiary stock from noncontrolling interests							(8	)			(29)
Purchases of Loews treasury stock			(216	)			(134	)			(1,265)
Issuance of Loews common stock											7
Proceeds from sale of subsidiary stock											114
Principal payments on debt			(2,411	)			(3,418	)			(1,929)
Issuance of debt			3,067				3,614				1,828
Other, net			(16	)			(2	)			4
Net cash flow financing activities			201				(166	)			(1,525)
Effect of foreign exchange rate on cash			9				(13	)			(11)
Net change in cash			145				(113	)			76
Cash, beginning of year			327				440				364
Cash, end of year		$	472			$	327			$	440

See Notes to Consolidated Financial Statements.

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Loews Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

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 89% owned subsidiary); the operation of offshore oil and gas drilling rigs (Diamond Offshore Drilling, Inc. (“Diamond Offshore”), a 53% owned subsidiary); transportation and storage of natural gas and natural gas liquids (Boardwalk Pipeline Partners, LP (“Boardwalk Pipeline”), a 51% owned subsidiary); the operation of a chain of hotels (Loews Hotels Holding Corporation (“Loews Hotels & Co”), a wholly owned subsidiary); and the manufacture of rigid plastic packaging solutions (Consolidated Container Company LLC (“Consolidated Container”), a 99% 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.

Principles of consolidation – The Consolidated Financial Statements include all subsidiaries and intercompany accounts and transactions have been eliminated. The equity method of accounting is used for investments in associated companies in which the Company generally has an interest of 20% to 50%.

Accounting estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management 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.

Investments – The Company classifies its fixed maturity securities and equity securities as either available-for-sale or trading, and as such, they are carried at fair value. Short term investments are carried at fair value. Changes in fair value of trading securities are reported within Net investment income on the Consolidated Statements of Income. Changes in fair value related to available-for-sale securities are reported as a component of Other comprehensive income. Losses may be recognized within the Consolidated Statements of Income when a decline in value is determined by the Company to be other-than-temporary.

The cost of fixed maturity securities classified as available-for-sale is adjusted for amortization of premiums and accretion of discounts, which are included in Net investment income on the Consolidated Statements of Income. The amortization of premium and accretion of discount for fixed maturity securities takes into consideration call and maturity dates that produce the lowest yield. In 2015, the Company changed its accounting principle as previously the amortization of premiums was to maturity. This change in estimate, effected by a change in accounting principle was adopted in the fourth quarter of 2015 and decreased Net investment income by $39 million in the Consolidated Statements of Income for the year ended December 31, 2015. The decrease to Net investment income included a $22 million cumulative adjustment relating to prior periods. The total adjustment decreased basic and diluted net income per share by $0.06 for the year ended December 31, 2015.

For asset-backed securities included in fixed maturity securities, the Company recognizes income using an effective yield based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments.

To the extent that unrealized gains on fixed income securities supporting long term care products and structured settlements not funded by annuities would result in a premium deficiency if those gains were realized, a related increase in Insurance reserves is recorded, net of tax and noncontrolling interests, as a reduction of net unrealized gains through Other comprehensive income (“Shadow Adjustments”). Shadow Adjustments increased $355 million (after tax and noncontrolling interests) and decreased $87 million (after tax and noncontrolling interests) for the years ended December 31, 2017 and 2016. As of December 31, 2017 and 2016, net unrealized gains on investments included in Accumulated other comprehensive income (“AOCI”) were correspondingly reduced by Shadow Adjustments of $1.3 billion and $909 million (after tax and noncontrolling interests).

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The Company’s carrying value of investments in limited partnerships is its share of the net asset value of each partnership, as determined by the general partner. Certain partnerships for which results are not available on a timely basis are reported on a lag, primarily three months or less. These investments are accounted for under the equity method and changes in net asset values are recorded within Net investment income on the Consolidated Statements of Income.

Investments in derivative securities are carried at fair value with changes in fair value reported as a component of Investment gains (losses), Income (loss) from trading portfolio, or Other comprehensive income (loss), depending on their hedge designation. A derivative is typically defined as an instrument whose value is “derived” from an underlying instrument, index or rate, has a notional amount, requires little or no initial investment and can be net settled. Derivatives include, but are not limited to, the following types of investments: interest rate swaps, interest rate caps and floors, put and call options, warrants, futures, forwards, commitments to purchase securities, credit default swaps and combinations of the foregoing. Derivatives embedded within non-derivative instruments (such as call options embedded in convertible bonds) must be split from the host instrument when the embedded derivative is not clearly and closely related to the host instrument.

A security is impaired if the fair value of the security is less than its cost adjusted for accretion, amortization and previously recorded other-than-temporary impairment (“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 including the evaluation of securities in an unrealized loss position on at least a quarterly basis.

CNA’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 include: (i) the financial condition and near term and long 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 significantly 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. 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 its non-redeemable preferred stock securities on the basis that these securities possess characteristics similar to debt securities. For all other equity securities, in determining whether the security is other-than-temporarily impaired, CNA 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

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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.

Joint venture investments – The Company had approximately 20% to 50% interests in operating joint ventures related to hotel properties that are accounted for under the equity method. The Company’s investment in these entities was $237 million and $217 million for the years ended December 31, 2017 and 2016 and reported in Other assets on the Company’s Consolidated Balance Sheets. Equity income for these investments was $81 million, $41 million and $43 million for the years ended December 31, 2017, 2016 and 2015 and reported in Other operating expenses on the Company’s Consolidated Statements of Income. Some of these investments are variable interest entities (“VIE”) as defined in the accounting guidance because the entities will require additional funding from each equity owner throughout the development and construction phase and are accounted for under the equity method since the Company is not the primary beneficiary. The maximum exposure to loss for the VIE investments is $273 million, consisting of the amount of the investment and debt guarantees.

The following tables present summarized financial information for these joint ventures:

Year Ended December 31						2017				2016
(In millions)
Total assets						$	1,703			$	1,749
Total liabilities							1,347				1,444
Year Ended December 31		2017				2016				2015
Revenues		$	731			$	693			$	606
Net income			261				80				71

Hedging – The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedging transactions. The Company also formally assesses (both at the hedge’s inception and on an ongoing basis) whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in fair value or cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. When it is determined that a derivative for which hedge accounting has been designated is not (or ceases to be) highly effective, the Company discontinues hedge accounting prospectively. See Note 3 for additional information on the Company’s use of derivatives.

Securities lending activities – The Company lends securities for the purpose of enhancing income or to finance positions to unrelated parties who have been designated as primary dealers by the Federal Reserve Bank of New York. Borrowers of these securities must deposit and maintain collateral with the Company of no less than 100% of the fair value of the securities loaned. U.S. Government securities and cash are accepted as collateral. The Company maintains effective control over loaned securities and, therefore, continues to report such securities as investments on the Consolidated Balance Sheets.

Securities lending is typically done on a matched-book basis where the collateral is invested to substantially match the term of the loan. This matching of terms tends to limit risk. In accordance with the Company’s lending agreements, securities on loan are returned immediately to the Company upon notice. Collateral is not reflected as an asset of the Company. There was no collateral held at December 31, 2017 and 2016.

Revenue recognition – Premiums on property and casualty insurance contracts are recognized in proportion to the underlying risk insured and are principally earned ratably over the duration of the policies. Premiums on long term care contracts are earned ratably over the policy year in which they are due. The reserve for unearned premiums represents the portion of premiums written relating to the unexpired terms of coverage.

Insurance receivables include balances due currently or in the future, including amounts due from insureds related to losses under high deductible policies, and are presented at unpaid balances, net of an allowance for doubtful accounts. Amounts are considered past due based on policy payment terms. The allowance is determined based on

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periodic evaluations of aged receivables, management’s experience and current economic conditions. Insurance receivables and any related allowance are written off after collection efforts are exhausted or a negotiated settlement is reached.

Property and casualty contracts that are retrospectively rated contain provisions that result in an adjustment to the initial policy premium depending on the contract provisions and loss experience of the insured during the experience period. For such contracts, CNA estimates the amount of ultimate premiums that it may earn upon completion of the experience period and recognizes either an asset or a liability for the difference between the initial policy premium and the estimated ultimate premium. CNA adjusts such estimated ultimate premium amounts during the course of the experience period based on actual results to date. The resulting adjustment is recorded as either a reduction of or an increase to the earned premiums for the period.

Contract drilling revenue from dayrate drilling contracts is recognized as services are performed. In connection with such drilling contracts, Diamond Offshore may receive fees (either lump-sum or dayrate) for the mobilization of equipment. These fees are earned as services are performed over the initial term of the related drilling contracts. Absent a contract, mobilization costs are recognized currently. From time to time, Diamond Offshore may receive fees from its customers for capital improvements to their rigs. Diamond Offshore defers such fees received and recognizes these fees into revenue on a straight-line basis over the period of the related drilling contract. Diamond Offshore capitalizes the costs of such capital improvements and depreciates them over the estimated useful life of the improvement.

Revenues from transportation and storage services are recognized in the period the service is provided based on contractual terms and the related transported and stored volumes. The majority of Boardwalk Pipeline’s operating subsidiaries are subject to Federal Energy Regulatory Commission (“FERC”) regulations and, accordingly, certain revenues collected may be subject to possible refunds to its customers. An estimated refund liability is recorded considering regulatory proceedings, advice of counsel and estimated total exposure.

Claim and claim adjustment expense reserves – Claim and claim adjustment expense reserves, except reserves for structured settlements not associated with asbestos and environmental pollution (“A&EP”), workers’ compensation lifetime claims and long term care claims, are not discounted and are based on (i) case basis estimates for losses reported on direct business, adjusted in the aggregate for ultimate loss expectations; (ii) estimates of incurred but not reported losses; (iii) estimates of losses on assumed reinsurance; (iv) estimates of future expenses to be incurred in the settlement of claims; (v) estimates of salvage and subrogation recoveries and (vi) estimates of amounts due from insureds related to losses under high deductible policies. Management considers current conditions and trends as well as past CNA and industry experience in establishing these estimates. The effects of inflation, which can be significant, are implicitly considered in the reserving process and are part of the recorded reserve balance. Ceded claim and claim adjustment expense reserves are reported as a component of Receivables on the Consolidated Balance Sheets.

Claim and claim adjustment expense reserves are presented net of anticipated amounts due from insureds related to losses under deductible policies of $1.2 billion as of December 31, 2017 and 2016. A significant portion of these amounts are supported by collateral. CNA also has an allowance for uncollectible deductible amounts, which is presented as a component of the allowance for doubtful accounts included in Receivables on the Consolidated Balance Sheets.

Structured settlements have been negotiated for certain property and casualty insurance claims. Structured settlements are agreements to provide fixed periodic payments to claimants. CNA’s obligations for structured settlements not funded by annuities are included in claim and claim adjustment expense reserves and carried at present values determined using interest rates ranging from 5.5% to 8.0% at December 31, 2017 and 2016. At December 31, 2017 and 2016, the discounted reserves for unfunded structured settlements were $527 million and $544 million, net of discount of $798 million and $841 million. For the years ended December 31, 2017, 2016 and 2015, the amount of interest recognized on the discounted reserves of unfunded structured settlements was $41 million, $42 million and $42 million. This interest accretion is presented as a component of Insurance claims and policyholders’ benefits on the Consolidated Statements of Income but is excluded from the disclosure of prior year development.

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Workers’ compensation lifetime claim reserves are calculated using mortality assumptions determined through statutory regulation and economic factors. At December 31, 2017 and 2016, workers’ compensation lifetime claim reserves are discounted at a 3.5% interest rate. As of December 31, 2017 and 2016, the discounted reserves for workers’ compensation lifetime claim reserves were $346 million and $371 million, net of discount of $190 million and $202 million. For the years ended December 31, 2017, 2016 and 2015, the amount of interest accretion recognized on the discounted reserves of workers’ compensation lifetime claim reserves was $19 million, $17 million and $20 million. This interest accretion is presented as a component of Insurance claims and policyholders’ benefits on the Consolidated Statements of Income, but is excluded from the Company’s disclosure of prior year development.

Long term care claim reserves are calculated using mortality and morbidity assumptions based on CNA and industry experience. Long term care claim reserves are discounted at an interest rate of 6.0% at December 31, 2017 and interest rates ranging from 4.5% to 6.8% at December 31, 2016. At December 31, 2017 and 2016, such discounted reserves totaled $2.4 billion and $2.2 billion, net of discount of $446 million and $529 million.

Future policy benefit reserves – Future policy benefit reserves represent the active life reserves related to CNA’s long term care policies and are computed using the net level premium method, which incorporates actuarial assumptions as to morbidity, persistency, inclusive of mortality, discount rate, future premium rate adjustments and expenses. Expense assumptions primarily relate to claim adjudication. Actuarial assumptions generally vary by plan, age at issue policy duration and gender. The initial assumptions are determined at issuance, including a margin for adverse deviation, and are locked in throughout the life of the contract unless a premium deficiency develops. If a premium deficiency emerges, the assumptions are unlocked and deferred acquisition costs, if any, and the future policy benefit reserves are adjusted. The December 31, 2015 gross premium valuation (“GPV”) indicated a premium deficiency of $296 million. The indicated premium deficiency necessitated a charge to income that was effected by the write off of the entire long term care deferred acquisition cost asset of $289 million and an increase to active life reserves of $7 million. The GPV as of December 31, 2017 and 2016 indicated the carried reserves were sufficient, therefore there was no unlocking of assumptions. Interest rates for long term care active life reserves range from 6.6% to 7.0% as of December 31, 2017 and 2016.

Guaranty fund and other insurance-related assessments – Liabilities for guaranty fund and other insurance-related assessments are accrued when an assessment is probable, when it can be reasonably estimated and when the event obligating the entity to pay an imposed or probable assessment has occurred. Liabilities for guaranty funds and other insurance-related assessments are not discounted and are included as part of Other liabilities on the Consolidated Balance Sheets. As of December 31, 2017 and 2016, the liability balances were $121 million and $125 million.

Reinsurance – Reinsurance accounting allows for contractual cash flows to be reflected as premiums and losses. To qualify for reinsurance accounting, reinsurance agreements must include risk transfer. To meet risk transfer requirements, a reinsurance contract must include both insurance risk, consisting of underwriting and timing risk, and a reasonable possibility of a significant loss for the assuming entity.

Reinsurance receivables related to paid losses are presented at unpaid balances. Reinsurance receivables related to unpaid losses are estimated in a manner consistent with claim and claim adjustment expense reserves or future policy benefit reserves. Reinsurance receivables are reported net of an allowance for doubtful accounts on the Consolidated Balance Sheets. The cost of reinsurance is primarily accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies or over the reinsurance contract period. The ceding of insurance does not discharge the primary liability of CNA.

CNA has established an allowance for doubtful accounts on reinsurance receivables which relates to both amounts already billed on ceded paid losses as well as ceded reserves that will be billed when losses are paid in the future. The allowance for doubtful accounts on reinsurance receivables is estimated on the basis of periodic evaluations of balances due from reinsurers, reinsurer solvency, industry experience and current economic conditions. Reinsurer financial strength ratings are updated and reviewed on an annual basis or sooner if CNA becomes aware of significant changes related to a reinsurer. Because billed receivables generally approximate 3% or less of total reinsurance receivables, the age of the reinsurance receivables related to paid losses is not a significant input into the

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allowance analysis. Changes in the allowance for doubtful accounts on reinsurance receivables are presented as a component of Insurance claims and policyholders’ benefits on the Consolidated Statements of Income.

Amounts are considered past due based on the reinsurance contract terms. Reinsurance receivables related to paid losses and any related allowance are written off after collection efforts have been exhausted or a negotiated settlement is reached with the reinsurer. Reinsurance receivables from insolvent insurers related to paid losses are written off when the settlement due from the estate can be reasonably estimated. At the time reinsurance receivables related to paid losses are written off, any required adjustment to reinsurance receivables related to unpaid losses is recorded as a component of Insurance claims and policyholders’ benefits on the Consolidated Statements of Income.

Reinsurance contracts that do not effectively transfer the economic risk of loss on the underlying policies are recorded using the deposit method of accounting, which requires that premium paid or received by the ceding company or assuming company be accounted for as a deposit asset or liability. CNA had $8 million and $3 million recorded as deposit assets at December 31, 2017 and 2016, and $4 million and $6 million recorded as deposit liabilities as of December 31, 2017 and 2016. Income on reinsurance contracts accounted for under the deposit method is recognized using an effective yield based on the anticipated timing of payments and the remaining life of the contract. When the anticipated timing of payments changes, the effective yield is recalculated to reflect actual payments to date and the estimated timing of future payments. The deposit asset or liability is adjusted to the amount that would have existed had the new effective yield been applied since the inception of the contract.

A loss portfolio transfer is a retroactive reinsurance contract. If the cumulative claim and allocated claim adjustment expenses ceded under a loss portfolio transfer exceed the consideration paid, the resulting gain from such excess is deferred and amortized into earnings in future periods in proportion to actual recoveries under the loss portfolio transfer. In any period in which there is a gain position and a revised estimate of claim and allocated claim adjustment expenses, a portion of the deferred gain is cumulatively recognized in earnings as if the revised estimate was available at the inception date of the loss portfolio transfer.

Deferred acquisition costs – Deferrable acquisition costs include commissions, premium taxes and certain underwriting and policy issuance costs which are incremental direct costs of successful contract acquisitions. Acquisition costs related to property and casualty business are deferred and amortized ratably over the period the related premiums are earned. Deferred acquisition costs are presented net of ceding commissions and other ceded acquisition costs.

CNA evaluates deferred acquisition costs for recoverability. Anticipated investment income is considered in the determination of the recoverability of deferred acquisition costs. Adjustments, if necessary, are recorded in current period results of operations.

Deferred acquisition costs related to long term care contracts issued prior to January 1, 2004 include costs which vary with and are primarily related to the acquisition of business. As noted under Future policy benefit reserves, all of the long term care deferred acquisition costs of $289 million were written off as of December 31, 2015 in recognition of a premium deficiency.

Goodwill and other intangible assets – Goodwill represents the excess of purchase price over fair value of net assets of acquired entities. Goodwill is tested for impairment annually or when certain triggering events require additional tests. Subsequent reversal of a goodwill impairment charge is not permitted.

Other intangible assets are reported within Other assets. Finite-lived intangible assets are amortized over their estimated useful lives. Indefinite-lived other intangible assets are tested for impairment annually or when certain triggering events require such tests. See Note 7 for additional information on the Company’s goodwill and other intangible assets.

Property, plant and equipment – Property, plant and equipment is carried at cost less accumulated depreciation and amortization. Depreciation is computed principally by the straight-line method over the estimated useful lives of the various classes of properties. Leaseholds and leasehold improvements are depreciated or amortized over the terms of the related leases (including optional renewal periods where appropriate) or the estimated lives of improvements, if less than the lease term.

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The principal service lives used in computing provisions for depreciation are as follows:

		Years
Pipeline equipment			30 to 50
Offshore drilling equipment			15 to 30
Other			3 to 40

Impairment of long-lived assets –Long-lived assets are reviewed for impairment when changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets and intangibles with finite lives, under certain circumstances, are reported at the lower of carrying amount or fair value. Assets to be disposed of and assets not expected to provide any future service potential to the Company are recorded at the lower of carrying amount or fair value less cost to sell.

Income taxes – The Company and its eligible subsidiaries file a consolidated tax return. Deferred income taxes are recognized for temporary differences between the financial statement and tax return bases of assets and liabilities, based on enacted tax rates and other provisions of the tax law. The effect of a change in tax laws or rates on deferred tax assets and liabilities is recognized in income in the period in which such change is enacted. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not, and a valuation allowance is established for any portion of a deferred tax asset that management believes may not be realized.

The Company recognizes uncertain tax positions that it has taken or expects to take on a tax return. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. See Note 10 for additional information on the provision for income taxes.

Pension and postretirement benefits – The Company recognizes the overfunded or underfunded status of its defined benefit plans in Other assets or Other liabilities in the Consolidated Balance Sheets. Changes in funded status related to prior service costs and credits and actuarial gains and losses are recognized in the year in which the changes occur through Accumulated other comprehensive income (loss). The Company measures its benefit plan assets and obligations at December 31. Annual service cost, interest cost, expected return on plan assets, amortization of prior service costs and credits and amortization of actuarial gains and losses are recognized in the Consolidated Statements of Income.

Stock-based compensation – The Company records compensation expense upon issuance, modification or cancellation of all share-based payment awards granted, primarily on a straight-line basis over the requisite service period, generally three to four years. Stock Appreciation Rights (“SARs”) are valued using the Black-Scholes option pricing model. The application of this valuation model involves assumptions that are judgmental and highly sensitive. These assumptions include the term that the awards are expected to be outstanding, an estimate of the volatility of the underlying stock price, applicable risk-free interest rates and the dividend yield of the Company’s stock. Restricted Stock Units are valued using the grant-date fair value of the Company’s stock.

Net income per share – Companies with complex capital structures are required to present basic and diluted net income per share. Basic net income per share excludes dilution and is computed by dividing net income 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.

For each of the years ended December 31, 2017, 2016 and 2015, approximately 0.9 million, 0.4 million and 0.3 million potential shares attributable to issuances and exercises under the Loews Corporation 2016 Incentive Compensation Plan and the prior plan were included in the calculation of diluted net income per share. For those same periods, approximately 0.4 million, 3.7 million and 4.8 million shares attributable to employee stock-based compensation awards were not included in the calculation of diluted net income per share because the effect would have been antidilutive.

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Foreign currency – Foreign currency translation gains and losses are reflected in Shareholders’ equity as a component of Accumulated other comprehensive income (loss). The Company’s foreign subsidiaries’ balance sheet accounts are translated at the exchange rates in effect at each reporting date and income statement accounts are translated at the average exchange rates during the reporting period. Foreign currency transaction gains (losses) of $26 million, $(21) million and $(8) million for the years ended December 31, 2017, 2016 and 2015 were included in the Consolidated Statements of Income.

Regulatory accounting – The majority of Boardwalk Pipeline’s operating subsidiaries are regulated by FERC. GAAP for regulated entities requires Texas Gas Transmission, LLC (“Texas Gas”), a wholly owned subsidiary of Boardwalk Pipeline, to report certain assets and liabilities consistent with the economic effect of the manner in which independent third party regulators establish rates. Effective April 1, 2016, Gulf South Pipeline, LP (“Gulf South”), a wholly owned subsidiary of Boardwalk Pipeline, implemented a fuel tracker pursuant to a FERC rate case settlement, for which Gulf South applies regulatory accounting. Accordingly, certain costs and benefits are capitalized as regulatory assets and liabilities in order to provide for recovery from or refund to customers in future periods. Other than as described for Texas Gas and Gulf South, regulatory accounting is not applicable to Boardwalk Pipeline’s other FERC regulated entities or operations.

Supplementary cash flow information – Cash payments made for interest on long term debt, net of capitalized interest, amounted to $533 million, $511 million and $513 million for the years ended December 31, 2017, 2016 and 2015. Cash payments for federal, foreign, state and local income taxes amounted to $166 million, $114 million and $110 million for the years ended December 31, 2017, 2016 and 2015. Investing activities include $87 million of previously accrued capital expenditures for the year ended December 31, 2017 and exclude $18 million and $3 million of accrued capital expenditures for the years ended December 31, 2016 and 2015.

Accounting changes – In March of 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The updated accounting guidance simplifies the accounting for share-based payment award transactions, including income tax consequences and classification on the statement of cash flows. As of January 1, 2017, the Company adopted the updated accounting guidance and began recognizing excess tax benefits or deficiencies on vesting or settlement of awards as an income tax benefit or expense within net income and classifying the related cash flows within operating activities. The change impacted the amount and timing of income tax expense recognition as well as the calculation of diluted earnings per share. The accounting change did not have a material effect on the consolidated financial statements.

Recently issued ASUs – In May of 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The core principle of the new accounting guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new accounting guidance provides a five-step analysis of transactions to determine when and how revenue is recognized and requires enhanced disclosures about revenue. The guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and may be adopted either retrospectively or on a modified basis, with a cumulative effect adjustment to the opening balance sheet at the date of adoption. The Company expects to adopt this updated guidance using the modified retrospective method. The adoption of the revenue standard will result in additional disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. This will include additional quantitative and qualitative disclosures regarding contracts with customers, including the nature of the related performance obligations, the contract asset and liability balances for customer contracts, including significant changes to these balances and significant judgments made in applying the guidance.

The standard excludes from its scope the accounting for insurance contracts, financial instruments and certain other agreements that are subject to other guidance in the FASB Accounting Standards Codification, which limits the impact of this change in accounting for the Company. Upon adoption, the Company expects the impact to be related primarily to revenue on CNA’s warranty products and services, which will be recognized more slowly under the new guidance than under the current revenue recognition pattern. At adoption, the Company anticipates a cumulative effect adjustment that will decrease Retained earnings by approximately $58 million (after tax and noncontrolling interests). In addition, Other revenues and Other operating expenses on the Company’s Consolidated

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Statements of Income will increase significantly for those contracts for which CNA has concluded it is a principal, as the retail sellers’ mark-up will now be reflected as revenue and commission expense. The estimated annual gross-up of other revenues and other operating expenses will be approximately $500 million. The related gross-up effect on the Consolidated Balance Sheet at adoption will be an increase of Other assets and Other liabilities of approximately $1.7 billion. Based on the Company’s assessment, the impact of adoption of the updated guidance will not have a material effect on its results of operations or financial position.

In January of 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The updated accounting guidance requires changes to the reporting model for financial instruments. The guidance is effective for interim and annual periods beginning after December 15, 2017. The Company expects the primary change to be the requirement for CNA’s equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The Company will recognize a cumulative effect adjustment to Retained earnings and AOCI for the amount of unrealized investment gains and losses, after tax and noncontrolling interests, related to available-for-sale equity securities at the date of adoption. At adoption, the Company estimates this new guidance will result in an increase to Retained earnings and a decrease to AOCI of $25 million (after tax and noncontrolling interests). Subsequent to adoption, changes in the fair value of CNA’s equity securities will be reported as Investment gains (losses) on the Company’s Consolidated Statements of Income, which will introduce additional volatility to the Company’s results of operations.

In February of 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The updated guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and nonlease components in a contract in accordance with the new revenue guidance in ASU 2014-09. The updated guidance is effective for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the effect the guidance will have on its consolidated financial statements.

In June of 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The updated accounting guidance requires changes to the recognition of credit losses on financial instruments not accounted for at fair value through net income. The guidance is effective for interim and annual periods beginning after December 15, 2019. The Company is currently evaluating the effect the guidance will have on its consolidated financial statements, and expects the primary changes to be the use of the expected credit loss model for the mortgage loan portfolio and reinsurance receivables and the presentation of credit losses within the available-for-sale fixed maturities portfolio through an allowance method rather than as a direct write-down. The expected credit loss model will require a financial asset to be presented at the net amount expected to be collected. Under the allowance method for available-for-sale debt securities the Company will record reversals of credit losses if the estimate of credit losses declines.

In October of 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.” The updated guidance amends the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017. The Company will adopt this updated guidance using the modified retrospective approach with a cumulative effect adjustment that will decrease Retained earnings by approximately $10 million (after tax and non-controlling interests) with an offset to a deferred income tax liability.

Note 2. Acquisitions and Divestitures

Loews Corporation

On May 22, 2017, the Company acquired CCC Acquisition Holdings, Inc. for $1.2 billion, subject to post-closing adjustments. CCC Acquisition Holdings, Inc., through its wholly owned subsidiary, Consolidated Container, is a rigid plastic packaging and recycled resins manufacturer that provides packaging solutions to end markets such as beverage, food and household chemicals through a network of manufacturing locations across North America. The results of Consolidated Container are included in the Consolidated Financial Statements since the acquisition date in the Corporate segment. For the period since the acquisition date, Consolidated Container’s revenues were $498

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million and net income was not significant. For the year ended December 31, 2016, Consolidated Container reported total revenues of $788 million.

The acquisition was funded with approximately $620 million of Parent Company cash and debt financing proceeds at Consolidated Container of $600 million, as discussed in Note 11. The following table summarizes the preliminary allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value as of the acquisition date and is subject to change within the measurement period. The primary areas that are not yet finalized relate to working capital at closing and determination of tax bases of net assets acquired.

(In millions)
Cash		$	5
Property, plant and equipment			389
Goodwill			310
Other assets:
Inventory			57
Customer relationships			459
Trade name			43
Other			127
Deferred income taxes			(27)
Other liabilities:
Accounts payable			(52)
Pension liability			(27)
Other			(61)
		$	1,223

Customer relationships were valued using an income approach, which values the intangible asset at the present value of the related incremental after tax cash flows. The customer relationships intangible asset will be amortized over a useful life of 21 years. The trade name was valued using an income approach, which values the intangible asset based on an estimate of cost savings, or a relief from royalty. The trade name will be amortized over a useful life of 10 years. Goodwill includes value associated with the assembled workforce and Consolidated Container’s future growth and profitability. The assets acquired and liabilities assumed as part of the acquisition did not result in a step up of tax basis and approximately $94 million of goodwill is deductible for tax purposes. See Note 7 for additional information on goodwill and intangible assets as of December 31, 2017.

Loews Hotels & Co

In 2017, Loews Hotels & Co received proceeds of $31 million for the sale of two hotels, in which Loews Hotels & Co had joint venture interests. Loews Hotels & Co paid approximately $84 million to acquire a hotel in 2016 and approximately $330 million to acquire two hotels in 2015. These acquisitions were funded with a combination of cash and property-level debt.

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Note 3. Investments

Net investment income is as follows:

Year Ended December 31		2017				2016				2015
(In millions)
Fixed maturity securities		$	1,812			$	1,819			$ 1,751
Limited partnership investments			277				199			119
Short term investments			18				9			11
Equity securities			12				10			12
Income from trading portfolio (a)			87				112			2
Other			35				45			34
Total investment income			2,241				2,194			1,929
Investment expenses			(59	)			(59	)		(63)
Net investment income		$	2,182			$	2,135			$ 1,866

(a)	Net unrealized gains (losses) related to changes in fair value on trading securities still held were $39, $44 and $(46) for the years ended December 31, 2017, 2016 and 2015.

As of December 31, 2017, the Company held $2 million of non-income producing fixed maturity securities. As of December 31, 2016, the Company held no non-income producing fixed maturity securities. As of December 31, 2017 and 2016, no investments in a single issuer exceeded 10% of shareholders’ equity, other than investments in securities issued by the U.S. Treasury and obligations of government-sponsored enterprises.

Investment gains (losses) are as follows:

Year Ended December 31		2017				2016				2015
(In millions)
Fixed maturity securities		$	122			$	54			$ (66)
Equity securities							(5	)		(23)
Derivative instruments			(4	)			(2	)		10
Short term investments and other			4				3			8
Investment gains (losses) (a)		$	122			$	50			$ (71)

(a)	Gross realized gains on available-for-sale securities were $187, $209 and $133 for the years ended December 31, 2017, 2016 and 2015. Gross realized losses on available-for-sale securities were $65, $160 and $222 for the years ended December 31, 2017, 2016 and 2015.

Net change in unrealized gains (losses) on available-for-sale investments is as follows:

Year Ended December 31		2017				2016				2015
(In millions)
Fixed maturity securities		$	728			$	225			$ (1,114)
Equity securities			32				(2	)		(6)
Other			(2	)			1			1
Total net change in unrealized gains (losses) on available-for-sale investments		$	758			$	224			$ (1,119)

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The components of OTTI losses recognized in earnings by asset type are as follows:

Year Ended December 31		2017				2016				2015
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds		$	12			$	59			$ 104
States, municipalities and political subdivisions										18
Asset-backed:
Residential mortgage-backed			1				10			8
Other asset-backed							3			1
Total asset-backed			1				13			9
Total fixed maturities available-for-sale			13				72			131
Equity securities available-for-sale			1				9			25
Net OTTI losses recognized in earnings		$	14			$	81			$ 156

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

		Cost or				Gross				Gross								Unrealized
		Amortized				Unrealized				Unrealized				Estimated				OTTI Losses
December 31, 2017		Cost				Gains				Losses				Fair Value				(Gains)
(In millions)
Fixed maturity securities:
Corporate and other bonds		$	17,210			$	1,625			$	28			$	18,807
States, municipalities and political subdivisions			12,478				1,551				2				14,027				$ (11)
Asset-backed:
Residential mortgage-backed			5,043				109				32				5,120				(27)
Commercial mortgage-backed			1,840				46				14				1,872
Other asset-backed			1,083				16				5				1,094
Total asset-backed			7,966				171				51				8,086				(27)
U.S. Treasury and obligations of government- sponsored enterprises			111				2				4				109
Foreign government			437				9				2				444
Redeemable preferred stock			10				1								11
Fixed maturities available-for-sale			38,212				3,359				87				41,484				(38)
Fixed maturities trading			649				2				2				649
Total fixed maturities			38,861				3,361				89				42,133				(38)
Equity securities:
Common stock			21				7				1				27
Preferred stock			638				31				1				668
Equity securities available-for-sale			659				38				2				695				-
Equity securities trading			518				92				81				529
Total equity securities			1,177				130				83				1,224				-
Total		$	40,038			$	3,491			$	172			$	43,357				$ (38)

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December 31, 2016		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			$ 17,711				$ 1,323				$ 76				$ 18,958				$ (1)
States, municipalities and political subdivisions			12,060				1,213				33				13,240				(16)
Asset-backed:
Residential mortgage-backed			5,004				120				51				5,073				(28)
Commercial mortgage-backed			2,016				48				24				2,040
Other asset-backed			1,022				8				5				1,025
Total asset-backed			8,042				176				80				8,138				(28)
U.S. Treasury and obligations of government-sponsored enterprises			83				10								93
Foreign government			435				13				3				445
Redeemable preferred stock			18				1								19
Fixed maturities available-for-sale			38,349				2,736				192				40,893				(45)
Fixed maturities trading			598				3								601
Total fixed maturities			38,947				2,739				192				41,494				(45)
Equity securities:
Common stock			13				6								19
Preferred stock			93				2				4				91
Equity securities available-for-sale			106				8				4				110				-
Equity securities trading			465				60				86				439
Total equity securities			571				68				90				549				-
Total			$ 39,518				$ 2,807				$ 282				$ 42,043				$ (45)

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

		Less than 12 Months								12 Months or Longer								Total
December 31, 2017		Estimated Fair Value				Gross Unrealized Losses				Estimated Fair Value				Gross Unrealized Losses				Estimated Fair Value				Gross Unrealized Losses
(In millions)
Fixed maturity securities:
Corporate and other bonds			$ 1,354				$ 21				$ 168				$ 7				$ 1,522				$ 28
States, municipalities and political subdivisions			72				1				85				1				157				2
Asset-backed:
Residential mortgage-backed			1,228				5				947				27				2,175				32
Commercial mortgage-backed			403				4				212				10				615				14
Other asset-backed			248				3				18				2				266				5
Total asset-backed			1,879				12				1,177				39				3,056				51
U.S. Treasury and obligations of government- sponsored enterprises			49				2				21				2				70				4
Foreign government			166				2				4								170				2
Total fixed maturity securities			3,520				38				1,455				49				4,975				87
Equity securities:
Common stock			7				1												7				1
Preferred stock			93				1												93				1
Total equity securities			100				2				-				-				100				2
Total			$ 3,620				$ 40				$ 1,455				$ 49				$ 5,075				$ 89

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		Less than								12 Months
		12 Months								or Longer								Total
						Gross								Gross								Gross
		Estimated				Unrealized				Estimated				Unrealized				Estimated				Unrealized
December 31, 2016		Fair Value				Losses				Fair Value				Losses				Fair Value				Losses
Fixed maturity securities:
Corporate and other bonds			$ 2,615				$ 61				$ 254				$ 15				$ 2,869				$ 76
States, municipalities and political subdivisions			959				32				23				1				982				33
Asset-backed:
Residential mortgage-backed			2,136				44				201				7				2,337				51
Commercial mortgage-backed			756				22				69				2				825				24
Other asset-backed			398				5				24								422				5
Total asset-backed			3,290				71				294				9				3,584				80
U.S. Treasury and obligations of government- sponsored enterprises			5																5
Foreign government			108				3												108				3
Total fixed maturity securities			6,977				167				571				25				7,548				192
Equity securities			12								13				4				25				4
Total			$ 6,989				$ 167				$ 584				$ 29				$ 7,573				$ 196

Based on current facts and circumstances, the Company believes the unrealized losses presented in the December 31, 2017 securities in a gross unrealized loss position table above are not indicative of the ultimate collectibility of the current amortized cost of the securities, but rather are attributable to changes in interest rates, credit spreads and other factors. The Company has no current intent to sell securities with unrealized losses, 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 December 31, 2017.

The following table presents the activity related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held at December 31, 2017, 2016 and 2015 for which a portion of an OTTI loss was recognized in Other comprehensive income.

Year Ended December 31		2017				2016				2015
(In millions)
Beginning balance of credit losses on fixed maturity securities		$	36			$	53			$	62
Reductions for securities sold during the period			(9	)			(16	)			(9)
Reductions for securities the Company intends to sell or more likely than not will be required to sell							(1	)
Ending balance of credit losses on fixed maturity securities		$	27			$	36			$	53

Contractual Maturity

The following table presents available-for-sale fixed maturity securities by contractual maturity.

December 31		2017								2016
		Cost or								Cost or
		Amortized				Estimated				Amortized				Estimated
		Cost				Fair Value				Cost				Fair Value
(In millions)
Due in one year or less			$ 1,135				$ 1,157				$ 1,779				$ 1,828
Due after one year through five years			8,165				8,501				7,566				7,955
Due after five years through ten years			16,060				16,718				15,892				16,332
Due after ten years			12,852				15,108				13,112				14,778
Total			$ 38,212				$ 41,484				$ 38,349				$ 40,893

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Actual maturities may differ from contractual maturities because certain securities may be called or prepaid. Securities not due at a single date are allocated based on weighted average life.

Limited Partnerships

The carrying value of limited partnerships as of December 31, 2017 and 2016 was approximately $3.3 billion and $3.2 billion, which includes undistributed earnings of $903 million and $820 million. Limited partnerships comprising 71.6% of the total carrying value are reported on a current basis through December 31, 2017 with no reporting lag, 13.2% of the total carrying value are reported on a one month lag and the remainder are reported on more than a one month lag. The number of limited partnerships held and the strategies employed provide diversification to the limited partnership portfolio and the overall invested asset portfolio.

Limited partnerships comprising 78.8% and 76.6% of the carrying value as of December 31, 2017 and 2016 employ hedge fund strategies. Limited partnerships comprising 18.1% and 19.8% of the carrying value at December 31, 2017 and 2016 were invested in private debt and equity and the remainder were primarily invested in real estate strategies. Hedge fund strategies include both long and short positions in fixed income, equity and derivative instruments. These hedge fund strategies may seek to generate gains from mispriced or undervalued securities, price differentials between securities, distressed investments, sector rotation or various arbitrage disciplines. Within hedge fund strategies, approximately 64.5% were equity related, 20.7% pursued a multi-strategy approach, 11.1% were focused on distressed investments and 3.7% were fixed income related as of December 31, 2017.

The ten largest limited partnership positions held totaled $1.5 billion as of December 31, 2017 and 2016. Based on the most recent information available regarding the Company’s percentage ownership of the individual limited partnerships, the carrying value reflected on the Consolidated Balance Sheets represents approximately 2.9% and 3.5% of the aggregate partnership equity at December 31, 2017 and 2016, and the related income reflected on the Consolidated Statements of Income represents approximately 3.0%, 4.0% and 2.8% of the changes in aggregate partnership equity for the years ended December 31, 2017, 2016 and 2015.

While the Company generally does not invest in highly leveraged partnerships, there are risks inherent in limited partnership investments which may result in losses due to short-selling, derivatives or other speculative investment practices. The use of leverage increases volatility generated by the underlying investment strategies.

The Company’s limited partnership investments contain withdrawal provisions that generally limit liquidity for a period of thirty days up to one year and in some cases do not permit withdrawals until the termination of the partnership. Typically, withdrawals require advance written notice of up to 90 days.

Derivative Financial Instruments

The Company may use derivatives in the normal course of business, primarily in an attempt to reduce exposure to market risk (principally interest rate risk, credit risk, equity price risk, commodity price risk and foreign currency risk) stemming from various assets and liabilities. The principal objective under such strategies is to achieve the desired reduction in economic risk, even if the position does not receive hedge accounting treatment.

The Company may enter into interest rate swaps, futures and forward commitments to purchase securities to manage interest rate risk. Credit derivatives such as credit default swaps may be entered into to modify the credit risk inherent in certain investments. Forward contracts, futures, swaps and options may be used to manage foreign currency and commodity price risk.

In addition to the derivatives used for risk management purposes described above, the Company may also use derivatives for purposes of income enhancement. Income enhancement transactions include but are not limited to interest rate swaps, call options, put options, credit default swaps, index futures and foreign currency forwards. See Note 4 for information regarding the fair value of derivative instruments.

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The following tables present the aggregate contractual or notional amount and estimated fair value related to derivative financial instruments.

December 31		2017												2016
		Contractual/												Contractual/
		Notional				Estimated Fair Value								Notional				Estimated Fair Value
		Amount				Asset				(Liability)				Amount				Asset				(Liability)
(In millions)
With hedge designation:
Interest rate swaps		$	500			$	4
Without hedge designation:
Equity markets:
Options – purchased			224				12								$ 223				$ 14
– written			290								$ (7)				267								$ (8)
Futures – short			265				1								225				1
Commodity futures – long			44												42
Embedded derivative on funds withheld liability			167								(3)				174				3

Investment Commitments

As of December 31, 2017, the Company had committed approximately $384 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. Purchases and sales of privately placed debt securities are recorded once funded. As of December 31, 2017, the Company had commitments to purchase or fund additional amounts of $165 million and sell $108 million under the terms of such securities.

Investments on Deposit

Securities with carrying values of approximately $2.6 billion and $2.3 billion were deposited by CNA’s insurance subsidiaries under requirements of regulatory authorities and others as of December 31, 2017 and 2016.

Cash and securities with carrying values of approximately $471 million and $514 million were deposited with financial institutions as collateral for letters of credit as of December 31, 2017 and 2016. In addition, cash and securities were deposited in trusts with financial institutions to secure reinsurance and other obligations with various third parties. The carrying values of these deposits were approximately $587 million and $261 million as of December 31, 2017 and 2016.

Note 4. 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.

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

Prices may fall within Level 1, 2 or 3 depending upon the methodology 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 a methodology and inputs the Company believes market participants would use to value the assets. Prices obtained from third-party pricing services or brokers are not adjusted by the Company.

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 may include: (i) the review of pricing service methodologies or broker pricing qualifications, (ii) back-testing, where past fair value estimates are compared to actual transactions executed in the market on similar dates, (iii) exception reporting, where period-over-period changes in price are reviewed and challenged with the pricing service or broker based on exception criteria, (iv) detailed analysis, where the Company performs an independent analysis of the inputs and assumptions used to price individual securities and (v) pricing validation, where prices received are compared to prices independently estimated by the Company.

Assets and liabilities measured at fair value on a recurring basis are summarized in the following tables. Corporate bonds and other includes obligations of the U.S. Treasury, government-sponsored enterprises and foreign governments and redeemable preferred stock.

December 31, 2017		Level 1				Level 2				Level 3				Total
(In millions)
Fixed maturity securities:
Corporate bonds and other		$	128			$	19,145			$	98			$	19,371
States, municipalities and political subdivisions							14,026				1				14,027
Asset-backed							7,751				335				8,086
Fixed maturities available-for-sale			128				40,922				434				41,484
Fixed maturities trading			10				635				4				649
Total fixed maturities		$	138			$	41,557			$	438			$	42,133
Equity securities available-for-sale		$	91			$	584			$	20			$	695
Equity securities trading			527								2				529
Total equity securities		$	618			$	584			$	22			$	1,224
Short term and other		$	3,669			$	958							$	4,627
Receivables			1				4								5
Payable to brokers			(12	)											(12)

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December 31, 2016		Level 1				Level 2				Level 3				Total
(In millions)
Fixed maturity securities:
Corporate bonds and other		$	112			$	19,273			$	130			$	19,515
States, municipalities and political subdivisions							13,239				1				13,240
Asset-backed							7,939				199				8,138
Fixed maturities available-for-sale			112				40,451				330				40,893
Fixed maturities trading							595				6				601
Total fixed maturities		$	112			$	41,046			$	336			$	41,494
Equity securities available-for-sale		$	91							$	19			$	110
Equity securities trading			438								1				439
Total equity securities		$	529			$	-			$	20			$	549
Short term and other		$	3,888			$	858							$	4,746
Receivables			1												1
Life settlement contracts										$	58				58
Payable to brokers			(44	)											(44)

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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 years ended December 31, 2017 and 2016:

														Purchases				Sales				Settlements				Transfers into Level 3				Transfers out of Level 3				Balance, December 31				Unrealized Gains (Losses) Recognized in Net Income on Level 3 Assets and Liabilities Held at December 31
						Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)
2017		Balance, January 1				Included in Net Income				Included in OCI
(In millions)
Fixed maturity securities:
Corporate bonds and other		$	130							$	3			$	18			$	(5	)		$	(54	)		$	16			$	(10	)		$	98
States, municipalities and political subdivisions			1																																1
Asset-backed			199			$	2				3				107								(43	)			153				(86	)			335
Fixed maturities available-for-sale			330				2				6				125				(5	)			(97	)			169				(96	)			434			$	-
Fixed maturities trading			6				(2	)																											4				(2)
Total fixed maturities		$	336			$	-			$	6			$	125			$	(5	)		$	(97	)		$	169			$	(96	)		$	438			$	(2)
Equity securities available-for-sale		$	19							$	3			$	1			$	(3	)														$	20
Equity securities trading			1			$	(1	)							2																				2
Total equity securities		$	20			$	(1	)		$	3			$	3			$	(3	)		$	-			$	-			$	-			$	22			$	-
Life settlement contracts		$	58			$	6											$	(59	)		$	(5	)										$	-
Derivative financial instruments, net			-				1												(1	)															-

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2016		Balance, January 1												Purchases				Sales				Settlements				Transfers into Level 3				Transfers out of Level 3				Balance, December 31				Unrealized Gains (Losses) Recognized in Net Income on Level 3 Assets and Liabilities Held at December 31
		Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)
		Included in Net Income				Included in OCI
(In millions)
Fixed maturity securities:
Corporate bonds and other		$	168			$	1			$	1			$	163			$	(36	)		$	(103	)						$	(64	)		$	130
States, municipalities and political subdivisions			2																				(1	)											1
Asset-backed			209								(5	)			133				(25	)			(32	)		$	61				(142	)			199
Fixed maturities available-for-sale			379				1				(4	)			296				(61	)			(136	)			61				(206	)			330			$	-
Fixed maturities trading			85				5								2				(86	)															6				3
Total fixed maturities		$	464			$	6			$	(4	)		$	298			$	(147	)		$	(136	)		$	61			$	(206	)		$	336			$	3
Equity securities available-for-sale		$	20			$	(1	)																										$	19			$	(2)
Equity securities trading			1				1											$	(1	)															1
Total equity securities		$	21			$	-			$	-			$	-			$	(1	)		$	-			$	-			$	-			$	20			$	(2)
Life settlement contracts		$	74			$	5															$	(21	)										$	58			$	(3)
Derivative financial instruments, net			3				(1	)										$	(2	)															-

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

Major Category of Assets and Liabilities		Consolidated 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

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Securities may be transferred in or out of levels within the fair value hierarchy based on the availability of observable market information and quoted prices used to determine the fair value of the security. The availability of observable market information and quoted prices varies based on market conditions and trading volume. During the year ended December 31, 2017 there were $10 million of transfers from Level 1 to Level 2 and no transfers from Level 2 to Level 1. During the year ended December 31, 2016, there were no transfers between Level 1 and Level 2. The Company’s policy is to recognize transfers between levels at the beginning of quarterly reporting periods.

Valuation Methodologies and Inputs

The following section describes the valuation methodologies and relevant inputs used to measure different financial instruments at fair value, including an indication of the level in the fair value hierarchy in which the instruments are generally classified.

Fixed Maturity Securities

Level 1 securities include highly liquid and exchange traded bonds and redeemable preferred stock, valued using quoted market prices. Level 2 securities include most other fixed maturity securities as the significant inputs are observable in the marketplace. All classes of Level 2 fixed maturity securities are valued using a methodology based on information generated by market transactions involving identical or comparable assets, a discounted cash flow methodology or a combination of both when necessary. Common inputs for all classes of fixed maturity securities include prices from recently executed transactions of similar securities, marketplace quotes, benchmark yields, spreads off benchmark yields, interest rates and U.S. Treasury or swap curves. Specifically for asset-backed securities, key inputs include prepayment and default projections based on past performance of the underlying collateral and current market data. Fixed maturity securities are primarily assigned to Level 3 in cases where broker/dealer quotes are significant inputs to the valuation and there is a lack of transparency as to whether these quotes are based on information that is observable in the marketplace. Level 3 securities also include private placement debt securities whose fair value is determined using internal models with inputs that are not market observable.

Equity Securities

Level 1 equity securities include publicly traded securities valued using quoted market prices. Level 2 securities are primarily non-redeemable preferred stocks and common stocks valued using pricing for similar securities, recently executed transactions and other pricing models utilizing market observable inputs. Level 3 securities are primarily priced using broker/dealer quotes and internal models with inputs that are not market observable.

Derivative Financial Instruments

Exchange traded derivatives are valued using quoted market prices and are classified within Level 1 of the fair value hierarchy. Level 2 derivatives primarily include currency forwards valued using observable market forward rates. Over-the-counter derivatives, principally interest rate swaps, total return swaps, commodity swaps, equity warrants and options, are valued using inputs including broker/dealer quotes and are classified within Level 2 or Level 3 of the valuation hierarchy, depending on the amount of transparency as to whether these quotes are based on information that is observable in the marketplace.

Short Term and Other Invested Assets

Securities that are actively traded or have quoted prices are classified as Level 1. These securities include money market funds, treasury bills and exchange traded open-end funds valued using quoted market prices. Level 2 primarily includes commercial paper, for which all inputs are market observable. Fixed maturity securities purchased within one year of maturity are classified consistent with fixed maturity securities discussed above. Short term investments as presented in the tables above differ from the amounts presented in the Consolidated Balance Sheets because certain short term investments, such as time deposits, are not measured at fair value.

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Life Settlement Contracts

Historically, the fair value of life settlement contracts was determined as the present value of the anticipated death benefits less anticipated premium payments based on contract terms that are distinct for each insured, as well as CNA’s own assumptions for mortality, premium expense and the rate of return that a buyer would require on the contracts. As of December 31, 2016 CNA reached an agreement on terms to sell the portfolio and the purchase and sale agreement related to the portfolio was executed on March 7, 2017. At December 31, 2016, the valuation of the life settlement contracts was based on the terms of the sale of the contract to a third party. Despite the sale, the contracts were classified as Level 3 as there is not an active market for life settlement contracts.

Significant Unobservable Inputs

The following tables present quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurement of Level 3 assets. Valuations for assets and liabilities not presented in the tables 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. The valuation of life settlement contracts was based on the terms of the sale of the contracts to a third party; therefore the contracts are not included in the tables below.

December 31, 2017		Estimated Fair Value				Valuation Techniques				Unobservable Inputs		Range (Weighted Average)
		(In millions)
Fixed maturity securities		$	136				Discounted cash flow			Credit spread			1% – 12%	(3%)
December 31, 2016		Estimated Fair Value				Valuation Techniques				Unobservable Inputs		Range (Weighted Average)
		(In millions)
Fixed maturity securities		$	106				Discounted cash flow			Credit spread			2% – 40%	(4%)

For fixed maturity securities, an increase to the credit spread assumptions would result in a lower fair value measurement.

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Financial Assets and Liabilities Not Measured at Fair Value

The carrying amount, estimated fair value and the level of the fair value hierarchy of the Company’s financial assets and liabilities which are not measured at fair value on the Consolidated Balance Sheets are presented in the following tables. The carrying amounts and estimated fair values of short term debt and long term debt exclude capital lease obligations. The carrying amounts reported on the Consolidated 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
December 31, 2017		Amount				Level 1				Level 2				Level 3				Total
(In millions)
Assets:
Other invested assets, primarily mortgage loans		$	839											$	844			$	844
Liabilities:
Short term debt			278							$	156				122				278
Long term debt			11,236								10,966				525				11,491
December 31, 2016
Assets:
Other invested assets, primarily mortgage loans		$	591											$	594			$	594
Liabilities:
Short term debt			107							$	104				3				107
Long term debt			10,655								10,150				646				10,796

The following methods and assumptions were used in estimating the fair value of these financial assets and liabilities.

The fair values of mortgage loans, included in Other invested assets, were based on the present value of the expected future cash flows discounted at the current interest rate for similar financial instruments, adjusted for specific loan risk.

Fair value of debt was based on observable market prices when available. When observable market prices were not available, the fair value of debt was based on observable market prices of comparable instruments adjusted for differences between the observed instruments and the instruments being valued or is estimated using discounted cash flow analyses, based on current incremental borrowing rates for similar types of borrowing arrangements.

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Note 5. Receivables

December 31		2017				2016
(In millions)
Reinsurance (Note 15)		$	4,290			$	4,453
Insurance			2,336				2,255
Receivable from brokers			69				178
Accrued investment income			413				410
Federal income taxes			52				7
Other, primarily customer accounts			533				431
Total			7,693				7,734
Less: allowance for doubtful accounts on reinsurance receivables			29				37
allowance for other doubtful accounts			51				53
Receivables		$	7,613			$	7,644

Note 6. Property, Plant and Equipment

December 31		2017				2016
(In millions)
Pipeline equipment (net of accumulated depreciation of $2,453 and $2,174)		$	7,857			$	7,631
Offshore drilling equipment (net of accumulated depreciation of $2,797 and $3,310)			5,226				5,693
Other (net of accumulated depreciation of $1,009 and $873)			1,886				1,527
Construction in process			458				379
Property, plant and equipment		$	15,427			$	15,230

The balance of other property, plant and equipment as of December 31, 2017 includes $366 million for Consolidated Container.

Depreciation expense and capital expenditures are as follows:

Year Ended December 31		2017								2016								2015
		Depre- ciation				Capital Expend.				Depre- ciation				Capital Expend.				Depre- ciation				Capital Expend.
(In millions)
CNA Financial		$	80			$	101			$	67			$	128			$	74			$	123
Diamond Offshore			349				113				384				629				494				812
Boardwalk Pipeline			325				689				321				648				327				390
Loews Hotels & Co			63				57				63				164				54				389
Corporate			37				30				6				3				6				4
Total		$	854			$	990			$	841			$	1,572			$	955			$	1,718

Capitalized interest related to the construction and upgrade of qualifying assets amounted to approximately $37 million, $51 million and $36 million for the years ended December 31, 2017, 2016 and 2015.

Diamond Offshore

Purchase of Assets

In 2016, Diamond Offshore took delivery of one ultra-deepwater semisubmersible rig. The net book value of this newly constructed rig was $774 million at December 31, 2016.

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Sale of Assets

In 2016, Diamond Offshore entered into a ten-year agreement with a subsidiary of GE Oil & Gas (“GE”) to provide services with respect to certain blowout preventer and related well control equipment on four drillships. Such services include management of maintenance, certification and reliability with respect to such equipment. In connection with the contractual services agreement with GE, Diamond Offshore completed four sale and leaseback transactions with a GE affiliate during 2016 with respect to the well control equipment on its four drillships and received an aggregate of $210 million in proceeds, which was less than the carrying value of the equipment. The resulting difference was recorded as prepaid rent with no gain or loss recognized on the transactions, and will be amortized over the terms of the operating leases. Future commitments under the operating leases and contractual services agreements are estimated to aggregate approximately $550 million over the remaining term of the agreements.

For the years ended December 31, 2017 and 2016, Diamond Offshore recognized $62 million and $34 million in aggregate expense related to the well control equipment leases and contractual services agreement.

Asset Impairments

During 2017, in response to continued depressed market conditions for the offshore contract drilling industry, Diamond Offshore’s expectations that a market recovery is not likely to occur in the near term, as well as decisions by management to market certain rigs for sale, Diamond Offshore evaluated ten of its drilling rigs with indications that their carrying values may not be recoverable. Based on its analyses, Diamond Offshore determined that the carrying values of three rigs were impaired, consisting of one ultra-deepwater semisubmersible, one deepwater semisubmersible and one jack-up rig.

Diamond Offshore estimated the fair value of two of the impaired rigs using an income approach, in which the fair value was estimated based on a calculation of the rig’s discounted future net cash flows over its remaining economic life, which utilized significant unobservable inputs, including assumptions related to estimated dayrate revenue, rig utilization, estimated reactivation and regulatory survey costs, as well as estimated proceeds that may be received on ultimate disposition of the rig. The fair value of the other impaired rig was estimated using a market approach, which required Diamond Offshore to estimate the value that would be received for the rig in the principal or most advantageous market for that rig in an orderly transaction between market participants. This estimate was primarily based on an indicative bid to purchase the rig, as well as our evaluation of other market data points; however, the rig has not been sold. These fair value estimates were representative of Level 3 fair value measurements due to the significant level of estimation involved and the lack of transparency as to the inputs used. During the year ended December 31, 2017, Diamond Offshore recorded asset impairment charges in the aggregate of $100 million ($32 million after tax and noncontrolling interests).

Diamond Offshore recorded aggregate asset impairment charges of $672 million ($263 million after tax and noncontrolling interests for the year ended December 31, 2016. See Note 6 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 for further discussion of Diamond Offshore’s 2016 asset impairments. Diamond Offshore recorded aggregate asset impairment charges of $861 million ($341 million after tax and noncontrolling interests) for the year ended December 31, 2015. See Note 6 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 for further discussion of Diamond Offshore’s 2015 asset impairments. The asset impairment charges recorded during the years ended December 31, 2017, 2016 and 2015 are reported within Other operating expenses on the Consolidated Statements of Income.

Boardwalk Pipeline

Sale of Assets

During 2017, Boardwalk Pipeline sold a processing plant and related assets for approximately $64 million, including customary adjustments. The sale resulted in a loss of $47 million ($15 million after tax and noncontrolling interests) and is reported within Other operating expenses on the Consolidated Statements of Income.

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Note 7. Goodwill and Other Intangible Assets

A summary of the changes in the carrying amount of goodwill is as follows:

		Total				CNA Financial				Diamond Offshore				Boardwalk Pipeline				Loews Hotels & Co				Corporate
(In millions)
Balance, December 31, 2015		$	351			$	114			$	-			$	237			$	-			$	-
Other adjustments			(5	)			(5	)
Balance, December 31, 2016			346				109				-				237				-				-
Acquisition			310																				310
Other adjustments			3				3
Balance, December 31, 2017		$	659			$	112			$	-			$	237			$	-			$	310

The increase in the goodwill balance as of December 31, 2017 primarily reflects the acquisition of Consolidated Container. See Note 2 for further discussion on the acquisition.

An impairment charge of $20 million was recorded in Other operating expenses in 2015 to write off all goodwill attributable to Diamond Offshore.

A summary of the net carrying amount of other intangible assets is as follows:

		December 31, 2017								December 31, 2016
		Gross Carrying Amount				Accumulated Amortization				Gross Carrying Amount				Accumulated Amortization
(In millions)
Finite-lived intangible assets:
Customer relationships		$	518			$	22			$	59			$	8
Other			74				13				21				7
Total finite-lived intangible assets			592				35				80				15
Indefinite-lived intangible assets			81								77
Total other intangible assets		$	673			$	35			$	157			$	15

The balance of finite-lived intangible assets as of December 31, 2017 includes assets from the acquisition of Consolidated Container.

Amortization expense for the years ended December 31, 2017, 2016 and 2015 of $20 million, $3 million and $3 million is reported in Other operating expenses on the Company’s Consolidated Statements of Income. At December 31, 2017, estimated amortization expense in each of the next five years is approximately $32 million in 2018, $32 million in 2019, $31 million in 2020, $30 million in 2021 and $30 million in 2022.

Note 8. 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 claim reserving trends and 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.

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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 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 $380 million, $165 million and $141 million for the years ended December 31, 2017, 2016 and 2015. Net catastrophe losses for the year ended December 31, 2017 included $256 million related to Hurricanes Harvey, Irma and Maria. Catastrophe-related reinsurance reinstatement premium was $4 million for the year ended December 31, 2017. The remaining net catastrophe losses in 2017 resulted primarily from the California wildfires and U.S. weather-related events. Net catastrophe losses in 2016 related primarily to U.S. weather-related events and the Fort McMurray wildfires. Net catastrophe losses in 2015 related primarily to U.S. weather-related events.

Liability for Unpaid Claim and Claim Adjustment Expenses

The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of Other Insurance Operations.

Year Ended December 31		2017				2016				2015
(In millions)
Reserves, beginning of year:
Gross		$	22,343			$	22,663			$	23,271
Ceded			4,094				4,087				4,344
Net reserves, beginning of year			18,249				18,576				18,927
Net incurred claim and claim adjustment expenses:
Provision for insured events of current year			5,201				5,025				4,934
Decrease in provision for insured events of prior years			(381	)			(342	)			(255)
Amortization of discount			179				175				166
Total net incurred (a)			4,999				4,858				4,845
Net payments attributable to:
Current year events			(975	)			(967	)			(856)
Prior year events			(4,366	)			(4,167	)			(4,089)
Total net payments			(5,341	)			(5,134	)			(4,945)
Foreign currency translation adjustment and other			163				(51	)			(251)
Net reserves, end of year			18,070				18,249				18,576
Ceded reserves, end of year			3,934				4,094				4,087
Gross reserves, end of year		$	22,004			$	22,343			$	22,663

(a)	Total net incurred above does not agree to Insurance claims and policyholders’ benefits as reflected in the Consolidated Statements of Income due to amounts related to retroactive reinsurance deferred gain accounting, uncollectible reinsurance and loss deductible receivables and benefit expenses related to future policy benefits, which are not reflected in the table above.

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Reserving Methodology

In developing claim and claim adjustment expense (“loss” or “losses”) reserve estimates, CNA’s actuaries perform detailed reserve analyses that are staggered throughout the year. Every reserve group is reviewed at least once during the year. The analyses generally review losses gross of ceded reinsurance and apply the ceded reinsurance terms to the gross estimates to establish estimates net of reinsurance. In addition to the detailed analyses, CNA reviews actual loss emergence for all products each quarter. In developing the loss reserve estimates for property and casualty contracts, CNA generally projects ultimate losses using several common actuarial methods as listed below. CNA reviews the various indications from the various methods and applies judgment to select an actuarial point estimate. The indicated required reserve is the difference between the selected ultimate loss and the inception-to-date paid losses. The difference between the selected ultimate loss and the case incurred or reported loss is IBNR. IBNR includes a provision for development on known cases as well as a provision for late reported incurred claims. Further, CNA does not establish case reserves for allocated loss adjustment expenses (“ALAE”), therefore ALAE reserves are included in its estimate of IBNR. The most frequently utilized methods to project ultimate losses include the following:

	•		Paid development: The paid development method estimates ultimate losses by reviewing paid loss patterns and applying them to accident years with further expected changes in paid losses.

	•		Incurred development: The incurred development method is similar to the paid development method, but it uses case incurred losses instead of paid losses.

	•		Loss ratio: The loss ratio method multiplies premiums by an expected loss ratio to produce ultimate loss estimates for each accident year.

	•		Bornhuetter-Ferguson using premiums and paid loss: The Bornhuetter-Ferguson using premiums and paid loss method is a combination of the paid development approach and the loss ratio approach. This method normally determines expected loss ratios similar to the approach used to estimate the expected loss ratio for the loss ratio method.

	•		Bornhuetter-Ferguson using premiums and incurred loss: The Bornhuetter-Ferguson using premiums and incurred loss method is similar to the Bornhuetter-Ferguson using premiums and paid loss method except that it uses case incurred losses.

	•		Frequency times severity: The frequency times severity method multiplies a projected number of ultimate claims by an estimated ultimate average loss for each accident year to produce ultimate loss estimates.

	•		Stochastic modeling: The stochastic modeling produces a range of possible outcomes based on varying assumptions related to the particular product being modeled.

For many exposures, especially those that can be considered long-tail, a particular accident or policy year may not have a sufficient volume of paid losses to produce a statistically reliable estimate of ultimate losses. In such a case, CNA’s actuaries typically assign more weight to the incurred development method than to the paid development method. As claims continue to settle and the volume of paid loss increases, the actuaries may assign additional weight to the paid development method. For most of CNA’s products, even the incurred losses for accident or policy years that are early in the claim settlement process will not be of sufficient volume to produce a reliable estimate of ultimate losses. In these cases, CNA may not assign any weight to the paid and incurred development methods. CNA may use the loss ratio, Bornhuetter-Ferguson and frequency times severity methods. For short-tail exposures, the paid and incurred development methods can often be relied on sooner, primarily because CNA’s history includes a sufficient number of years to cover the entire period over which paid and incurred losses are expected to change. However, CNA may also use the loss ratio, Bornhuetter-Ferguson and frequency times severity methods for short-tail exposures. For other more complex reserve groups where the above methods may not produce reliable indications, CNA uses additional methods tailored to the characteristics of the specific situation.

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Future Policy Benefit Reserves

Reserves for policyholder benefits for Other Insurance Operations, which primarily includes long term care, are based on actuarial assumptions which include estimates of morbidity, persistency, inclusive of mortality, discount rates, future premium rate increases and expenses over the life of the contracts. Under GAAP, the best estimates of the actuarial assumptions at the date the contract was issued are locked-in throughout the life of the contract unless a premium deficiency develops, which occurred in 2015. As a result, CNA updated the assumptions to represent management’s best estimates at the time of the premium deficiency and these revised assumptions are locked-in unless another premium deficiency is identified.

Certain claim liabilities are more difficult to estimate and have differing methodologies and considerations which are described below.

Mass Tort and A&EP Reserves

CNA’s mass tort and A&EP reserving methodologies are similar as both are based on detailed account reviews of large accounts with estimates based on ultimate payments considering the applicable law and coverage litigation. These reserves are subject to greater inherent variability than is typical of the remainder of CNA’s reserves due to, among other things, a general lack of sufficiently detailed data, expansion of the population being held responsible for these exposures and significant unresolved legal issues such as the existence of coverage and the definition of an occurrence.

Property and Casualty Reserve Reviews

CNA’s actuarial reserve analyses result in point estimates. Each quarter, the results of detailed reserve reviews are summarized and discussed with CNA’s senior management to determine management’s best estimate of reserves. CNA’s senior management considers many factors in making this decision. The factors include, but are not limited to, the historical pattern and volatility of the actuarial indications, the sensitivity of the actuarial indications to changes in paid and incurred loss patterns, the consistency of claims handling processes, the consistency of case reserving practices, changes in CNA’s pricing and underwriting, pricing and underwriting trends in the insurance market and legal, judicial, social and economic trends. CNA’s recorded reserves reflect its best estimate as of a particular point in time based upon known facts, consideration of the factors cited above and its judgment. The carried reserve differs from the actuarial point estimate as the result of CNA’s consideration of the factors noted above as well as the potential volatility of the projections associated with the specific product being analyzed and other factors affecting claims costs that may not be quantifiable through traditional actuarial analysis.

Development Tables

The loss reserve development tables presented herein illustrate the change over time of reserves established for claim and allocated claim adjustment expenses arising from short duration insurance contracts for certain lines of business within CNA’s Property and Casualty Operations. Not all lines of business are presented based on their context to CNA’s overall loss reserves, calendar year reserve development, or calendar year net earned premiums. Insurance contracts are considered to be short duration contracts when the contracts are not expected to remain in force for an extended period of time. The Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses tables, reading across, show the cumulative net incurred claim and allocated claim adjustment expenses relating to each accident year at the end of the stated calendar year. Changes in the cumulative amount across time are the result of CNA’s expanded awareness of additional facts and circumstances that pertain to the unsettled claims. The Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses tables, reading across, show the cumulative amount paid for claims in each accident year as of the end of the stated calendar year. The Net Strengthening or (Releases) of Prior Accident Year Reserves tables, reading across, show the net increase or decrease in the cumulative net incurred accident year claim and allocated claim adjustment expenses during each stated calendar year and indicates whether the reserves for that accident year were strengthened or released.

The information in the tables is reported on a net basis after reinsurance and does not include the effects of discounting. The information contained in the years preceding calendar year 2016 is unaudited. To the extent CNA enters into a commutation, the transaction is reported on a prospective basis. To the extent that CNA enters into a

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disposition, the effects of the disposition are reported on a retrospective basis by removing the balances associated with it.

The amounts reported for the cumulative number of reported claims include direct and assumed open and closed claims by accident year at the claimant level. The number excludes claim counts for claims within a policy deductible where the insured is responsible for payment of losses in the deductible layer. Claim count data for certain assumed reinsurance contracts is unavailable.

In the loss reserve development tables, IBNR includes reserves for incurred but not reported losses and expected development on case reserves.

The following tables present the gross and net carried reserves:

December 31, 2017		Property and Casualty Operations				Other Insurance Operations				Total
(In millions)
Gross Case Reserves		$	6,913			$	4,757			$	11,670
Gross IBNR Reserves			9,156				1,178				10,334
Total Gross Carried Claim and Claim Adjustment Expense Reserves		$	16,069			$	5,935			$	22,004
Net Case Reserves		$	6,343			$	3,302			$	9,645
Net IBNR Reserves			8,232				193				8,425
Total Net Carried Claim and Claim Adjustment Expense Reserves		$	14,575			$	3,495			$	18,070
December 31, 2016
(In millions)
Gross Case Reserves		$	7,164			$	4,696			$	11,860
Gross IBNR Reserves			9,207				1,276				10,483
Total Gross Carried Claim and Claim Adjustment Expense Reserves		$	16,371			$	5,972			$	22,343
Net Case Reserves		$	6,582			$	3,045			$	9,627
Net IBNR Reserves			8,328				294				8,622
Total Net Carried Claim and Claim Adjustment Expense Reserves		$	14,910			$	3,339			$	18,249

Net Prior Year Development

Changes in estimates of claim and claim adjustment expense reserves and premium accruals, net of reinsurance, for prior years are defined as net prior year development. These changes can be favorable or unfavorable. Favorable net prior year development of $302 million, $316 million and $218 million was recorded for Property and Casualty Operations for the years ended December 31, 2017, 2016 and 2015.

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Favorable net prior year development of $89 million, $43 million and $50 million was recorded for Other Insurance Operations for the years ended December 31, 2017, 2016 and 2015. The favorable net prior year development for the year ended December 31, 2017 was driven by lower than expected claim severity.

Premium development can occur in the Property and Casualty Operations when there is a change in exposure on auditable policies or when premium accruals differ from processed premium. Audits on policies usually occur in a period after the expiration date of the policy.

The following table and discussion presents detail of the net prior year claim and claim adjustment expense reserve development in CNA’s Property and Casualty Operations:

Year Ended December 31		2017				2016				2015
(In millions)
Medical professional liability		$	5			$	(37	)		$	(43)
Other professional liability and management liability			(131	)			(130	)
Surety			(84	)			(63	)			(69)
Commercial auto			(38	)			(46	)			(22)
General liability							(28	)			(33)
Workers’ compensation			(65	)			150				80
Other			5				(134	)			(123)
Total pretax (favorable) unfavorable development		$	(308	)		$	(288	)		$	(210)

2017

Unfavorable development in medical professional liability was primarily due to continued higher than expected frequency in aging services and higher than expected severity for hospitals in recent accident years. This was partially offset by favorable development in life sciences and hospitals in prior accident years as well as favorable development related to unallocated claim adjustment expenses.

Favorable development in other professional liability and management liability was primarily due to favorable settlements on closed claims and a lower frequency of large losses for accident years 2011 through 2015 for professional and management liability, lower than expected claim frequency in accident years 2012 through 2015 for professional liability and lower than expected severity in accident years 2014 through 2015 for professional liability.

Favorable development in surety coverages was primarily due to lower than expected frequency of large losses in accident years 2015 and prior.

Favorable development for commercial auto was primarily due to lower than expected severity in accident years 2013 through 2016, as well as a large favorable recovery on a claim in accident year 2012.

Favorable development for workers’ compensation was primarily related to decreases in frequency and severity in recent accident years, partially attributable to California reforms impacting medical costs. This was partially offset by unfavorable development related to an adverse arbitration ruling on reinsurance recoverables from older accident years as well as the recognition of loss estimates associated with favorable premium development.

Unfavorable development for other coverages was primarily due to higher than expected severity in accident year 2016 and higher than expected large claim frequency in the Hardy Political Risks portfolio relating largely to accident year 2016. This unfavorable development was largely offset by favorable development due to better than expected frequency in accident years 2014 through 2015, better than expected emergence in Canadian run-off business in accident years 2014 and prior, several favorable settlements relating to large claims in the Europe Professional Indemnity portfolio and lower than expected large loss frequency in the Europe Financial Institutions portfolio.

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2016

Favorable development for medical professional liability was primarily due to lower than expected severities for individual health care professionals, allied facilities and hospitals in accident years 2011 and prior and better than expected severity in medical products liability in accident years 2010 through 2015. This was partially offset by unfavorable development in accident years 2012 and 2013 related to higher than expected large loss emergence in hospitals and higher than expected frequency and severity in accident years 2014 and 2015 in the aging services business.

Favorable development in other professional liability and management liability was primarily due to favorable settlements on closed claims and lower than expected frequency of claims in accident years 2010 through 2014 related to professional services and financial institutions. This was partially offset by unfavorable development related to a specific financial institutions claim in accident year 2014, higher management liability severities in accident year 2015 and deterioration on credit crises-related claims in accident year 2009.

Favorable development in surety coverages was primarily due to lower than expected frequency of large losses in accident years 2014 and prior.

Favorable development for commercial auto was primarily due to favorable settlements on claims in accident years 2010 through 2014 and lower than expected severities in accident years 2012 through 2015.

Favorable development for general liability was primarily due to better than expected claim settlements in accident years 2012 through 2014 and better than expected severity on umbrella claims in accident years 2010 through 2013. This was partially offset by unfavorable development related to an increase in reported claims prior to the closing of the three year window set forth by the Minnesota Child Victims Act in accident years 2006 and prior.

Unfavorable development for workers’ compensation was primarily due to higher than expected severity for Defense Base Act contractors that largely resulted from a reduction of expected future recoveries from the U.S. Department of Labor under the War Hazard Act. Further unfavorable development was due to the impact of recent Florida court rulings for accident years 2008 through 2015. These were partially offset by favorable development related to lower than expected frequencies related to the ongoing Middle Market and Small Business results for accident years 2009 through 2014.

Favorable development for other coverages was due to better than expected claim frequency and claim severity in accident years 2010 through 2015, better than expected loss frequency in accident years 2013 through 2015, better than expected severity on the December 2015 United Kingdom floods, better than expected attritional losses and large loss experience on accident years 2013 through 2015 for Hardy business and favorable settlements on claims in accident years 2013 and prior related to CNA’s Canadian package business. Additional favorable development was due to a commutation of exposures in marine run-off classes on CNA’s Europe business and lower than expected frequency of large losses related to CNA’s Europe business in accident years 2013 and 2015. This was partially offset by unfavorable development related to higher than expected severity from a fourth quarter 2015 catastrophe event.

2015

Overall, favorable development for medical professional liability was related to lower than expected severity in accident years 2012 and prior. Unfavorable development was recorded related to increased claim frequency and severity in the aging services business in accident years 2013 and 2014.

Favorable development in other professional liability and management liability related to better than expected large loss emergence in financial institutions primarily in accident years 2011 through 2014. Additional favorable development related to lower than expected severity for professional services in accident years 2011 and prior. Unfavorable development was recorded related to increased frequency of large claims on public company management liability in accident years 2012 through 2014.

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Favorable development for surety coverages was primarily due to lower than expected frequency of large losses in accident years 2013 and prior.

Favorable development for commercial auto was primarily due to lower than expected severity in accident years 2009 through 2014.

Favorable development for general liability was primarily due to favorable settlements on claims in accident years 2010 through 2013.

Unfavorable development for workers’ compensation was primarily due to higher than expected severity related to Defense Base Act contractors in accident years 2008 through 2014.

Favorable development for other coverages was due to better than expected claim frequency in accident year 2014, better than expected claim emergence from 2012 and 2014 catastrophe events, better than expected large loss emergence in accident years 2012 and prior and better than expected individual large loss emergence and favorable settlements on large claims in accident years 2013 and 2014. This was partially offset by unfavorable development due to higher than expected large losses in financial institutions and political risk, primarily in accident year 2014.

Property and Casualty Operations – Line of Business Composition

The table below presents the net liability for unpaid claim and claim adjustment expenses, by line of business for Property and Casualty Operations:

December 31		2017
(In millions)
Medical professional liability		$	1,700
Other professional liability and management liability			2,912
Surety			368
Commercial auto			389
General liability			3,123
Workers’ compensation			4,012
Other			2,071
Total net liability for unpaid claim and claim adjustment expenses		$	14,575

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Medical Professional Liability
																																										December 31, 2017
Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses																																														Cumulative
																																														Number of
December 31		2008 (a)				2009 (a)				2010 (a)				2011 (a)				2012 (a)				2013 (a)				2014 (a)				2015 (a)				2016 (a)				2017				IBNR				Claims
(In millions, except reported claims data)
Accident Year
2008		$	426			$	451			$	496			$	480			$	468			$	468			$	467			$	455			$	442			$	438			$	4				14,102
2009							462				469				494				506				480				471				463				432				422				3				15,594
2010											483				478				478				486				470				446				403				398				9				15,239
2011															486				492				507				533				501				491				491				16				17,481
2012																			526				529				575				567				559				563				39				18,503
2013																							534				540				560				567				573				44				19,777
2014																											511				548				585				564				78				19,764
2015																															480				539				543				164				17,690
2016																																			469				527				268				14,743
2017																																							452				370				11,137
																																			Total			$	4,971			$	995
Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses
Accident Year
2008		$	9			$	90			$	207			$	282			$	332			$	377			$	395			$	409			$	428			$	431
2009							9				75				180				278				328				353				377				396				408
2010											11				93				186				273				338				361				371				380
2011															18				121				225				315				379				407				435
2012																			15				121				236				359				428				475
2013																							18				121				259				364				429
2014																											25				149				274				374
2015																															22				105				241
2016																																			18				126
2017																																							20
																																			Total			$	3,319
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																																						$	1,652
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2008																																							20
Liability for unallocated claim adjustment expenses for accident years presented																																							28
Total net liability for unpaid claim and claim adjustment expenses																																						$	1,700
Net Strengthening or (Releases) of Prior Accident Year Reserves
Years Ended
December 31																																										Total
Accident Year
2008						$	25			$	45			$	(16)			$	(12)							$	(1)			$	(12)			$	(13)			$	(4)			$	12
2009											7				25				12			$	(26)				(9)				(8)				(31)				(10)				(40)
2010															(5)								8				(16)				(24)				(43)				(5)				(85)
2011																			6				15				26				(32)				(10)								5
2012																							3				46				(8)				(8)				4				37
2013																											6				20				7				6				39
2014																															37				37				(21)				53
2015																																			59				4				63
2016																																							58				58
Total net development for the accident years presented above																															(27)				(2)				32
Total net development for accident years prior to 2008																															(16)				(35)				(19)
Total unallocated claim adjustment expense development																															-				-				(8)
Total																														$	(43)			$	(37)			$	5

(a)	Data presented for these calendar years is required supplemental information, which is unaudited.

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Other Professional Liability and Management Liability
																																										December 31, 2017
Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses																																														Cumulative
																																														Number of
December 31		2008 (a)				2009 (a)				2010 (a)				2011 (a)				2012 (a)				2013 (a)				2014 (a)				2015 (a)				2016 (a)				2017				IBNR				Claims
(In millions, except reported claims data)
Accident Year
2008		$	916			$	933			$	954			$	924			$	915			$	880			$	850			$	845			$	827			$	818			$	26				16,331
2009							829				873				903				898				891				900				895				903				901				32				17,274
2010											825				827				850				848				846				836				823				826				31				17,805
2011															876				904				933				948				944				910				898				71				18,643
2012																			907				894				876				870				833				832				73				18,262
2013																							844				841				879				840				824				83				17,362
2014																											841				859				854				798				158				16,984
2015																															847				851				832				296				16,603
2016																																			859				859				426				17,004
2017																																							810				701				15,206
																																			Total			$	8,398			$	1,897
Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses
Accident Year
2008		$	39			$	181			$	376			$	515			$	600			$	641			$	678			$	719			$	741			$	753
2009							37				195				358				550				638				719				769				798				821
2010											31				203				404				541				630				670				721				753
2011															71				313				502				604				682				726				781
2012																			57				248				398				570				648				698
2013																							51				240				426				583				667
2014																											51				212				375				494
2015																															48				209				377
2016																																			60				236
2017																																							52
																																			Total			$	5,632
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																																						$	2,766
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2008																																							79
Liability for unallocated claim adjustment expenses for accident years presented																																							67
Total net liability for unpaid claim and claim adjustment expenses																																						$	2,912
Net Strengthening or (Releases) of Prior Accident Year Reserves
Years Ended
December 31																																										Total
Accident Year
2008						$	17			$	21			$	(30)			$	(9)			$	(35)			$	(30)			$	(5)			$	(18)			$	(9)			$	(98)
2009											44				30				(5)				(7)				9				(5)				8				(2)				72
2010															2				23				(2)				(2)				(10)				(13)				3				1
2011																			28				29				15				(4)				(34)				(12)				22
2012																							(13)				(18)				(6)				(37)				(1)				(75)
2013																											(3)				38				(39)				(16)				(20)
2014																															18				(5)				(56)				(43)
2015																																			4				(19)				(15)
2016																																							-				-
Total net development for the accident years presented above																															26				(134)				(112)
Total net development for accident years prior to 2008																															(26)				4				(14)
Total unallocated claim adjustment expense development																															-				-				(5)
Total																														$	-			$	(130)			$	(131)

(a)	Data presented for these calendar years is required supplemental information, which is unaudited.

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Surety
																																										December 31, 2017
Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses																																														Cumulative
																																														Number of
December 31		2008 (a)				2009 (a)				2010 (a)				2011 (a)				2012 (a)				2013 (a)				2014 (a)				2015 (a)				2016 (a)				2017				IBNR				Claims
(In millions, except reported claims data)
Accident Year
2008		$	114			$	114			$	73			$	68			$	61			$	52			$	48			$	45			$	44			$	44								7,199
2009							114				114				103				85				68				59				52				53				53			$	1				6,679
2010											112				112				111				84				76				66				63				59				7				5,962
2011															120				121				116				87				75				70				66				9				5,795
2012																			120				122				98				70				52				45				9				5,519
2013																							120				121				115				106				91				10				4,993
2014																											123				124				94				69				25				4,938
2015																															131				131				104				63				4,670
2016																																			124				124				84				4,707
2017																																							120				97				2,901
																																			Total			$	775			$	305
Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses
Accident Year
2008		$	9			$	27			$	35			$	39			$	42			$	43			$	43			$	43			$	43			$	43
2009							13				24				34				41				43				45				46				47				47
2010											13				34				50				55				57				58				55				52
2011															19				42				55				58				60				60				56
2012																			5				32				34				35				35				36
2013																							16				40				69				78				78
2014																											7				30				38				36
2015																															7				26				38
2016																																			5				37
2017																																							23
																																			Total			$	446
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																																						$	329
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2008																																							9
Liability for unallocated claim adjustment expenses for accident years presented																																							30
Total net liability for unpaid claim and claim adjustment expenses																																						$	368
Net Strengthening or (Releases) of Prior Accident Year Reserves
Years Ended
December 31																																										Total
Accident Year
2008						$	-			$	(41)			$	(5)			$	(7)			$	(9)			$	(4)			$	(3)			$	(1)			$	-			$	(70)
2009															(11)				(18)				(17)				(9)				(7)				1				-				(61)
2010																			(1)				(27)				(8)				(10)				(3)				(4)				(53)
2011																			1				(5)				(29)				(12)				(5)				(4)				(54)
2012																							2				(24)				(28)				(18)				(7)				(75)
2013																											1				(6)				(9)				(15)				(29)
2014																															1				(30)				(25)				(54)
2015																																							(27)				(27)
2016																																							-				-
Total net development for the accident years presented above																															(65)				(65)				(82)
Total net development for accident years prior to 2008																															(4)				2				1
Total unallocated claim adjustment expense development																															-				-				(3)
Total																														$	(69)			$	(63)			$	(84)

(a)	Data presented for these calendar years is required supplemental information, which is unaudited.

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Commercial Auto

																																										December 31, 2017
Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses																																														Cumulative
																																														Number of
December 31		2008 (a)				2009 (a)				2010 (a)				2011 (a)				2012 (a)				2013 (a)				2014 (a)				2015 (a)				2016 (a)				2017				IBNR				Claims
(In millions, except reported claims data)
Accident Year
2008		$	322			$	323			$	316			$	306			$	309			$	305			$	298			$	298			$	296			$	297								56,424
2009							287				272				274				278				281				277				275				272				272								47,343
2010											262				274				279				283				291				286				281				280			$	1				46,335
2011															262				273				279				293				290				285				285				3				46,691
2012																			270				282				292				296				300				292				7				45,288
2013																							242				259				257				241				237				10				38,539
2014																											231				221				210				204				19				33,029
2015																															199				197				187				35				29,924
2016																																			196				183				53				29,745
2017																																							196				117				25,173
																																			Total			$	2,433			$	245
Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses
Accident Year
2008		$	83			$	158			$	210			$	244			$	274			$	289			$	291			$	292			$	293			$	295
2009							72				128				188				229				257				269				270				270				271
2010											72				137				197				240				265				274				279				280
2011															78				141				193				241				264				275				277
2012																			77				157				214				253				276				278
2013																							73				132				164				195				219
2014																											63				100				135				163
2015																															52				95				128
2016																																			51				91
2017																																							58
																																			Total			$	2,060
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																																						$	373
			Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2008																																				6
			Liability for unallocated claim adjustment expenses for accident years presented																																				10
			Total net liability for unpaid claim and claim adjustment expenses																																			$	389
Net Strengthening or (Releases) of Prior Accident Year Reserves
Years Ended December 31																																										Total
Accident Year
2008						$	1			$	(7)			$	(10)			$	3			$	(4)			$	(7)							$	(2)			$	1			$	(25)
2009											(15)				2				4				3				(4)			$	(2)				(3)				-				(15)
2010															12				5				4				8				(5)				(5)				(1)				18
2011																			11				6				14				(3)				(5)				-				23
2012																							12				10				4				4				(8)				22
2013																											17				(2)				(16)				(4)				(5)
2014																															(10)				(11)				(6)				(27)
2015																																			(2)				(10)				(12)
2016																																							(13)				(13)
			Total net development for the accident years presented above																												(18)				(40)				(41)
			Total net development for accident years prior to 2008																												(4)				(6)				1
			Total unallocated claim adjustment expense development																												-				-				2
																											Total			$	(22)			$	(46)			$	(38)

(a)	Data presented for these calendar years is required supplemental information, which is unaudited.

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General Liability
																																										December 31, 2017
Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses																																														Cumulative
																																														Number of
December 31		2008 (a)				2009 (a)				2010 (a)				2011 (a)				2012 (a)				2013 (a)				2014 (a)				2015 (a)				2016 (a)				2017				IBNR				Claims
(In millions, except reported claims data)
Accident Year
2008		$	611			$	604			$	630			$	647			$	633			$	632			$	613			$	600			$	591			$	592			$	13			$	44,655
2009							591				637				634				633				629				623				619				622				627				18				44,038
2010											566				597				599				649				695				675				659				654				19				43,472
2011															537				534				564				610				611				621				615				29				38,216
2012																			539				563				579				570				558				569				34				34,249
2013																							615				645				634				643				604				62				33,255
2014																											627				634				635				627				131				27,478
2015																															573				574				585				208				23,082
2016																																			622				647				351				21,893
2017																																							627				547				15,375
																																			Total			$	6,147			$	1,412
Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses
Accident Year
2008		$	31			$	129			$	261			$	390			$	473			$	528			$	550			$	560			$	567			$	574
2009							33				112				270				392				486				532				557				584				596
2010											27				139				267				414				530				577				608				618
2011															27				135				253				389				484				534				562
2012																			27				127				233				340				417				473
2013																							33				135				257				377				469
2014																											29				115				245				379
2015																															31				132				247
2016																																			34				163
2017																																							27
																																			Total			$	4,108
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																																						$	2,039
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2008																																							1,026
Liability for unallocated claim adjustment expenses for accident years presented																																							58
Total net liability for unpaid claim and claim adjustment expenses																																						$	3,123
Net Strengthening or (Releases) of Prior Accident Year Reserves
Years Ended
December 31																																										Total
Accident Year
2008						$	(7)			$	26			$	17			$	(14)			$	(1)			$	(19)			$	(13)			$	(9)			$	1			$	(19)
2009											46				(3)				(1)				(4)				(6)				(4)				3				5				36
2010															31				2				50				46				(20)				(16)				(5)				88
2011																			(3)				30				46				1				10				(6)				78
2012																							24				16				(9)				(12)				11				30
2013																											30				(11)				9				(39)				(11)
2014																															7				1				(8)				-
2015																																			1				11				12
2016																																							25				25
Total net development for the accident years presented above																															(49)				(13)				(5)
Total net development for accident years prior to 2008																															16				(15)				(2)
Total unallocated claim adjustment expense development																															-				-				7
																											Total			$	(33)			$	(28)			$	-

(a)	Data presented for these calendar years is required supplemental information, which is unaudited.

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Workers’ Compensation
																																										December 31, 2017
Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses																																														Cumulative
																																														Number of
December 31		2008 (a)				2009 (a)				2010 (a)				2011 (a)				2012 (a)				2013 (a)				2014 (a)				2015 (a)				2016 (a)				2017				IBNR				Claims
(In millions, except reported claims data)
Accident Year
2008		$	558			$	575			$	593			$	606			$	608			$	612			$	622			$	630			$	638			$	652			$	34				59,911
2009							583				587				594				596				600				611				617				625				632				34				51,161
2010											576				619				641				663				683				697				717				721				33				48,144
2011															593				628				637				648				642				666				668				23				44,691
2012																			589				616				648				661				671				667				63				41,756
2013																							528				563				584				610				584				57				38,153
2014																											459				474				474				448				106				33,072
2015																															416				426				401				154				31,470
2016																																			421				399				200				31,310
2017																																							434				254				27,929
																																			Total			$	5,606			$	958
Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses
Accident Year
2008		$	92			$	233			$	323			$	381			$	425			$	461			$	489			$	505			$	520			$	541
2009							88				223				315				381				435				468				495				516				539
2010											94				245				352				433				500				531				565				603
2011															97				245				353				432				471				515				557
2012																			86				229				338				411				465				503
2013																							79				211				297				366				413
2014																											60				157				213				256
2015																															50				130				179
2016																																			52				127
2017																																							62
																																			Total			$	3,780
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																																						$	1,826
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2008																																							2,216
Other (b)																																							(37)
Liability for unallocated claim adjustment expenses for accident years presented																																							7
Total net liability for unpaid claim and claim adjustment expenses																																						$	4,012
Net Strengthening or (Releases) of Prior Accident Year Reserves
Years Ended
December 31																																											Total
Accident Year
2008						$	17			$	18			$	13			$	2			$	4			$	10			$	8			$	8			$	14			$	94
2009											4				7				2				4				11				6				8				7				49
2010															43				22				22				20				14				20				4				145
2011																			35				9				11				(6)				24				2				75
2012																							27				32				13				10				(4)				78
2013																											35				21				26				(26)				56
2014																															15								(26)				(11)
2015																																			10				(25)				(15)
2016																																							(22)				(22)
Total net development for the accident years presented above																															71				106				(76)
Adjustment for development on a discounted basis																															(2)				1				(4)
Total net development for accident years prior to 2008																															11				43				14
Total unallocated claim adjustment expense development																																							1
Total																														$	80			$	150			$	(65)

(a)	Data presented for these calendar years is required supplemental information, which is unaudited.

(b)	Other includes the effect of discounting lifetime claim reserves.

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The table below reconciles the net liability for unpaid claim and claim adjustment expenses for Property and Casualty Operations to the amount presented in the Consolidated Balance Sheets.

As of December 31,			2017
(In millions)
Net liability for unpaid claim and claim adjustment expenses:
Property and Casualty Operations		$	14,575
Other Insurance Operations (a)			3,495
Total net claim and claim adjustment expenses			18,070
Reinsurance receivables: (b)
Property and Casualty Operations			1,494
Other Insurance Operations (c)			2,440
Total reinsurance receivables			3,934
Total gross liability for unpaid claims and claims adjustment expenses		$	22,004

(a)	Other Insurance Operations include amounts primarily related to long term care claim reserves, which are long duration insurance contracts, but also include amounts related to unfunded structured settlements arising from short duration insurance contracts.

(b)	Reinsurance receivables presented do not include reinsurance receivables related to paid losses.

(c)	The Other Insurance Operations reinsurance receivables are primarily related to A&EP claims covered under the loss portfolio transfer.

The table below presents information about average historical claims duration as of December 31, 2017 and is presented as required supplementary information, which is unaudited.

Average Annual Percentage Payout of Ultimate Net Incurred Claim and Allocated Claim Adjustment Expenses in Year:
		1				2				3				4				5				6				7				8				9				10				Total
Medical professional liability			3.3	%			18.9	%			23.5	%			19.8	%			12.7	%			7.2	%			4.5	%			3.3	%			3.6	%			0.7	%			97.5	%
Other professional liability and management liability			5.9	%			21.0	%			21.1	%			17.3	%			9.9	%			6.0	%			5.6	%			4.0	%			2.6	%			1.5	%			94.9	%
Surety (a)			21.4	%			38.4	%			17.7	%			7.5	%			3.4	%			2.0	%			(2.3	)%			(1.1	)%			-				-				87.0	%
Commercial auto			28.1	%			22.9	%			18.4	%			14.1	%			9.2	%			3.4	%			0.9	%			0.2	%			0.4	%			0.7	%			98.3	%
General liability			4.9	%			16.6	%			20.7	%			20.8	%			15.2	%			8.4	%			4.2	%			2.5	%			1.5	%			1.2	%			96.0	%
Workers’ compensation			13.5	%			21.2	%			14.4	%			10.7	%			7.8	%			5.5	%			4.9	%			3.7	%			3.0	%			3.2	%			87.9	%

(a)	Due to the nature of the Surety business, average annual percentage payout of ultimate net incurred claim and allocated claim adjustment expenses has been calculated using only the payouts of mature accident years presented in the loss reserve development tables.

A&EP Reserves

In 2010, Continental Casualty Company (“CCC”) together with several of CNA’s insurance subsidiaries completed a transaction with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc., under which substantially all of CNA’s legacy A&EP liabilities were ceded to NICO (“loss portfolio transfer” or “LPT”). At the effective date of the transaction, CNA ceded approximately $1.6 billion of net A&EP claim and allocated claim adjustment expense reserves to NICO under a retroactive reinsurance agreement with an aggregate limit of $4.0 billion. The $1.6 billion of claim and allocated claim adjustment expense reserves ceded to NICO was net of $1.2 billion of ceded claim and allocated claim adjustment expense reserves under existing third party reinsurance contracts. The NICO LPT aggregate reinsurance limit also covers credit risk on the existing third party reinsurance related to these liabilities. CNA paid NICO a reinsurance premium of $2.0 billion and transferred to NICO billed third party reinsurance receivables related to A&EP claims with a net book value of $215 million, resulting in total consideration of $2.2 billion.

Subsequent to the effective date of the LPT, CNA recognized adverse prior year development on its A&EP reserves which resulted in additional amounts ceded under the LPT. As a result, the cumulative amounts ceded under the LPT exceeded the $2.2 billion consideration paid, resulting in the NICO LPT moving into a gain position, requiring retroactive reinsurance accounting. Under retroactive reinsurance accounting, this gain is deferred and

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only recognized in earnings in proportion to actual paid recoveries under the LPT. Over the life of the contract, there is no economic impact as long as any additional losses incurred are within the limit of the LPT. In a period in which CNA recognizes a change in the estimate of A&EP reserves that increases the amounts ceded under the LPT, the proportion of actual paid recoveries to total ceded losses is affected and the change in the deferred gain is recognized in earnings as if the revised estimate of ceded losses was available at the effective date of the LPT. The effect of the deferred retroactive reinsurance benefit is recorded in Insurance claims and policyholders’ benefits in the Consolidated Statements of Income.

The following table presents the impact of the loss portfolio transfer on the Consolidated Statements of Income.

Year Ended December 31		2017								2016								2015
(In millions)
Net A&EP adverse development before consideration of LPT		$	60							$	200							$	150
Retroactive reinsurance benefit recognized			(68	)							(107	)							(85	)
Pretax impact of A&EP reserve development and the LPT		$	(8	)						$	93							$	65

Based upon CNA’s annual A&EP reserve review, net unfavorable prior year development of $60 million, $200 million and $150 million was recognized before consideration of cessions to the LPT for the years ended December 31, 2017, 2016, and 2015. The 2017 unfavorable development was driven by modestly higher anticipated payouts on claims from known sources of asbestos exposure. The 2016 unfavorable development was driven by an increase in anticipated future expenses associated with determination of coverage, higher anticipated payouts associated with a limited number of historical accounts having significant asbestos exposures and higher than expected severity on pollution claims. The 2015 unfavorable development was recorded to reflect a decrease in anticipated future reinsurance recoveries related to asbestos claims and higher than expected severity on pollution claims. While the unfavorable development was ceded to NICO under the LPT, CNA’s reported earnings in the periods were negatively affected due to the application of retroactive reinsurance accounting.

As of December 31, 2017 and 2016, the cumulative amounts ceded under the LPT were $2.9 billion and $2.8 billion. The unrecognized deferred retroactive reinsurance benefit was $326 million and $334 million as of December 31, 2017 and 2016.

NICO established a collateral trust account as security for its obligations to CNA. The fair value of the collateral trust account was $3.1 billion and $2.8 billion as of December 31, 2017 and 2016. In addition, Berkshire Hathaway Inc. guaranteed the payment obligations of NICO up to the aggregate reinsurance limit as well as certain of NICO’s performance obligations under the trust agreement. NICO is responsible for claims handling and billing and collection from third-party reinsurers related to CNA’s A&EP claims.

Note 9. Leases

Leases primarily cover office facilities, machinery and computer equipment. Hotel properties, in some instances, are constructed on leased land. Rent expense amounted to $113 million, $97 million and $85 million for the years ended December 31, 2017, 2016 and 2015. The table below presents the future minimum lease payments to be made under non-cancelable operating leases along with lease and sublease minimum receipts to be received on owned and leased properties.

		Future Minimum Lease
Year Ended December 31		Payments				Receipts
(In millions)
2018		$	76			$	6
2019			70				5
2020			71				5
2021			69				4
2022			59				4
Thereafter			384				16
Total		$	729			$	40

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Note 10. Income Taxes

The Company and its eligible subsidiaries file a consolidated federal income tax return. The Company has entered into a separate tax allocation agreement with CNA, a majority-owned subsidiary in which its ownership exceeds 80%. The agreement provides that the Company will: (i) pay to CNA the amount, if any, by which the Company’s consolidated federal income tax is reduced by virtue of inclusion of CNA in the Company’s return or (ii) be paid by CNA an amount, if any, equal to the federal income tax that would have been payable by CNA if it had filed a separate consolidated return. The agreement may be canceled by either of the parties upon thirty days written notice.

For 2015 through 2017, the Internal Revenue Service (“IRS”) has accepted the Company into the Compliance Assurance Process (“CAP”), which is a voluntary program for large corporations. Under CAP, the IRS conducts a real-time audit and works contemporaneously with the Company to resolve any issues prior to the filing of the tax return. The Company believes this approach should reduce tax-related uncertainties, if any. Although the outcome of tax audits is always uncertain, the Company believes that any adjustments resulting from audits will not have a material impact on its results of operations, financial position and cash flows. The Company and/or its subsidiaries also file income tax returns in various state, local and foreign jurisdictions. These returns, with few exceptions, are no longer subject to examination by the various taxing authorities before 2013.

Diamond Offshore, which is not included in the Company’s consolidated federal income tax return, files income tax returns in the U.S. federal and various state and foreign jurisdictions. Tax years that remain subject to examination by these jurisdictions include years 2009 to 2016.

On December 22, 2017, H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018,” previously known as “The Tax Cuts and Jobs Act” was signed into law (the “Tax Act”). The Tax Act amended the Internal Revenue Code in several areas that had a direct and immediate effect on the Company’s results of operations and statement of financial position as of and for the year ended December 31, 2017 including, among other things, a reduction in the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018, eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized, and a one-time mandatory deemed repatriation of accumulated earnings of foreign subsidiaries as of December 31, 2017, inclusive of the utilization of certain tax attributes offset by a provisional liability for uncertain tax positions related to such attributes. The Tax Act is subject to further clarification by the issuance of future technical guidance by the U.S. Department of Treasury and/or future technical correction legislation.

The Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”) which allows companies to report the income tax effects of the Tax Act as a provisional amount based on a reasonable estimate, which would be subject to adjustment during a reasonable measurement period, not to exceed twelve months, until the accounting and analysis under ASC 740 is complete. Due to the timing of the enactment of the Tax Act, there continues to be a significant amount of uncertainty as to the appropriate application of a number of the underlying provisions, pending further guidance and clarification from the relevant authorities. The Company will continue to monitor developments in this area and adjust its provisional estimates throughout the year in 2018, as and if necessary, as additional guidance and clarification becomes available.

The Company recorded a one-time non-cash provisional $200 million increase to net income (net of noncontrolling interests) for the year ended December 31, 2017 related to the Tax Act. This increase includes a $268 million income tax benefit due to the adjustment of net deferred tax assets and liabilities related to the reduction of the U.S. federal corporate income tax rate from 35% to 21% partially offset by a $78 million charge mostly related to the one-time mandatory repatriation of previously deferred earnings of certain of Diamond Offshore’s non-U.S. subsidiaries, inclusive of the utilization of certain tax attributes offset by a provisional liability for uncertain tax positions related to such attributes. The Company is still in the process of evaluating the estimate as it relates to the tax effect of: (i) the amount of deferred tax assets and liabilities subject to the income tax rate change from 35% to 21%, including the calculation of the mandatory deemed repatriation aspect of the Tax Act and the state tax effect of adjustments made to federal temporary differences, (ii) the ability to more likely than not realize the benefit of deferred tax assets, including net operating losses and foreign tax credits, (iii) the effect of re-computing CNA’s insurance reserves and the transition adjustment from existing law, the effects of which will have no impact on the effective tax rate and (iv) the special accounting method provisions for recognizing income for

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U.S. federal income tax purposes no later than financial accounting purposes and the transition adjustment from existing law, which will also have no impact on the effective tax rate.

Any adjustments to these provisional amounts will be reported as a component of Income tax (expense) benefit in the reporting period in which such adjustments are determined, which will be no later than the fourth quarter of 2018.

The current and deferred components of income tax expense (benefit) are as follows:

Year Ended December 31		2017								2016								2015
(In millions)
Income tax expense (benefit):
Federal:
Current		$	157							$	71							$	79
Deferred			(63	)							102								(234	)
State and city:
Current			22								13								21
Deferred			17								13								5
Foreign			37								21								86
Total		$	170							$	220							$	(43	)

The components of U.S. and foreign income before income tax and a reconciliation between the federal income tax expense at statutory rates and the actual income tax expense (benefit) is as follows:

Year Ended December 31		2017								2016								2015
(In millions)
Income before income tax:
U.S.		$	1,322							$	1,207							$	543
Foreign			260								(271	)							(299	)
Total		$	1,582							$	936							$	244
Income tax expense at statutory rate		$	554							$	328							$	86
Increase (decrease) in income tax expense resulting from:
Effect of the Tax Act			(190	)
Exempt investment income			(134	)							(126	)							(126	)
Foreign related tax differential			(36	)							40								(18	)
Amortization of deferred charges associated with intercompany
rig sales to other tax jurisdictions																			38
Taxes related to domestic affiliate			1								(14	)							(10	)
Partnership earnings not subject to taxes			(51	)							(52	)							(38	)
Allowance for foreign tax credits			7								62
Unrecognized tax positions, settlements and adjustments relating to prior years			(8	)							(42	)							1
Other (a)			27								24								24
Income tax expense (benefit)		$	170							$	220							$	(43	)

(a)	Includes state and local taxes and other non-deductible expenses.

The Company currently intends to indefinitely reinvest the earnings of its foreign subsidiaries. Except to the extent of the U.S. tax provided under the Tax Act or other required U.S. tax provision, the Company has not provided tax on any withholding or other tax that may be applicable should a future distribution be made from any unremitted earnings. It is not practical to estimate this potential liability.

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A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding tax carryforwards and interest and penalties, is as follows:

Year Ended December 31		2017								2016								2015
(In millions)
Balance at January 1		$	35							$	54							$	57
Additions for tax positions related to the current year			51								4								7
Additions for tax positions related to a prior year			5								1
Reductions for tax positions related to a prior year			(1	)							(20	)							(3	)
Lapse of statute of limitations			(6	)							(4	)							(7	)
Balance at December 31		$	84							$	35							$	54

In 2016, the $20 million in reductions for tax positions related to a prior year, is primarily from the devaluation of the Egyptian pound. At December 31, 2017, 2016 and 2015, $102 million, $36 million and $49 million of unrecognized tax benefits related to Diamond Offshore would affect the effective tax rate if recognized.

The Company recognizes interest accrued related to: (i) unrecognized tax benefits in Interest expense and (ii) tax refund claims in Other revenues on the Consolidated Statements of Income. The Company recognizes penalties in Income tax expense on the Consolidated Statements of Income. Interest amounts recorded by the Company were insignificant for the years ended December 31, 2017, 2016 and 2015. The Company recorded income tax benefit of $2 million and $23 million for the years ended December 31, 2017 and 2016 and income tax expense of $2 million for the year ended December 31, 2015 related to penalties.

The following table summarizes deferred tax assets and liabilities:

December 31		2017								2016
(In millions)
Deferred tax assets:
Insurance reserves:
Property and casualty claim and claim adjustment expense reserves		$	74							$	125
Unearned premium reserves			142								206
Receivables			13								26
Employee benefits			243								407
Life settlement contracts			-								56
Deferred retroactive reinsurance benefit			68								117
Net operating loss carryforwards			169								178
Tax credit carryforwards			199								289
Basis differential in investment in subsidiary			15								17
Other			211								246
Total deferred tax assets			1,134								1,667
Valuation allowance			(169	)							(210	)
Net deferred tax assets			965								1,457
Deferred tax liabilities:
Deferred acquisition costs			(77	)							(120	)
Net unrealized gains			(263	)							(295	)
Property, plant and equipment			(765	)							(1,019	)
Basis differential in investment in subsidiary			(364	)							(409	)
Other liabilities			(220	)							(235	)
Total deferred tax liabilities			(1,689	)							(2,078	)
Net deferred tax liabilities (a)		$	(724	)						$	(621	)

(a)	Includes $25 and $15 of deferred tax assets reflected in Other assets in the Consolidated Balance Sheets at December 31, 2017 and 2016.

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Federal net operating loss carryforwards of $51 million expire between 2033 and 2037. Net operating loss carryforwards in foreign tax jurisdictions of $42 million expire between 2021 and 2027 and $76 million can be carried forward indefinitely. Federal tax credit carryforwards of $171 million can be utilized to offset future current tax liabilities or will ultimately be refundable no later than 2021. Foreign tax credit carryforwards of $28 million will expire in 2019 and 2024 to 2027.

Although realization of deferred tax assets is not assured, management believes it is more likely than not that the recognized deferred tax assets will be realized through recoupment of ordinary and capital taxes paid in prior carryback years and through future earnings, reversal of existing temporary differences and available tax planning strategies. As of December 31, 2017, Diamond Offshore recorded a valuation allowance of $169 million related to net operating losses of $111 million, foreign tax credits of $27 million, and other deferred tax assets of $31 million.

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Note 11. Debt

December 31		2017				2016
(In millions)
Loews Corporation (Parent Company):
Senior:
2.6% notes due 2023 (effective interest rate of 2.8%) (authorized, $500)		$	500			$	500
3.8% notes due 2026 (effective interest rate of 3.9%) (authorized, $500)			500				500
6.0% notes due 2035 (effective interest rate of 6.2%) (authorized, $300)			300				300
4.1% notes due 2043 (effective interest rate of 4.3%) (authorized, $500)			500				500
CNA Financial:
Senior:
7.0% notes due 2018 (effective interest rate of 7.1%) (authorized, $150)			150				150
7.4% notes due 2019 (effective interest rate of 7.5%) (authorized, $350)							350
5.9% notes due 2020 (effective interest rate of 6.0%) (authorized, $500)			500				500
5.8% notes due 2021 (effective interest rate of 5.9%) (authorized, $400)			400				400
7.3% debentures due 2023 (effective interest rate of 7.3%) (authorized, $250)			243				243
4.0% notes due 2024 (effective interest rate of 4.0%) (authorized, $550)			550				550
4.5% notes due 2026 (effective interest rate of 4.5%) (authorized, $500)			500				500
3.5% notes due 2027 (effective interest rate of 3.6%) (authorized, $500)			500
Variable rate note due 2036 (effective interest rate of 4.9% and 4.3%)			30				30
Capital lease obligation			3				5
Diamond Offshore:
Senior:
Variable rate revolving credit facility due 2020 (effective interest rate of 1.9%)							104
5.9% notes due 2019 (effective interest rate of 6.0%) (authorized, $500)							500
3.5% notes due 2023 (effective interest rate of 3.6%) (authorized, $250)			250				250
7.9% notes due 2025 (effective interest rate of 8.0%) (authorized, $500)			500
5.7% notes due 2039 (effective interest rate of 5.8%) (authorized, $500)			500				500
4.9% notes due 2043 (effective interest rate of 5.0%) (authorized, $750)			750				750
Boardwalk Pipeline:
Senior:
Variable rate revolving credit facility due 2022 (effective interest rate of 2.7% and 2.0%)			385				180
5.5% notes due 2017 (effective interest rate of 5.6%) (authorized, $300)							300
6.3% notes due 2017 (effective interest rate of 6.4%) (authorized, $275)							275
5.2% notes due 2018 (effective interest rate of 5.4%) (authorized, $185)			185				185
5.8% notes due 2019 (effective interest rate of 5.9%) (authorized, $350)			350				350
4.5% notes due 2021 (effective interest rate of 5.0%) (authorized, $440)			440				440
4.0% notes due 2022 (effective interest rate of 4.4%) (authorized, $300)			300				300
3.4% notes due 2023 (effective interest rate of 3.5%) (authorized, $300)			300				300
5.0% notes due 2024 (effective interest rate of 5.2%) (authorized, $600)			600				600
6.0% notes due 2026 (effective interest rate of 6.2%) (authorized, $550)			550				550
4.5% notes due 2027 (effective interest rate of 4.6%) (authorized, $500)			500
7.3% debentures due 2027 (effective interest rate of 8.1%) (authorized, $100)			100				100
Capital lease obligation			9				9
Loews Hotels & Co:
Senior debt, principally mortgages (effective interest rates approximate 4.2%)			648				650
Consolidated Container:
Senior debt, variable rate term loan due 2024 (effective interest rate of 5.5%)			604
Capital lease obligation			6
			11,653				10,871
Less unamortized discount and issuance costs			120				93
Debt		$	11,533			$	10,778

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December 31, 2017		Principal				Unamortized Discount and Issuance Costs				Net				Short Term Debt				Long Term Debt
(In millions)
Loews Corporation		$	1,800			$	24			$	1,776							$	1,776
CNA Financial			2,876				15				2,861			$	151				2,710
Diamond Offshore			2,000				28				1,972								1,972
Boardwalk Pipeline			3,719				31				3,688				1				3,687
Loews Hotels & Co			648				5				643				122				521
Consolidated Container			610				17				593				6				587
Total		$	11,653			$	120			$	11,533			$	280			$	11,253

At December 31, 2017, the aggregate long term debt maturing in each of the next five years is approximately as follows: $280 million in 2018, $449 million in 2019, $556 million in 2020, $846 million in 2021, $955 million in 2022 and $8.6 billion thereafter. Long term debt is generally redeemable in whole or in part at the greater of the principal amount or the net present value of remaining scheduled payments discounted at the specified treasury rate plus a margin.

CNA Financial

CNA is a member of the Federal Home Loan Bank of Chicago (“FHLBC”). FHLBC membership provides participants with access to additional sources of liquidity through various programs and services. As a requirement of membership in the FHLBC, CNA held $5 million of FHLBC stock as of December 31, 2017, giving it access to approximately $111 million of additional liquidity. As of December 31, 2017 and 2016, CNA had no outstanding borrowings from the FHLBC.

In the third quarter of 2017, CNA completed a public offering of $500 million aggregate principal amount of its 3.5% senior notes due August 15, 2027 and used a portion of the net proceeds to redeem the entire $350 million outstanding principal amount of its 7.4% senior notes due November 15, 2019. The redemption of the $350 million senior notes resulted in a loss of $42 million ($24 million after tax and noncontrolling interests) and is included in Interest expense on the Consolidated Statements of Income for the year ended December 31, 2017.

CNA has a five-year $250 million senior unsecured revolving credit facility with a syndicate of banks which may be used for general corporate purposes. At CNA’s election, the commitments under the credit agreement may be increased from time to time up to an additional aggregate amount of $100 million. As of December 31, 2017, there were no outstanding borrowings under the credit agreements and CNA was in compliance with all covenants.

Diamond Offshore

In the third quarter of 2017, Diamond Offshore completed a public offering of $500 million aggregate principal amount of its 7.9% senior notes due August 15, 2025 and used the net proceeds together with cash on hand to redeem the entire $500 million outstanding principal amount of its 5.9% senior notes due May 1, 2019. The redemption of this debt resulted in a loss of $35 million ($11 million after tax and noncontrolling interests) and is included in Interest expense on the Consolidated Statements of Income for the year ended December 31, 2017.

Diamond Offshore has a $1.5 billion senior unsecured revolving credit facility that matures in October of 2020, except for $40 million of commitments that mature in March of 2019 and $60 million of commitments that mature in October of 2019. In addition, Diamond Offshore also has the option to increase the revolving commitments under the revolving credit facility by up to an additional $500 million from time to time, upon receipt of additional commitments from new or existing lenders, and to request one additional one-year extension of the maturity date. Up to $250 million of the facility may be used for the issuance of performance or other standby letters of credit and up to $100 million may be used for swingline loans. As of December 31, 2017, there were no outstanding borrowings under the credit agreement and Diamond Offshore was in compliance with all covenants.

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Boardwalk Pipeline

In the first quarter of 2017, Boardwalk Pipeline completed a public offering of $500 million aggregate principal amount of its 4.5% senior notes due July 15, 2027 and used the net proceeds to repay the entire $275 million outstanding principal amount of its 6.3% senior notes due August 15, 2017 and to fund growth capital expenditures.

In the first quarter of 2017, Boardwalk Pipeline retired at maturity the $300 million outstanding aggregate principal amount of its 5.5% senior notes.

Boardwalk Pipeline has a revolving credit facility having aggregate lending commitments of $1.5 billion. During the third quarter of 2017, Boardwalk Pipeline extended the maturity date of the revolving credit facility by one year to May 26, 2022. As of December 31, 2017, there were borrowings of $385 million under the credit agreement and Boardwalk Pipeline was in compliance with all covenants.

Boardwalk Pipeline has a subordinated loan agreement with a subsidiary of the Company under which it can borrow up to $300 million until December 31, 2018. Boardwalk Pipeline had no outstanding borrowings under the subordinated loan agreement.

Consolidated Container

In the second quarter of 2017, Consolidated Container entered into a credit agreement providing for a $605 million term loan and a five year $125 million asset based lending facility (“ABL facility”) in conjunction with the acquisition discussed in Note 2. The term loan is a variable rate facility which bears interest at a floating rate equal to the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 3.5%, subject to a 1.0% floor. Consolidated Container entered into interest rate swaps for a notional amount of $500 million to hedge its cash flow exposure to the variable rate debt by fixing the interest rate on the hedged portion of the term loan. As of December 31, 2017, the term loan had a weighted average effective interest rate of 5.5%, including the effects of the interest rate swaps. The term loan matures on May 22, 2024 and requires annual principal amortization of 1.0% of the original loan amount beginning December 31, 2017. Consolidated Container recorded approximately $19 million of debt issuance costs, which will be amortized over the terms of the facilities. As of December 31, 2017, Consolidated Container had no outstanding borrowings under its ABL facility. In February of 2018, Consolidated Container repriced its term loan to bear interest at a floating rate equal to LIBOR plus an applicable margin of 3.0%, subject to a 1.0% floor.

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Note 12. Shareholders’ Equity

Accumulated other comprehensive income (loss)

The tables below present the changes in AOCI by component for the years ended December 31, 2015, 2016 and 2017:

		OTTI Gains (Losses)				Unrealized Gains (Losses) on Investments				Cash Flow Hedges				Pension Liability				Foreign Currency Translation				Total Accumulated Other Comprehensive Income (Loss)
(In millions)
Balance, January 1, 2015		$	32			$	846			$	(6	)		$	(641	)		$	49			$	280
Other comprehensive loss before reclassifications, after tax of $13, $313, $1, $16 and $0			(23	)			(600	)			(2	)			(31	)			(139	)			(795	)
Reclassification of losses from accumulated other comprehensive income, after tax of $(8), $(31), $(2), $(11) and $0			14				43				7				13								77
Other comprehensive income (loss)			(9	)			(557	)			5				(18	)			(139	)			(718	)
Issuance of equity securities by subsidiary															1								1
Amounts attributable to noncontrolling interests			1				58				(2	)			9				14				80
Balance, December 31, 2015			24				347				(3	)			(649	)			(76	)			(357	)
Other comprehensive income (loss) before reclassifications, after tax of $(4), $(133), $0, $9 and $0			9				283								(22	)			(114	)			156
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $3, $16, $0, $(15) and $0			(6	)			(26	)			2				27								(3	)
Other comprehensive income (loss)			3				257				2				5				(114	)			153
Amounts attributable to noncontrolling interests							(28	)			(1	)			(2	)			12				(19	)
Balance, December 31, 2016			27				576				(2	)			(646	)			(178	)			(223	)
Other comprehensive income (loss) before reclassifications, after tax of $1, $(106), $(2), $4 and $0			(3	)			190				1				(18	)			100				270
Reclassification of (gains) losses from accumulated other comprehensive income, after tax of $1, $38, $0, $(16) and $0			(2	)			(82	)			2				30								(52	)
Other comprehensive income (loss)			(5	)			108				3				12				100				218
Amounts attributable to noncontrolling interests							(11	)			(1	)			1				(10	)			(21	)
Balance, December 31, 2017		$	22			$	673			$	-			$	(633	)		$	(88	)		$	(26	)

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

Major Category of AOCI		Affected Line Item
OTTI gains (losses)		Investment gains (losses)
Unrealized gains (losses) on investments		Investment gains (losses)
Cash flow hedges		Other revenues, Interest expense and Contract drilling expenses
Pension liability		Other operating expenses

Common Stock Dividends

Dividends of $0.25 per share on the Company’s common stock were declared and paid in 2017, 2016 and 2015.

There are no restrictions on the Company’s retained earnings or net income with regard to payment of dividends. However, as a holding company, Loews relies upon invested cash balances and distributions from its subsidiaries to generate the funds necessary to declare and pay any dividends to holders of its common stock. The ability of the Company’s subsidiaries to pay dividends is subject to, among other things, the availability of sufficient earnings and funds in such subsidiaries, compliance with covenants in their respective credit agreements and 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. See Note 13 for a discussion of the regulatory restrictions on CNA’s availability to pay dividends.

Treasury Stock

The Company repurchased 4.8 million, 3.4 million and 33.3 million shares of its common stock at aggregate costs of $237 million, $134 million and $1.3 billion during the years ended December 31, 2017, 2016 and 2015. As of December 31, 2017, 4.4 million shares were retired. The remaining 0.4 million shares will be retired in 2018. Upon retirement, treasury stock was eliminated through a reduction to common stock, APIC and retained earnings.

Note 13. Statutory Accounting Practices

CNA’s insurance subsidiaries are domiciled in various jurisdictions. These subsidiaries prepare statutory financial statements in accordance with accounting practices prescribed or permitted by the respective jurisdictions’ insurance regulators. Domestic prescribed statutory accounting practices are set forth in a variety of publications of the National Association of Insurance Commissioners (“NAIC”) as well as state laws, regulations and general administrative rules. These statutory accounting principles vary in certain respects from GAAP. In converting from statutory accounting principles to GAAP, the more significant adjustments include deferral of policy acquisition costs and the inclusion of net unrealized holding gains or losses in shareholders’ equity relating to certain fixed maturity securities.

CNA has a prescribed practice as it relates to the accounting under Statement of Statutory Accounting Principles No. 62R (“SSAP No. 62R”), Property and Casualty Reinsurance, paragraphs 67 and 68 in conjunction with the 2010 loss portfolio transfer with NICO which is further discussed in Note 8. The prescribed practice allows CNA to aggregate all third party A&EP reinsurance balances administered by NICO in Schedule F and to utilize the LPT as collateral for the underlying third-party reinsurance balances for purposes of calculating the statutory reinsurance penalty. This prescribed practice increased statutory capital and surplus by $63 million and $67 million at December 31, 2017 and 2016.

The 2015 long term care premium deficiency discussed in Note 1 was recorded on a GAAP basis. There was no premium deficiency for statutory accounting purposes. Statutory accounting principles requires the use of prescribed discount rates in calculating the reserves for long term care future policy benefits which are lower than the discount rates used on a GAAP basis and results in higher carried reserves relative to GAAP reserves.

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The payment of dividends by CNA’s insurance subsidiaries without prior approval of the insurance department of each subsidiary’s domiciliary jurisdiction is generally limited by formula. Dividends in excess of these amounts are subject to prior approval by the respective insurance regulator.

Dividends from CCC are subject to the insurance holding company laws of the State of Illinois, the domiciliary state of CCC. Under these laws, ordinary dividends, or dividends that do not require prior approval by the Illinois Department of Insurance (the “Department”) are determined based on the greater of the prior year’s statutory net income or 10% of statutory surplus as of the end of the prior year, as well as timing and amount of dividends paid in the preceding 12 months. Additionally, ordinary dividends may only be paid from earned surplus, which is calculated by removing unrealized gains from unassigned surplus. As of December 31, 2017, CCC is in a positive earned surplus position. The maximum allowable dividend CCC could pay during 2018 that would not be subject to the Department’s prior approval is $1.1 billion, less dividends paid during the preceding 12 months measured at that point in time. CCC paid dividends of $955 million in 2017. The actual level of dividends paid in any year is determined after an assessment of available dividend capacity, holding company liquidity and cash needs as well as the impact the dividends will have on the statutory surplus of the applicable insurance company.

Combined statutory capital and surplus and statutory net income for the Combined Continental Casualty Companies are presented in the table below, determined in accordance with accounting practices prescribed or permitted by insurance and/or other regulatory authorities.

		Statutory Capital and Surplus								Statutory Net Income
		December 31								Year Ended December 31
		2017(a)				2016				2017(a)				2016				2015
(In millions)
Combined Continental Casualty Companies			$ 10,726				$ 10,748				$ 1,029				$ 1,033				$ 1,148

(a)	Information derived from the statutory-basis financial statements to be filed with insurance regulators.

CNA’s domestic insurance subsidiaries are subject to risk-based capital (“RBC”) requirements. RBC is a method developed by the NAIC to determine the minimum amount of statutory capital appropriate for an insurance company to support its overall business operations in consideration of its size and risk profile. The formula for determining the amount of RBC specifies various factors, weighted based on the perceived degree of risk, which are applied to certain financial balances and financial activity. The adequacy of a company’s actual capital is evaluated by a comparison to the RBC results, as determined by the formula. Companies below minimum RBC requirements are classified within certain levels, each of which requires specified corrective action.

The statutory capital and surplus presented above for CCC was approximately 264% and 270% of company action level RBC at December 31, 2017 and 2016. Company action level RBC is the level of RBC which triggers a heightened level of regulatory supervision. The statutory capital and surplus of CCC’s foreign insurance subsidiaries, which is not significant to the overall statutory capital and surplus, also met or exceeded their respective regulatory and other capital requirements.

Note 14. Benefit Plans

Pension Plans – The Company and its subsidiaries have 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 covers salaried employees are based on formulas which include, among others, years of service and average pay. The Company and its subsidiaries’ funding policy is to make contributions in accordance with applicable governmental regulatory requirements.

Other Postretirement Benefit Plans – The Company and its subsidiaries have 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

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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 and its subsidiaries 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 and its subsidiaries are basically health and, for certain retirees, life insurance type benefits.

The Company and its subsidiaries fund certain of these benefit plans, and accrue postretirement benefits during the active service of those employees who would become eligible for such benefits when they retire. The Company and its subsidiaries use December 31 as the measurement date for their plans.

Weighted average assumptions used to determine benefit obligations:

		Pension Benefits												Other Postretirement Benefits
December 31			2017				2016				2015				2017				2016				2015
Discount rate			3.5%				3.9%				4.0%				3.4%				3.7%				3.7%
Expected long term rate of return on plan assets			7.5%				7.5%				7.5%				5.3%				5.3%				5.3%
Rate of compensation increase			3.9% to 5.5%				3.9% to 5.5%				3.5% to 5.5%

Weighted average assumptions used to determine net periodic benefit cost:

		Pension Benefits												Other Postretirement Benefits
Year Ended December 31			2017				2016				2015				2017				2016				2015
Discount rate			3.8%				4.0%				3.8%				3.7%				3.7%				3.4%
Expected long term rate of return on plan assets			7.5%				7.5%				7.5%				5.3%				5.3%				5.3%
Rate of compensation increase			3.9% to 5.5%				3.5% to 5.5%				3.5% to 5.5%

In determining the discount rate assumption, we utilize current market and liability information, including a discounted cash flow analysis of our pension and postretirement obligations. In particular, the basis for our discount rate selection was the yield on indices of highly rated fixed income debt securities with durations comparable to that of our plan liabilities. The yield curve was applied to expected future retirement plan payments to adjust the discount rate to reflect the cash flow characteristics of the plans. The yield curves and indices evaluated in the selection of the discount rate are comprised of high quality corporate bonds that are rated AA by an accepted rating agency.

The expected long term rate of return for plan assets is determined based on widely-accepted capital market principles, long term return analysis for global fixed income and equity markets as well as the active total return oriented portfolio management style. Long term trends are evaluated relative to market factors such as inflation, interest rates and fiscal and monetary policies, in order to assess the capital market assumptions as applied to the plan. Consideration of diversification needs and rebalancing is maintained.

Assumed health care cost trend rates:

December 31		2017				2016				2015
Health care cost trend rate assumed for next year			4.0% to 7.0%				4.0% to 7.0%				4.0% to 7.5%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)			4.0% to 5.0%				4.0% to 5.0%				4.0% to 5.0%
Year that the rate reaches the ultimate trend rate			2018-2022				2017-2021				2016-2021

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Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. An increase or decrease in the assumed health care cost trend rate of 1% in each year would not have a significant impact on the service and interest cost as of December 31, 2017. An increase of 1% in each year would increase the accumulated postretirement benefit obligation as of December 31, 2017 by $2 million and a decrease of 1% in each year would decrease the accumulated postretirement benefit obligation as of December 31, 2017 by $2 million.

Net periodic benefit cost components:

		Pension Benefits												Other Postretirement Benefits
Year Ended December 31		2017				2016				2015				2017				2016				2015
(In millions)
Service cost		$	8			$	8			$	12			$	1			$	1			$	1
Interest cost			119				128				127				2				3				3
Expected return on plan assets			(173	)			(177	)			(193	)			(5	)			(5	)			(5)
Amortization of unrecognized net loss			43				46				42												1
Amortization of unrecognized prior service benefit							(1	)			(1	)			(2	)			(3	)			(10)
Settlement			11				3				3
Net periodic benefit cost		$	8			$	7			$	(10	)		$	(4	)		$	(4	)		$	(10)

In 2016, the CNA Retirement Plan paid $88 million to settle its obligation to certain retirees through the purchase of a group annuity contract from a third party insurance company. The transaction reduced the plan’s projected benefit obligation by $86 million.

In 2015, CNA eliminated future benefit accruals associated with the CNA Retirement Plan effective June 30, 2015. This amendment resulted in a $55 million curtailment which is a decrease in the plan benefit obligation liability and a reduction of the unrecognized actuarial losses included in AOCI.

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The following provides a reconciliation of benefit obligations and plan assets:

		Pension Benefits								Other Postretirement Benefits
		2017				2016				2017				2016
(In millions)
Change in benefit obligation:
Benefit obligation at January 1		$	3,131			$	3,227			$	66			$	82
Acquisitions			103
Service cost			8				8				1				1
Interest cost			119				128				2				3
Plan participants’ contributions											5				5
Amendments							1
Actuarial (gain) loss			100				72				(1	)			(13)
Benefits paid from plan assets			(192	)			(188	)			(11	)			(12)
Settlements			(37	)			(101	)
Foreign exchange			10				(16	)
Benefit obligation at December 31			3,242				3,131				62				66
Change in plan assets:
Fair value of plan assets at January 1			2,423				2,500				86				86
Acquisitions			75
Actual return on plan assets			247				211				5				3
Company contributions			51				19				3				4
Plan participants’ contributions											5				5
Benefits paid from plan assets			(192	)			(188	)			(11	)			(12)
Settlements			(37	)			(103	)
Foreign exchange			10				(16	)
Fair value of plan assets at December 31			2,577				2,423				88				86
Funded status		$	(665	)		$	(708	)		$	26			$	20
Amounts recognized in the Consolidated Balance Sheets consist of:
Other assets		$	4			$	4			$	47			$	44
Other liabilities			(669	)			(712	)			(21	)			(24)
Net amount recognized		$	(665	)		$	(708	)		$	26			$	20
Amounts recognized in Accumulated other comprehensive income (loss), not yet recognized in net periodic (benefit) cost:
Prior service credit		$	(3	)		$	(3	)		$	(3	)		$	(6)
Net actuarial loss			1,069				1,097				(3	)			(2)
Net amount recognized		$	1,066			$	1,094			$	(6	)		$	(8)
Information for plans with projected and accumulated benefit obligations in excess of plan assets:
Projected benefit obligation		$	3,132			$	3,103
Accumulated benefit obligation			3,117				3,089			$	21			$	24
Fair value of plan assets			2,462				2,391

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The accumulated benefit obligation for all defined benefit pension plans was $3.2 billion and $3.1 billion at December 31, 2017 and 2016.

The Company and its subsidiaries employ a total return approach whereby a mix of equity and fixed maturity securities are used to maximize the long term return of plan assets for a prudent level of risk and to manage cash flows according to plan requirements. The target allocation of plan assets is 40% to 60% invested in equity securities and limited partnerships, with the remainder primarily invested in fixed maturity securities. The intent of this strategy is to minimize expenses by generating investment returns that exceed the growth of the plan liabilities over the long run. Risk tolerance is established after careful consideration of the plan liabilities, plan funded status and corporate financial conditions. The investment portfolio contains a diversified blend of fixed maturity, equity and short term securities. Alternative investments, including limited partnerships, are used to enhance risk adjusted long term returns while improving portfolio diversification. At December 31, 2017, the Company and its subsidiaries had committed $107 million to future capital calls from various third party limited partnership investments in exchange for an ownership interest in the related partnerships. Investment risk is monitored through annual liability measurements, periodic asset/liability studies and quarterly investment portfolio reviews.

The table below presents the estimated amounts to be recognized from AOCI into net periodic cost (benefit) during 2018.

				Other
		Pension		Postretirement
		Benefits		Benefits
(In millions)
Amortization of net actuarial (gain) loss		$ 42		$ (1)
Amortization of prior service credit				(2)
Total estimated amounts to be recognized		$ 42		$ (3)

The table below presents the estimated future minimum benefit payments at December 31, 2017.

				Other
		Pension		Postretirement
Expected future benefit payments		Benefits		Benefits
(In millions)
2018		$ 231		$ 5
2019		213		5
2020		214		5
2021		215		5
2022		217		4
2023 – 2027		1,057		18

In 2018, it is expected that contributions of approximately $24 million will be made to pension plans and $2 million to postretirement health care and life insurance benefit plans.

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Pension plan assets measured at fair value on a recurring basis are summarized below.

December 31, 2017		Level 1					Level 2					Level 3					Total
(In millions)
Plan assets at fair value:
Fixed maturity securities:
Corporate and other bonds								$	522				$	10				$	532
States, municipalities and political subdivisions									62										62
Asset-backed									182										182
Total fixed maturities			$	-					766					10					776
Equity securities				449					122										571
Short term investments				29					11										40
Fixed income mutual funds				96															96
Other assets				13					9										22
Total plan assets at fair value			$	587				$	908				$	10				$	1,505
Plan assets at net asset value: (a)
Limited partnerships																			990
Collective investment trust funds																			82
Total plan assets			$	587				$	908				$	10				$	2,577
December 31, 2016
Plan assets at fair value:
Fixed maturity securities:
Corporate and other bonds								$	500				$	10				$	510
States, municipalities and political subdivisions									63										63
Asset-backed									186										186
Total fixed maturities			$	-					749					10					759
Equity securities				404					105										509
Short term investments				18					35										53
Fixed income mutual funds				92															92
Other assets				15					37										52
Total plan assets at fair value			$	529				$	926				$	10				$	1,465
Plan assets at net asset value: (a)
Limited partnerships																			958
Total plan assets			$	529				$	926				$	10				$	2,423

(a)	Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table for these investments are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

The limited partnership investments held within the plans are recorded at fair value, which represents the plans’ shares of the net asset value of each partnership, as determined by the general partner. Limited partnerships comprising 86% of the carrying value as of December 31, 2017 and 2016 employ hedge fund strategies that generate returns through investing in marketable securities in the public fixed income and equity markets and the remainder were primarily invested in private debt and equity. Within hedge fund strategies, approximately 62% were equity related, 32% pursued a multi-strategy approach and 6% were focused on distressed investments at December 31, 2017.

For a discussion of the valuation methodologies used to measure fixed maturity securities, equities and short term investments, see Note 4.

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Other postretirement benefits plan assets measured at fair value on a recurring basis are summarized below.

December 31, 2017		Level 1					Level 2					Level 3					Total
(In millions)
Fixed maturity securities:
Corporate and other bonds								$	18									$	18
States, municipalities and political subdivisions									42										42
Asset-backed									12										12
Total fixed maturities			$	-					72				$	-					72
Short term investments				2															2
Fixed income mutual funds				14															14
Total			$	16				$	72				$	-				$	88
December 31, 2016
Fixed maturity securities:
Corporate and other bonds								$	19									$	19
States, municipalities and political subdivisions									44										44
Asset-backed									15										15
Total fixed maturities			$	-					78				$	-					78
Short term investments				3															3
Fixed income mutual funds				5															5
Total			$	8				$	78				$	-				$	86

There were no Level 3 assets at December 31, 2017 and 2016.

Savings Plans – The Company and its subsidiaries have several contributory savings plans which allow employees to make regular contributions based upon a percentage of their salaries. Matching contributions are made up to specified percentages of employees’ contributions. The contributions by the Company and its subsidiaries to these plans amounted to $105 million, $107 million and $115 million for the years ended December 31, 2017, 2016 and 2015.

Stock-based Compensation – In 2016, shareholders approved the Loews Corporation 2016 Incentive Compensation Plan (the “2016 Loews Plan”) which replaced a previously existing plan. The aggregate number of shares of Loews common stock authorized under the 2016 Loews Plan is 6,000,000 shares, plus up to 3,000,000 shares that may be forfeited under the prior plan. The maximum number of shares of Loews common stock with respect to which awards may be granted to any individual in any calendar year is 500,000 shares. In accordance with the 2016 Loews Plan and the prior plan, the Company’s stock-based compensation consists of the following:

SARs: SARs were granted under the prior plan. The exercise price per share may not be less than the fair market value of the common stock on the date of grant. Generally, SARs vest ratably over a four-year period and expire in ten years.

Time-based Restricted Stock Units: Time-based restricted stock units (“RSUs”) were granted under the 2016 Loews Plan and represent the right to receive one share of the Company’s common stock for each vested RSU. Generally, RSUs vest 50% on the second anniversary of the grant date and 50% on the third anniversary of the grant date.

Performance-based Restricted Stock Units: Performance-based RSUs (“PSUs”) were granted under the 2016 Loews Plan and represent the right to receive one share of the Company’s common stock for each vested PSU, subject to the achievement of specified performance goals by the Company. Generally, performance-based RSUs vest, if performance goals are satisfied, 50% on the second anniversary of the grant date and 50% on the third anniversary of the grant date.

In 2017, the Company granted an aggregate of 274,500 RSUs and PSUs at a weighted average grant-date fair value of $45.91 per unit. 17,033 RSUs were forfeited during the year. 4,266,050 SARs were outstanding at December 31, 2017 with a weighted average exercise price of $40.05.

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The Company recognized compensation expense that decreased net income by $33 million, $32 million and $14 million for the years ended December 31, 2017, 2016 and 2015. Several of the Company’s subsidiaries also maintain their own stock-based compensation plans. Such amounts include the Company’s share of expense related to its subsidiaries’ plans.

Note 15. Reinsurance

CNA cedes insurance to reinsurers to limit its maximum loss, provide greater diversification of risk, minimize exposures on larger risks and to exit certain lines of business. The ceding of insurance does not discharge the primary liability of CNA. A credit exposure exists with respect to reinsurance ceded to the extent that any reinsurer is unable to meet its obligations. A collectability exposure also exists to the extent that the reinsurer disputes the liabilities assumed under reinsurance agreements. Property and casualty reinsurance coverages are tailored to the specific risk characteristics of each product line and CNA’s retained amount varies by type of coverage. Reinsurance contracts are purchased to protect specific lines of business such as property and workers’ compensation. Corporate catastrophe reinsurance is also purchased for property and workers’ compensation exposure. Currently most reinsurance contracts are purchased on an excess of loss basis. CNA also utilizes facultative reinsurance in certain lines. In addition, CNA assumes reinsurance, primarily through Hardy and as a member of various reinsurance pools and associations.

The following table presents the amounts receivable from reinsurers:

December 31		2017					2016
(In millions)
Reinsurance receivables related to insurance reserves:
Ceded claim and claim adjustment expenses			$	3,934				$	4,094
Ceded future policy benefits				230					212
Reinsurance receivables related to paid losses				126					147
Reinsurance receivables				4,290					4,453
Less allowance for doubtful accounts				29					37
Reinsurance receivables, net of allowance for doubtful accounts			$	4,261				$	4,416

CNA has established an allowance for doubtful accounts on reinsurance receivables related to credit risk. CNA reviews the allowance quarterly and adjusts the allowance as necessary to reflect changes in estimates of uncollectible balances. The allowance may also be reduced by write-offs of reinsurance receivable balances.

CNA attempts to mitigate its credit risk related to reinsurance by entering into reinsurance arrangements with reinsurers that have credit ratings above certain levels and by obtaining collateral. On a limited basis, CNA may enter into reinsurance agreements with reinsurers that are not rated, primarily captive reinsurers. The primary methods of obtaining collateral are through reinsurance trusts, letters of credit and funds withheld balances. Such collateral was approximately $2.9 billion and $3.0 billion at December 31, 2017 and 2016.

CNA’s largest recoverables from a single reinsurer, including ceded unearned premium reserves as of December 31, 2017 were approximately $2.1 billion from a subsidiary of Berkshire Hathaway Insurance Group, $395 million from the Gateway Rivers Insurance Company and $230 million from subsidiaries of Wilton Re. These amounts are substantially collateralized. The recoverable from the Berkshire Hathaway Insurance Group includes amounts related to third party reinsurance for which NICO has assumed the credit risk under the terms of the loss portfolio transfer as discussed in Note 8.

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The effects of reinsurance on earned premiums are presented in the following table:

		Direct				Assumed				Ceded				Net				Assumed/ Net %
(In millions)
Year Ended December 31, 2017
Property and casualty		$	10,447			$	317			$	4,315			$	6,449				4.9%
Long term care			489				50								539				9.3
Earned premiums		$	10,936			$	367			$	4,315			$	6,988				5.3%
Year Ended December 31, 2016
Property and casualty		$	10,400			$	258			$	4,270			$	6,388				4.0%
Long term care			486				50								536				9.3
Earned premiums		$	10,886			$	308			$	4,270			$	6,924				4.4%
Year Ended December 31, 2015
Property and casualty		$	9,853			$	274			$	3,754			$	6,373				4.3%
Long term care			498				50								548				9.1
Earned premiums		$	10,351			$	324			$	3,754			$	6,921				4.7%

Included in the direct and ceded earned premiums for the years ended December 31, 2017, 2016 and 2015 are $3.9 billion, $3.9 billion and $3.3 billion related to property business that is 100% reinsured under a significant third party captive program. The third party captives that participate in this program are affiliated with the non-insurance company policyholders, therefore this program provides a means for the policyholders to self-insure this property risk. CNA receives and retains a ceding commission.

Long term care premiums are from long duration contracts; property and casualty premiums are from short duration contracts.

Insurance claims and policyholders’ benefits reported on the Consolidated Statements of Income are net of reinsurance recoveries of $3.1 billion, $3.0 billion and $2.6 billion for the years ended December 31, 2017, 2016 and 2015, including $2.5 billion, $2.6 billion and $2.3 billion related to the significant third party captive program discussed above.

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Note 16. Quarterly Financial Data (Unaudited)

2017 Quarter Ended		Dec. 31				Sept. 30				June 30				March 31
(In millions, except per share data)
Total revenues		$	3,555			$	3,521			$	3,359				$ 3,300
Net income (a)			481				157				231				295
Per share-basic			1.43				0.46				0.69				0.88
Per share-diluted			1.43				0.46				0.69				0.87
2016 Quarter Ended
Total revenues		$	3,338			$	3,287			$	3,307				$ 3,173
Net income (loss) (b)			290				327				(65	)			102
Per share-basic and diluted			0.86				0.97				(0.19	)			0.30

The sum of the quarterly per share amounts may not equal per share amounts reported for year-to-date periods. This is due to changes in the number of weighted average shares outstanding and the effects of rounding for each period.

(a)	Net income for the fourth quarter of 2017 includes the impact of a $200 million net benefit resulting from the enactment of the Tax Act.

(b)	Net loss for the second quarter of 2016 includes the impact of a $267 million asset impairment charge at Diamond Offshore.

Note 17. Legal Proceedings

CNA Financial

In September of 2016, a class action lawsuit was filed against CCC, Continental Assurance Company (“CAC”) (a former subsidiary of CCC), CNA, the Investment Committee of the CNA 401(k) Plus Plan (“Plan”), The Northern Trust Company and John Does 1-10 (collectively “Defendants”) related to the Plan. The complaint alleges that Defendants breached fiduciary duties to the Plan and caused prohibited transactions in violation of the Employee Retirement Income Security Act of 1974 when the Plan’s Fixed Income Fund’s annuity contract with CAC was canceled. The plaintiff alleges he and a proposed class of the Plan participants who had invested in the Fixed Income Fund suffered lower returns in their Plan investments as a consequence of these alleged violations and seeks relief on behalf of the putative class. The Plan trustees have provided notice to their fiduciary coverage insurance carriers.

Through mediation, the plaintiff, Defendants and the Plan’s fiduciary insurance carriers reached an agreement in principle to settle this matter. Upon completion of a definitive settlement agreement, plaintiff and Defendants will propose a class settlement for court approval. Based on the agreement in principle, management has recorded its best estimate of CNA’s probable loss and the Company does not believe that the ultimate resolution of this matter will have a material impact on its condensed consolidated financial statements.

Other Litigation

The Company and its subsidiaries are from time to time parties to other litigation arising in the ordinary course of business. While it is difficult to predict the outcome or effect of any litigation, management does not believe that the outcome of any such pending litigation will materially affect the Company’s results of operations or equity.

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Note 18. Commitments and Contingencies

CNA Guarantees

In the course of selling business entities and assets to third parties, CNA agreed to guarantee the performance of certain obligations of previously owned subsidiaries and to indemnify purchasers for losses arising out of breaches of representation and warranties with respect to the business entities or assets sold, including, in certain cases, losses arising from undisclosed liabilities or certain named litigation. Such guarantee and indemnification agreements in effect for sales of business entities, assets and third party loans may include provisions that survive indefinitely. As of December 31, 2017, the aggregate amount related to quantifiable guarantees was $375 million and the aggregate amount related to quantifiable indemnification agreements was $252 million. In certain cases, should CNA be required to make payments under any such guarantee, it would have the right to seek reimbursement from an affiliate of a previously owned subsidiary.

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 December 31, 2017, 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. Certain provisions of the indemnification agreements survive indefinitely while others survive until the applicable statutes of limitation expire, or until the agreed upon contract terms expire.

CNA also provided guarantees, if the primary obligor fails to perform, to holders of structured settlement annuities provided by a previously owned subsidiary. As of December 31, 2017, the potential amount of future payments CNA could be required to pay under these guarantees was approximately $1.8 billion, which will be paid over the lifetime of the annuitants. CNA does not believe any payment is likely under these guarantees, as CNA is the beneficiary of a trust that must be maintained at a level that approximates the discounted reserves for these annuities.

CNA Small Business Premium Rate Adjustment

In 2016 and 2017, CNA identified rating errors related to its multi-peril package product and workers’ compensation policies within its Small Business unit and determined that it would voluntarily issue premium refunds along with interest on affected policies. After the rating errors were identified, written and earned premium have been reported net of any impact from the premium rate adjustments. For the year ended December 31, 2017, CNA recognized $36 million of adverse premium development and also increased interest expense by $7 million for interest due to policyholders on the premium rate adjustments. For the year ended December 31, 2016 CNA recorded a charge which reduced earned premium by $16 million.

The policyholder refunds for the multi-peril package product were issued in the third quarter of 2017. The policyholder refunds for workers’ compensation policies are expected to be refunded in 2018. The estimated refund liability, including interest, for the workers’ compensation policies as of December 31, 2017 was $60 million. Any fines or penalties related to the foregoing are reasonably possible, but are not expected to be material to the Company’s financial statements.

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Note 19. Segments

The Company has five reportable segments comprised of four individual operating subsidiaries, CNA, Diamond Offshore, Boardwalk Pipeline and Loews Hotels & Co; and the Corporate segment. The operations of Consolidated Container since the acquisition date are included in the Corporate segment. Each of the operating subsidiaries is 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.

CNA’s business is the sale of property and casualty insurance coverage primarily through a network of independent agents, brokers and managing general underwriters. CNA’s operations also include its long term care business that is in run-off, certain corporate expenses, including interest on CNA’s corporate debt, and certain property and casualty businesses in run-off, including CNA Re and A&EP.

Diamond Offshore provides contract drilling services to the energy industry around the world with a fleet of 17 offshore drilling rigs consisting of four drillships and seven ultra-deepwater, four deepwater and two mid-water semisubmersible rigs.

Boardwalk Pipeline is engaged in the interstate transportation and storage of natural gas and NGLs. 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 and Texas, with approximately 14,335 miles of pipeline.

Loews Hotels & Co operates a chain of 24 hotels, 22 of which are in the United States and two of which are in Canada.

The Corporate segment consists of investment income from the Parent Company’s cash and investments, interest expense, other unallocated expenses and the results of Consolidated Container since the acquisition date. Purchase accounting adjustments have been pushed down to the appropriate subsidiary.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1.

In the following tables certain financial measures are presented to provide information used by management to monitor the Company’s operating performance. These schedules present the reportable segments of the Company and their contribution to the consolidated 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.

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Statements of Income and Total assets by segment are presented in the following tables.

Year Ended December 31, 2017		CNA Financial				Diamond Offshore				Boardwalk Pipeline				Loews Hotels & Co				Corporate				Total
(In millions)
Revenues:
Insurance premiums		$	6,988																			$	6,988
Net investment income			2,034			$	2											$	146				2,182
Investment gains			122																				122
Contract drilling revenues							1,451																1,451
Other revenues			439				47			$	1,325			$	682				499				2,992
Total			9,583				1,500				1,325				682				645				13,735
Expenses:
Insurance claims and policyholders’ benefits			5,310																				5,310
Amortization of deferred acquisition costs			1,233																				1,233
Contract drilling expenses							802																802
Other operating expenses			1,523				571				861				589				618				4,162
Interest			203				149				171				28				95				646
Total			8,269				1,522				1,032				617				713				12,153
Income (loss) before income tax			1,314				(22	)			293				65				(68)				1,582
Income tax (expense) benefit			(419)				4				232				(1	)			14				(170)
Net income (loss)			895				(18	)			525				64				(54)				1,412
Amounts attributable to noncontrolling interests			(94)				(9	)			(145)												(248)
Net income (loss) attributable to Loews Corporation		$	801			$	(27	)		$	380			$	64			$	(54)			$	1,164
December 31, 2017
Total assets		$	56,539			$	6,251			$	8,972			$	1,558			$	6,266			$	79,586

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Year Ended December 31, 2016		CNA Financial				Diamond Offshore				Boardwalk Pipeline				Loews Hotels & Co				Corporate				Total
(In millions)
Revenues:
Insurance premiums		$	6,924																			$	6,924
Net investment income			1,988			$	1											$	146				2,135
Investment gains (losses)			62				(12)																50
Contract drilling revenues							1,525																1,525
Other revenues			410				75			$	1,316			$	667				3				2,471
Total			9,384				1,589				1,316				667				149				13,105
Expenses:
Insurance claims and policyholders’ benefits			5,283																				5,283
Amortization of deferred acquisition costs			1,235																				1,235
Contract drilling expenses							772																772
Other operating expenses			1,558				1,198				835				621				131				4,343
Interest			167				90				183				24				72				536
Total			8,243				2,060				1,018				645				203				12,169
Income (loss) before income tax			1,141				(471)				298				22				(54)				936
Income tax (expense) benefit			(279)				111				(61)				(10	)			19				(220)
Net income (loss)			862				(360)				237				12				(35)				716
Amounts attributable to noncontrolling interests			(88)				174				(148)												(62)
Net income (loss) attributable to Loews Corporation		$	774			$	(186)			$	89			$	12			$	(35)			$	654
December 31, 2016
Total assets		$	55,207			$	6,371			$	8,706			$	1,498			$	4,812			$	76,594

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Year Ended December 31, 2015		CNA Financial				Diamond Offshore				Boardwalk Pipeline				Loews Hotels & Co				Corporate				Total
(In millions)
Revenues:
Insurance premiums		$	6,921																			$	6,921
Net investment income			1,840			$	3			$	1							$	22				1,866
Investment losses			(71)																				(71)
Contract drilling revenues							2,360																2,360
Other revenues			411				65				1,253			$	604				6				2,339
Total			9,101				2,428				1,254				604				28				13,415
Expenses:
Insurance claims and policyholders’ benefits			5,384																				5,384
Amortization of deferred acquisition costs			1,540																				1,540
Contract drilling expenses							1,228																1,228
Other operating expenses			1,469				1,508				851				555				116				4,499
Interest			155				94				176				21				74				520
Total			8,548				2,830				1,027				576				190				13,171
Income (loss) before income tax			553				(402	)			227				28				(162)				244
Income tax (expense) benefit			(71)				117				(46)				(16	)			59				43
Net income (loss)			482				(285	)			181				12				(103)				287
Amounts attributable to noncontrolling interests			(49)				129				(107)												(27)
Net income (loss) attributable to Loews Corporation		$	433			$	(156	)		$	74			$	12			$	(103)			$	260

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