60086--2/24/2010--LOEWS

related topics

{gas, price, oil}

{operation, natural, condition}

{loss, insurance, financial}

{regulation, change, law}

{operation, international, foreign}

{tax, income, asset}

{competitive, industry, competition}

{regulation, government, change}

{cost, contract, operation}

{condition, economic, financial}

{customer, product, revenue}

{financial, litigation, operation}

{debt, indebtedness, cash}

{capital, credit, financial}

{cost, regulation, environmental}

{stock, price, share}

{personnel, key, retain}

We are a holding company and derive substantially all of our income and cash flow from our subsidiaries. Deterioration in the public debt and equity markets could lead to investment losses and lower cash balances at the parent company, which could impair our ability to fund acquisitions, share buybacks, dividends or other investments or to fund capital needed by our subsidiaries. We could have liability in the future for tobacco-related lawsuits. Risks Related to Us and Our Subsidiary, CNA Financial Corporation CNA has incurred and may continue to incur significant realized and unrealized investment losses and volatility in net investment income arising from the severe disruption in the capital and credit markets. CNA s underwriting results may continue to suffer as a result of the unfavorable global economic conditions. CNA s valuation of investments and impairment of securities requires significant judgment. CNA is unable to predict the impact on itself of governmental efforts and policy changes taken and proposed to be taken in response to the unfavorable economic conditions. CNA is subject to extensive federal, state and local governmental regulations that restrict its ability to do business and generate revenues. CNA is subject to capital adequacy requirements and, if it is unable to maintain or raise sufficient capital to meet these requirements, regulatory agencies may restrict or prohibit CNA from operating its business. Rating agencies may downgrade their ratings of CNA and thereby adversely affect its ability to write insurance at competitive rates or at all. CNA s insurance subsidiaries, upon whom CNA depends for dividends in order to fund its working capital needs, are limited by state regulators in their ability to pay dividends. If CNA determines that its recorded loss reserves are insufficient to cover its estimated ultimate unpaid liability for claims, CNA may need to increase its loss reserves. Loss reserves for asbestos and environmental pollution are especially difficult to estimate and may result in more frequent and larger additions to these reserves. CNA s key assumptions used to determine reserves and deferred acquisition costs for CNA s long term care product offerings could vary significantly from actual experience. CNA is unable to predict the impact of federal health care reform legislation. CNA s premium writings and profitability are affected by the availability and cost of reinsurance. CNA may not be able to collect amounts owed to it by reinsurers. Risks Related to Us and Our Subsidiary, Diamond Offshore Drilling, Inc. Diamond Offshore s business depends on the level of activity in the oil and gas industry, which is significantly affected by volatile oil and gas prices. The continuing global financial crisis and worldwide economic downturn has had, and may continue to have, a negative impact on Diamond Offshore s business and financial condition. Diamond Offshore s industry is cyclical. Diamond Offshore can provide no assurance that its current backlog of contract drilling revenue will be ultimately realized. Diamond Offshore relies heavily on a relatively small number of customers and the loss of a significant customer and/or a dispute that leads to the loss of a customer could have a material adverse impact on its financial results. The terms of Diamond Offshore s dayrate drilling contracts may limit its ability to attain profitability in a declining market or to benefit from increasing dayrates in an improving market. Contracts for Diamond Offshore s drilling units are generally fixed dayrate contracts, and increases in Diamond Offshore s operating costs could adversely affect the profitability of those contracts. Diamond Offshore s drilling contracts may be terminated due to events beyond its control. Diamond Offshore s business involves numerous operating hazards and Diamond Offshore is not fully insured against all of them. Diamond Offshore is self-insured for physical damage to rigs and equipment caused by named windstorms in the U.S. Gulf of Mexico. A significant portion of Diamond Offshore s operations are conducted outside the United States and involve additional risks not associated with domestic operations. Diamond Offshore s drilling contracts offshore Mexico expose it to greater risks than they normally assume. Fluctuations in exchange rates and nonconvertibility of currencies could result in losses. Diamond Offshore may be required to accrue additional tax liability on certain of its foreign earnings. Public health threats could have a material adverse effect on Diamond Offshore s operations and financial results. Rig conversions, upgrades or new builds may be subject to delays and cost overruns. Risks Related to Us and Our Subsidiary, HighMount Exploration Production LLC HighMount may not be able to replace reserves and sustain production at current levels. Replacing reserves is risky and uncertain and requires significant capital expenditures. Estimates of natural gas and NGL reserves are uncertain and inherently imprecise. If commodity prices decrease, HighMount may be required to take additional write-downs of the carrying values of its properties. HighMount may incur additional goodwill impairment charges if market conditions deteriorate. Natural gas, NGL and other commodity prices are volatile. HighMount engages in commodity price hedging activities. Drilling for and producing natural gas and NGLs is a high risk activity with many uncertainties. HighMount s business involves many hazards and operational risks, some of which may not be fully covered by insurance. Risks Related to Us and Our Subsidiary, Boardwalk Pipeline Partners, LP Boardwalk Pipeline needs to obtain and maintain authority from PHMSA to operate at higher than normal operating pressures. Boardwalk Pipeline may not be able to maintain or replace expiring gas transportation and storage contracts at favorable rates. Increased competition could result in lower contracted pipeline capacity, decreased rates for Boardwalk Pipeline s services and reduced revenues. Continued development of new supply sources could impact demand. Boardwalk Pipeline is undertaking and may continue to pursue complex pipeline or storage projects which involve significant risks that may adversely affect its business. Boardwalk Pipeline is exposed to credit risk relating to nonperformance by its customers. Boardwalk Pipeline depends on certain key customers for a significant portion of its revenues. The loss of any of these key customers could result in a decline in Boardwalk Pipeline s revenues. Significant changes in energy prices could affect natural gas market supply and demand, or potentially reduce the competitiveness of natural gas compared with other forms of energy available to Boardwalk Pipeline s customers, which could reduce system throughput and adversely affect Boardwalk Pipeline s revenues and available cash. Boardwalk Pipeline s natural gas transportation and storage operations are subject to FERC s rate-making policies which could limit Boardwalk Pipeline s ability to recover the full cost of operating its pipelines, including earning a reasonable return. Boardwalk Pipeline s operations are subject to catastrophic losses, operational hazards and unforeseen interruptions for which it may not be adequately insured. Risks Related to Us and Our Subsidiaries Generally Future acts of terrorism could harm us and our subsidiaries. Certain of our subsidiaries face significant risks related to the impact of hurricanes and other natural disasters. Certain of our subsidiaries are subject to extensive federal, state and local governmental regulations. The businesses operated by our subsidiaries face intense competition. We and our subsidiaries are subject to litigation. We and our subsidiaries are each dependent on a small number of key executives and other key personnel to operate our businesses successfully. Certain of our subsidiaries face significant risks related to compliance with environmental laws. Certain of our subsidiaries are subject to physical and financial risks associated with climate change. The economic recession and ongoing financial and credit markets crisis have had and may continue to have a negative impact on the business and financial condition of us and our subsidiaries.

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60086--2/24/2010--LOEWS_CORP