Management's discussion and analysis of financial condition and results of operations ("MD&A") should be read in conjunction with our Consolidated Condensed Financial Statements included in Item 1 of this Report, Risk Factors included in Part II, Item 1A of this Report, and the Consolidated Financial Statements, Risk Factors, and MD&A included in our Annual Report on Form 10-K for the year ended December 31, 2008. This MD&A is comprised of the following sections:

Page No.

Overview 52 Consolidated Financial Results 53 Parent Company Structure 54 Critical Accounting Estimates 54 Results of Operations by Business Segment 54 CNA Financial 55 Standard Lines 55 Specialty Lines 57 Life & Group Non-Core 59 Other Insurance 60 A&E Reserves 61 Diamond Offshore 64 HighMount 66 Boardwalk Pipeline 69 Loews Hotels 73 Corporate and Other 74 Liquidity and Capital Resources 74 CNA Financial 74 Diamond Offshore 75 HighMount 76 Boardwalk Pipeline 77 Loews Hotels 78 Corporate and Other 78 Investments 78 Accounting Standards Updates 83 Forward-Looking Statements 83

OVERVIEW

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

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

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

• exploration, production and marketing of natural gas, natural gas liquids and, to a lesser extent, oil (HighMount Exploration & Production LLC ("HighMount"), a wholly owned subsidiary);

• operation of interstate natural gas transmission pipeline systems including integrated storage facilities (Boardwalk Pipeline Partners, LP ("Boardwalk Pipeline"), a 72% owned subsidiary); and

• operation of hotels (Loews Hotels Holding Corporation ("Loews Hotels"), a wholly owned subsidiary).

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

Consolidated Financial Results

Net income (loss) and earnings (loss) per share information attributable to
Loews common stock and former Carolina Group stock is summarized in the table
below.



                                                      Three Months Ended           Nine Months Ended
                                                         September 30,               September 30,
                                                        2009          2008          2009          2008
(In millions, except per share data)

Net income (loss) attributable to Loews common
stock:
Income (loss) from continuing operations            $     469       $  (144 )    $    163       $   776
Discontinued operations, net (a)                           (1 )           7            (2 )       4,501
Net income (loss) attributable to Loews common
stock                                                     468          (137 )         161         5,277
Net income attributable to former Carolina Group
stock - Discontinued operations, net (b)                                                            211
Net income (loss) attributable to Loews
Corporation                                         $     468       $  (137 )    $    161       $ 5,488

Net income (loss) per share:
Loews common stock:
Income (loss) from continuing operations            $    1.08       $ (0.33 )    $   0.37       $  1.58
Discontinued operations, net (a)                                       0.02                        9.14
Loews common stock                                  $    1.08       $ (0.31 )    $   0.37       $ 10.72
Former Carolina Group stock - Discontinued
operations                                          $       -       $     -      $      -       $  1.95

(a) Includes a tax-free non-cash gain of $4,287 million related to the separation of Lorillard, Inc. and an after tax gain of $75 million from the sale of Bulova Corporation for the nine months ended September 30, 2008.

(b) The Carolina Group and the former Carolina Group stock were eliminated effective June 10, 2008 as part of the separation of Lorillard, Inc.

Income from continuing operations for the 2009 third quarter was $469 million, or $1.08 per share, compared to a loss of $144 million, or $0.33 per share, in the 2008 third quarter. Income from continuing operations for the nine months ended September 30, 2009 was $163 million, or $0.37 per share compared to $776 million, or $1.58 per share, in the prior year.

Book value per common share increased to $39.54 at September 30, 2009, as compared to $34.60 at June 30, 2009 and $30.18 at December 31, 2008. The increase during the third quarter of 2009 was primarily driven by a $1.7 billion (after tax and noncontrolling interests) improvement in the fair value of our insurance subsidiary's fixed maturities investment portfolio reflecting a further narrowing of credit spreads which began in the second quarter.

Income from continuing operations in the third quarter of 2009 primarily reflects improved net investment income and significantly lower impairment losses at CNA compared to a loss from continuing operations in the prior year. Net investment income benefited from higher limited partnership results, partially offset by the impact of lower short-term interest rates. In addition, continued strong results at Diamond Offshore and higher investment income at the holding company contributed to the improved results. Results were lower at Boardwalk Pipeline due to remediation of pipeline anomalies, and at Loews Hotels due to impairment charges related to two properties.

Income from continuing operations includes net investment losses of $61 million (after tax and noncontrolling interests) in the third quarter of 2009 compared to net investment losses of $379 million in the comparable prior year period. Net investment losses in the third quarter of 2008 were primarily driven by other-than-temporary impairment losses recognized in CNA's available-for-sale portfolio driven by credit related issues.

The decline in income from continuing operations in 2009 primarily reflects a non-cash impairment charge of $660 million (after tax) recorded in the first quarter of 2009, related to the carrying value of HighMount's natural gas and oil properties, reflecting declines in natural gas prices. There were no comparable impairment charges in the prior year period. Excluding this impairment charge, results improved over the comparable period of the prior year due to the reasons discussed above, partially offset by increased impairment losses recorded in CNA's investment portfolio.

Net investment losses were $549 million (after tax and noncontrolling interests) in the nine months ended September 30, 2009, compared to losses of $472 million in the comparable prior year period.

In June of 2008, we disposed of our entire ownership interest in Lorillard, Inc. through the redemption of Carolina Group stock in exchange for Lorillard common stock and an exchange of our remaining Lorillard common stock for Loews common stock. The Carolina Group and Carolina Group stock have been eliminated. We also sold Bulova Corporation in January 2008. Lorillard's results of operations and the gain on disposal of Lorillard and Bulova have been classified as discontinued operations.

Parent Company Structure

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

CRITICAL ACCOUNTING ESTIMATES

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

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

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

• Insurance Reserves

• Reinsurance

• Litigation

• Valuation of Investments and Impairment of Securities

• Long Term Care Products

• Pension and Postretirement Benefit Obligations

• Valuation of HighMount's Proved Reserves

• Goodwill

• Income Taxes

Due to the inherent uncertainties involved with these types of judgments, actual results could differ significantly from estimates, which may have a material adverse impact on our results of operations or equity. See the Critical Accounting Estimates section and the Results of Operations by Business Segment - CNA Financial - Reserves - Estimates and Uncertainties section of our MD&A included under Item 7 of our Form 10-K for the year ended December 31, 2008 for further information. Effective April 1, 2009, we adopted updated accounting guidance, which amended the Other-than-temporary impairment ("OTTI") loss model for fixed maturity securities. Please read Note 1 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

RESULTS OF OPERATIONS BY BUSINESS SEGMENT

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

CNA Financial

Insurance operations are conducted by subsidiaries of CNA Financial Corporation ("CNA"). CNA is a 90% owned subsidiary.

CNA's core property and casualty commercial insurance operations are reported in two business segments: Standard Lines and Specialty Lines. Standard Lines includes standard property and casualty coverages sold to small businesses and middle market entities and organizations in the U.S. primarily through an independent agency distribution system. Standard Lines also includes commercial insurance and risk management products sold to large corporations in the U.S. primarily through insurance brokers. Specialty Lines provides a broad array of professional, financial and specialty property and casualty products and services, including excess and surplus lines, primarily through insurance brokers and managing general underwriters. Specialty Lines also includes insurance coverages sold globally through CNA's foreign operations ("CNA Global"). The non-core operations are managed in the Life & Group Non-Core segment and Other Insurance segment. Life & Group Non-Core primarily includes the results of the life and group lines of business sold or placed in run-off. Other Insurance primarily includes the results of certain property and casualty lines of business placed in run-off, including CNA Reinsurance Company Limited. This segment also includes the results related to the centralized adjusting and settlements of Asbestos and Environmental Pollution ("A&E") claims.

Segment Results

The following discusses the results of continuing operations for CNA's operating segments. CNA utilizes the net operating income financial measure to monitor its operations. Net operating income is calculated by excluding from net income
(loss) the after tax and noncontrolling interest effects of (i) net realized investment gains or losses, (ii) income or loss from discontinued operations and
(iii) any cumulative effects of changes in accounting guidance. In evaluating the results of CNA's Standard Lines and Specialty Lines segments, CNA's management utilizes the loss ratio, the expense ratio, the dividend ratio, and the combined ratio. These ratios are calculated using GAAP financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios.

Standard Lines

The following table summarizes the results of operations for Standard Lines.



                                        Three Months Ended           Nine Months Ended
                                           September 30,               September 30,
                                          2009          2008           2009         2008
   (In millions, except %)

   Net written premiums               $     632       $   723      $   2,156      $ 2,342
   Net earned premiums                      702           762          2,083        2,313
   Net investment income                    243           136            615          499
   Net operating income (loss)              101           (48 )          287          149
   Net realized investment losses           (40 )        (103 )         (245 )       (148 )
   Net income (loss)                         61          (151 )           42            1

   Ratios:
   Loss and loss adjustment expense        74.0 %        96.3 %         72.4 %       81.1 %
   Expense                                 37.7          34.4           35.3         31.3
   Dividend                                 0.5          (1.4 )          0.3         (0.2 )
   Combined                               112.2 %       129.3 %        108.0 %      112.2 %

Three Months Ended September 30, 2009 Compared to 2008

Net written premiums for Standard Lines decreased $91 million for the three months ended September 30, 2009 as compared with the same period in 2008. Despite favorable new business in the current three month period, premiums written declined in both CNA's Business Insurance and Commercial Insurance groups primarily due to general economic conditions. Current economic conditions have led to decreased insured exposures, particularly in the construction industry due to smaller payrolls and reduced project volume. This, along with competitive market conditions, may continue to put ongoing pressure on premium and income levels and the expense ratio. Net earned premiums decreased

$60 million for the three months ended September 30, 2009 as compared with the same period in 2008, consistent with the trend of lower net written premiums.

Standard Lines average rate was flat for the three months ended September 30, 2009, as compared to decreases of 5.0% for the three months ended September 30, 2008 for the policies that renewed during those periods. Retention rates of 80.0% and 81.0% were achieved for those policies that were available for renewal in each period.

Net results improved $212 million for the three months ended September 30, 2009 as compared with the same period in 2008, due to improved net operating results and lower net realized investment losses. See the Investments section of this MD&A for further discussion of the net realized investment results and net investment income.

Net operating results improved $149 million for the three months ended September 30, 2009 as compared with the same period in 2008. This improvement was primarily driven by lower catastrophe losses and higher net investment income. Partially offsetting these favorable items was an unfavorable change in current accident year underwriting results excluding catastrophes.

The combined ratio improved 17.1 points for the three months ended September 30, 2009 as compared with the same period in 2008. The loss ratio improved 22.3 points primarily due to decreased catastrophe losses, partially offset by the impact of higher current accident year non-catastrophe loss ratios. Catastrophe losses were $20 million, or 2.9 points of the loss ratio, for the three months ended September 30, 2009 as compared to $236 million, or 31.0 points of the loss ratio, for the same period in 2008.

CNA's estimates for the current accident year partially rely on the actuarial trends and results for recent accident years. The trends observed during the third quarter of 2009 indicated higher than anticipated claim costs in recent accident years, primarily in small and middle markets workers' compensation lines of business, resulting in an increase in the full year 2009 accident year non-catastrophe loss ratio in the third quarter of 2009. The trends observed during the third quarter of 2008 were generally favorable across several lines of business, which resulted in a decrease in the full year 2008 accident year non-catastrophe loss ratio in the third quarter of 2008.

The expense ratio increased 3.3 points for the three months ended September 30, 2009 as compared with the same period in 2008, primarily related to higher underwriting expenses, unfavorable changes in estimates for insurance-related assessments, and the lower net earned premium base. Underwriting expenses increased primarily due to higher employee-related costs.

The dividend ratio increased 1.9 points for the three months ended September 30, 2009 as compared with the same period in 2008. This increase was primarily due to favorable dividend reserve development recorded on workers' compensation coverages in the third quarter of 2008.

Favorable net prior year development of $1 million was recorded for the three months ended September 30, 2009, reflecting $13 million of favorable claim and allocated claim adjustment expense reserve development and $12 million of unfavorable premium development. Favorable net prior year development of $1 million, reflecting $4 million of favorable claim and allocated claim adjustment expense reserve development and $3 million of unfavorable premium development, was recorded for the three months ended September 30, 2008. Further information on Standard Lines net prior year development for the three months ended September 30, 2009 and 2008 is included in Note 8 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Nine Months Ended September 30, 2009 Compared to 2008

Net written premiums for Standard Lines decreased $186 million and net earned premiums decreased $230 million for the nine months ended September 30, 2009 as compared with the same period in 2008, due primarily to the same reasons discussed above in the three month comparison as well as increased unfavorable premium development recorded in 2009.

Standard Lines rate on average decreased 1.0% for the nine months ended September 30, 2009, as compared to decreases of 5.0% for the nine months ended September 30, 2008 for the policies that renewed during those periods. Retention rates of 81.0% were achieved for those policies that were available for renewal in both periods.

Net income improved $41 million for the nine months ended September 30, 2009 as compared with the same period in 2008. This increase was due to improved net operating income, partially offset by higher net realized investment losses.

Net operating income improved $138 million for the nine months ended September 30, 2009 as compared with the same period in 2008. This improvement was due primarily to the same reasons discussed above in the three month comparison.

The combined ratio improved 4.2 points for the nine months ended September 30, 2009 as compared with the same period in 2008. The loss ratio improved 8.7 points primarily due to decreased catastrophe losses, partially offset by the impact of higher current accident year non-catastrophe loss ratios. Catastrophe losses were $72 million, or 3.5 points of the loss ratio, for the nine months ended September 30, 2009 as compared to $334 million, or 14.5 points of the loss ratio, for the same period in 2008. The current accident year loss ratio, excluding catastrophe losses, was unfavorably impacted by large property losses in 2009 and the impact of higher loss ratios in the workers' compensation line of business.

The expense ratio increased 4.0 points for the nine months ended September 30, 2009 as compared with the same period in 2008, primarily related to the reasons discussed above in the three month comparison.

Favorable net prior year development of $35 million was recorded for the nine months ended September 30, 2009, reflecting $123 million of favorable claim and allocated claim adjustment expense reserve development and $88 million of unfavorable premium development. Favorable net prior year development of $50 million, reflecting $54 million of favorable claim and allocated claim adjustment expense reserve development and $4 million of unfavorable premium development, was recorded for the nine months ended September 30, 2008. Further information on Standard Lines net prior year development for the nine months ended September 30, 2009 and 2008 is included in Note 8 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

The following table summarizes the gross and net carried reserves for Standard Lines.

                                                          September 30,       December 31,
                                                              2009                2008
(In millions)

Gross Case Reserves                                      $         5,933     $        6,158
Gross IBNR Reserves                                                5,725              5,890
Total Gross Carried Claim and Claim Adjustment
Expense Reserves                                         $        11,658     $       12,048

Net Case Reserves                                        $         4,765     $        4,995
Net IBNR Reserves                                                  4,853              4,875
Total Net Carried Claim and Claim Adjustment Expense
Reserves                                                 $         9,618     $        9,870

Specialty Lines

The following table summarizes the results of operations for Specialty Lines.



                                        Three Months Ended           Nine Months Ended
                                           September 30,               September 30,
                                          2009           2008          2009         2008
   (In millions, except %)

   Net written premiums               $     845        $  875      $   2,508      $ 2,583
   Net earned premiums                      859           882          2,505        2,614
   Net investment income                    187           121            483          408
   Net operating income                     144           130            406          372
   Net realized investment losses           (23 )         (66 )         (150 )        (88 )
   Net income                               121            64            256          284

   Ratios:
   Loss and loss adjustment expense        62.1 %        58.5 %         62.0 %       62.8 %
   Expense                                 29.6          29.0           29.4         27.8
   Dividend                                 0.2           0.3            0.3          0.4
   Combined                                91.9 %        87.8 %         91.7 %       91.0 %

Three Months Ended September 30, 2009 Compared to 2008

Net written premiums for Specialty Lines decreased $30 million for the three months ended September 30, 2009 as compared with the same period in 2008. This decrease reflects lower net written premiums for CNA Global, partially offset by growth in U.S. Specialty lines. CNA Global written premiums were unfavorably impacted by current economic conditions and foreign exchange. Modest growth in U.S. Specialty written premiums was driven by strong rate increases in the financial institutions and directors and officers lines, partially offset by the impact of current economic conditions. The current economic conditions have led to decreased insured exposures in several lines, primarily the architects and engineers professional liability marketplace. This, along with the competitive market conditions, may continue to put ongoing pressure on premium and income levels and the expense ratio. Net earned premiums decreased $23 million for the three months ended September 30, 2009 as compared with the same period in 2008, consistent with the trend of lower net written premiums.

Specialty Lines average rate was flat for the three months ended September 30, 2009 as compared to decreases of 3.0% for the three months ended September 30, 2008 for the policies that renewed during those periods. Retention rates of 84.0% were achieved for those policies that were available for renewal in both periods.

Net income improved $57 million for the three months ended September 30, 2009 as compared with the same period in 2008. This improvement was primarily due to lower net realized investment losses. See the Investments section of this MD&A for further discussion of the net realized investment results and net investment income.

Net operating income improved $14 million for the three months ended September 30, 2009 as compared with the same period in 2008. This improvement was primarily due to higher net investment income, partially offset by decreased . . .