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, 2011. This MD&A is comprised of the following sections:

                                                              Page
                                                               No.

                Overview                                         39
                Consolidated Financial Results                   39
                Parent Company Structure                         40
                Critical Accounting Estimates                    40
                Results of Operations by Business Segment        41
                CNA Financial                                    41
                CNA Specialty                                    42
                CNA Commercial                                   44
                Life & Group Non-Core                            46
                Other                                            46
                Diamond Offshore                                 47
                Boardwalk Pipeline                               52
                HighMount                                        54
                Loews Hotels                                     57
                Corporate and Other                              57
                Liquidity and Capital Resources                  58
                CNA Financial                                    58
                Diamond Offshore                                 59
                Boardwalk Pipeline                               60
                HighMount                                        61
                Loews Hotels                                     61
                Corporate and Other                              61
                Investments                                      62
                Forward-Looking Statements                       66

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);

- interstate transportation and storage of natural gas (Boardwalk Pipeline Partners, LP ("Boardwalk Pipeline"), a 55% owned subsidiary);

- exploration, production and marketing of natural gas and oil (including condensate and natural gas liquids) (HighMount Exploration & Production LLC ("HighMount"), a wholly 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 for the three months ended September 30, 2012 amounted to $177 million, or $0.45 per share, as compared to $162 million, or $0.40 per share, in the prior year period. Net income for the nine months ended

September 30, 2012 was $600 million, or $1.51 per share, compared to $791 million, or $1.94 per share, in the prior year period.

Net income for the three and nine months ended September 30, 2012 includes after tax non-cash ceiling test impairment charges of $166 million and $336 million at HighMount related to the carrying value of its natural gas and oil properties reflecting declines in natural gas and NGL prices.

Income before net investment gains (losses) and impairment charges for the three months ended September 30, 2012 was $339 million, as compared to $177 million in the 2011 period. The increase is due primarily to higher earnings at CNA and higher parent company investment income due primarily to increased performance of equity and limited partnership investments. These increases were partially offset by lower earnings at Diamond Offshore.

CNA's earnings increased due to higher net investment income and lower catastrophe losses. Increased investment income reflects improved performance of limited partnership investments.

Diamond Offshore's earnings decreased due to lower rig utilization and a decrease in average dayrate.

Income before net investment gains and impairment charges for the first nine months of 2012 was $901 million, as compared to $782 million in the 2011 period. The increase is due primarily to the reasons discussed above and improved earnings from Boardwalk Pipeline, primarily due to the contribution from Boardwalk HP Storage Company which was acquired in December 2011 as well as the prior year impact of an impairment charge related to steel pipe materials.

Book value per share increased to $50.41 at September 30, 2012, from $47.33 at December 31, 2011 and $47.58 at September 30, 2011.

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 earnings and 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 and compliance with covenants in their respective loan agreements. 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 and Other Receivables

- Litigation

- Valuation of Investments and Impairment of Securities

- Long Term Care Products

- Payout Annuity Contracts

- Pension and Postretirement Benefit Obligations

- Valuation of HighMount's Proved Reserves

- Impairment of Long-Lived Assets

- 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, 2011 for further information.

RESULTS OF OPERATIONS BY BUSINESS SEGMENT

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

CNA Financial

The following table summarizes the results of operations for CNA for the three
and nine months ended September 30, 2012 and 2011 as presented in Note 12 of the
Notes to Consolidated Condensed Financial Statements included in Item 1 of this
Report:



                                                     Three Months Ended           Nine Months Ended
                                                        September 30,               September 30,

                                                     2012           2011          2012          2011
(In millions)

Revenues:
Insurance premiums                                 $   1,781       $ 1,732      $   5,098      $ 4,942
Net investment income                                    601           394          1,719        1,531
Investment gains (losses)                                  8           (27 )           62           14
Other revenue                                             75            77            233          215

Total                                                  2,465         2,176          7,112        6,702

Expenses:
Insurance claims and policyholders' benefits           1,435         1,400          4,164        4,131
Amortization of deferred acquisition costs               333           297            937          880
Other operating                                          340           309            970          911
Interest                                                  43            43            128          142

Total                                                  2,151         2,049          6,199        6,064

Income before income tax                                 314           127            913          638
Income tax expense                                       (92 )         (48 )         (272 )       (199 )
Amounts attributable to noncontrolling interests         (22 )         (10 )          (64 )        (58 )

Net income attributable to Loews Corporation       $     200       $    69      $     577      $   381

Three Months Ended September 30, 2012 Compared to 2011

Net income increased $131 million for the three months ended September 30, 2012 as compared with the 2011 period. This increase was primarily due to higher net investment income and lower catastrophe losses, partially offset by decreased favorable net prior year development and unfavorable morbidity in the long term care business. Catastrophe losses were $16 million (after tax and noncontrolling interests) for the three months ended September 30, 2012 as compared to catastrophe losses of $29 million (after tax and noncontrolling interests) for the same period in 2011. Net investment income increased $207 million primarily due to favorable limited partnership results. See the Investments section of this MD&A for further discussion of net investment income.

Nine Months Ended September 30, 2012 Compared to 2011

Net income increased $196 million for the nine months ended September 30, 2012 as compared with the 2011 period. This increase was primarily due to higher net investment income, lower catastrophe losses and increased net investment gains. Catastrophe losses were $72 million (after tax and noncontrolling interests) for the nine months ended September 30, 2012 as compared to catastrophe losses of $120 million (after tax and noncontrolling interests) for the same period in 2011. Favorable net prior year development of $165 million and $179 million was recorded for the nine months ended September 30, 2012 and 2011 related to CNA Specialty, CNA Commercial and Other segments. Net investment income increased $188 million primarily due to favorable limited partnership results. Net

investment gains increased $28 million (after tax and noncontrolling interests) for the nine months ended September 30, 2012 as compared with the same period in 2011. See the Investments section of this MD&A for further discussion of net investment income and net realized investment results.

CNA Segment Results

CNA utilizes the net operating income financial measure to monitor its operations. Net operating income is calculated by excluding from net income
(loss) the 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 the CNA Specialty and CNA Commercial segments and Hardy, included in the Other segment, CNA 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.

CNA Specialty

The following table summarizes the results of operations for CNA Specialty:



                                           Three Months Ended           Nine Months Ended
                                              September 30,               September 30,

                                           2012            2011         2012          2011
(In millions, except %)

Net written premiums                     $     723        $  750      $   2,206      $ 2,172
Net earned premiums                            738           741          2,163        2,098
Net investment income                          159            85            446          371
Net operating income                           121            74            336          293
Net realized investment gains (losses)           1            (5 )           11            4
Net income                                     122            69            347          297

Ratios:
Loss and loss adjustment expense              62.5 %        65.5 %         63.6 %       63.6 %
Expense                                       31.0          29.8           31.5         30.6
Dividend                                       0.2          (0.6 )                      (0.2 )

Combined                                      93.7 %        94.7 %         95.1 %       94.0 %

Three Months Ended September 30, 2012 Compared to 2011

Net written premiums for CNA Specialty decreased $27 million for the three months ended September 30, 2012 as compared with the same period in 2011. This decrease was primarily due to lower new business levels in certain lines, partially offset by continued positive rate achievement. Net earned premiums decreased $3 million as compared with the same period in 2011. This decrease was primarily due to favorable premium development recorded in 2011, partially offset by the impact of increased net written premiums over recent quarters. Further information on premium development is included in Note 6 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

CNA Specialty's average rate increased 5% for the three months ended September 30, 2012, as compared with flat average rate for the three months ended September 30, 2011 for the policies that renewed in each period. Retention of 86% and 87% was achieved in each period.

Net income increased $53 million for the three months ended September 30, 2012 as compared with the same period in 2011 due to higher net operating income.

Net operating income increased $47 million for the three months ended September 30, 2012 as compared with the same period in 2011, primarily due to higher net investment income.

The combined ratio decreased 1.0 point for the three months ended September 30, 2012 as compared with the same period in 2011. The loss ratio decreased 3.0 points, due to the impact of increased favorable net prior year development and an improved current accident year loss ratio. The expense ratio increased 1.2 points for the three

months ended September 30, 2012 as compared with the same period in 2011, primarily due to the impact of favorable premium development in 2011.

Favorable net prior year development of $40 million and $31 million was recorded for the three months ended September 30, 2012 and 2011. Further information on CNA Specialty's net prior year development for the three months ended September 30, 2012 and 2011 is included in Note 6 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Nine Months Ended September 30, 2012 Compared to 2011

Net written premiums for CNA Specialty increased $34 million for the nine months ended September 30, 2012 as compared with the same period in 2011, driven by increased rate, partially offset by lower new business levels in certain lines. Net earned premiums increased $65 million as compared with the same period in 2011, consistent with increased net written premiums over recent quarters.

CNA Specialty's average rate increased 4% for the nine months ended September 30, 2012, as compared with flat average rate for the nine months ended September 30, 2011 for the policies that renewed in each period. Retention of 86% was achieved in each period.

Net income increased $50 million for the nine months ended September 30, 2012 as compared with the same period in 2011, due to higher net operating income.

Net operating income increased $43 million for the nine months ended September 30, 2012 as compared with the same period in 2011, primarily due to higher net investment income and the inclusion of CNA's Surety business on a wholly owned basis in 2012. These favorable impacts were partially offset by decreased favorable net prior year development and decreased current accident year underwriting results.

The combined ratio increased 1.1 points for the nine months ended September 30, 2012 as compared with the same period in 2011. The loss ratio remained unchanged as the impact of an improved current accident year loss ratio was offset by decreased favorable net prior year development. The expense ratio increased 0.9 points for the nine months ended September 30, 2012 as compared with the same period in 2011, primarily due to increased underwriting expenses and the impact of favorable premium development in 2011.

Favorable net prior year development of $95 million and $106 million was recorded for the nine months ended September 30, 2012 and 2011. Further information on CNA Specialty's net prior year development for the nine months ended September 30, 2012 and 2011 is included in Note 6 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

The following table summarizes the gross and net carried reserves for CNA Specialty:

                                                        September 30,          December 31,
                                                            2012                   2011
(In millions)

Gross Case Reserves                                    $         2,435         $       2,441
Gross IBNR Reserves                                              4,418                 4,399

Total Gross Carried Claim and Claim Adjustment
Expense Reserves                                       $         6,853         $       6,840


Net Case Reserves                                      $         2,112         $       2,086
Net IBNR Reserves                                                4,010                 3,937

Total Net Carried Claim and Claim Adjustment
Expense Reserves                                       $         6,122         $       6,023

CNA Commercial

The following table summarizes the results of operations for CNA Commercial:



                                           Three Months Ended           Nine Months Ended
                                              September 30,               September 30,

                                           2012           2011          2012          2011

(In millions, except %)

Net written premiums                     $     811       $   836      $   2,543      $ 2,544
Net earned premiums                            840           848          2,452        2,418
Net investment income                          230           115            646          569
Net operating income                           113            42            289          191
Net realized investment gains (losses)           6            (8 )           20            8
Net income                                     119            34            309          199

Ratios:
Loss and loss adjustment expense              70.5 %        68.7 %         71.3 %       74.7 %
Expense                                       35.2          33.8           35.2         34.6
Dividend                                       0.3           0.4            0.3          0.2

Combined                                     106.0 %       102.9 %        106.8 %      109.5 %

Three Months Ended September 30, 2012 Compared to 2011

Net written premiums for CNA Commercial decreased $25 million for the three months ended September 30, 2012 as compared with the same period in 2011. Net written premiums for the three months ended September 30, 2011 included $38 million related to First Insurance Company of Hawaii ("FICOH"), which was sold in the fourth quarter of 2011. Excluding FICOH, the increase in net written premiums was primarily driven by continued positive rate achievement. Net earned premiums decreased $8 million for the three months ended September 30, 2012 as compared with the same period in 2011. Net earned premiums for the three months ended September 30, 2011 included $35 million related to FICOH. Excluding FICOH, the increase in net earned premiums was driven by the increase in net written premiums over recent quarters.

CNA Commercial's average rate increased 8% for the three months ended September 30, 2012, as compared with an increase of 2% for the three months ended September 30, 2011 for the policies that renewed in each period. Retention of 79% was achieved in each period.

Net income increased $85 million for the three months ended September 30, 2012 as compared with the same period in 2011. This increase was due to increased net operating income and improved net realized investment results.

Net operating income increased $71 million for the three months ended September 30, 2012 as compared with the same period in 2011. This increase was primarily due to higher net investment income and lower catastrophe losses. These favorable impacts were partially offset by decreased favorable net prior year development. Additionally, income tax expense of $22 million was recorded in 2011 due to an increase in the tax rate applicable to the undistributed earnings of FICOH, which was under contract for sale.

The combined ratio increased 3.1 points for the three months ended September 30, 2012 as compared with the same period in 2011. The loss ratio increased 1.8 points, primarily due to the impacts of less favorable net prior year development, partially offset by lower catastrophe losses and an improved current accident year non-catastrophe loss ratio. Catastrophe losses were $24 million, or 2.8 points of the loss ratio, for the three months ended September 30, 2012, as compared to $46 million, or 5.5 points of the loss ratio, for the three months ended September 30, 2011.

The expense ratio increased 1.4 points for the three months ended September 30, 2012 as compared with the same period in 2011, primarily due to higher underwriting expenses and the favorable impact of recoveries in 2011 on insurance receivables written off in prior years.

Favorable net prior year development of $3 million and $53 million was recorded for the three months ended September 30, 2012 and 2011. Further information on CNA Commercial net prior year development for the three months ended September 30, 2012 and 2011 is included in Note 6 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

Nine Months Ended September 30, 2012 Compared to 2011

Net written premiums and net earned premiums for CNA Commercial decreased $1 million and increased $34 million for the nine months ended September 30, 2012 as compared with the same period in 2011. Net written premiums and net earned premiums for the nine months ended September 30, 2011 included $110 million and $103 million related to FICOH. Excluding FICOH, the increase in net written premiums was due to the same reasons discussed above in the three month comparison. Excluding FICOH, the increase in net earned premiums was driven by the increase in net written premiums over recent quarters and favorable premium development recorded in 2012. Further information on premium development is included in Note 6 of the Notes to Consolidated Condensed Financial Statements included under Item 1.

CNA Commercial's average rate increased 6% for the nine months ended September 30, 2012 as compared with an increase of 2% for the nine months ended September 30, 2011 for the policies that renewed in each period. Retention of 78% and 79% was achieved in each period.

Net income increased $110 million for the nine months ended September 30, 2012 as compared with the same period in 2011, primarily due to higher net operating income.

Net operating income increased $98 million for the nine months ended September 30, 2012 as compared with the same period in 2011. This increase was primarily due to lower catastrophe losses and higher net investment income, as well as the tax expense item in 2011 discussed above in the three month comparison. These favorable impacts were partially offset by decreased favorable net prior year development.

The combined ratio improved 2.7 points for the nine months ended September 30, 2012 as compared with the same period in 2011. The loss ratio improved 3.4 points, primarily due to the impacts of lower catastrophe losses and an improved current accident year non-catastrophe loss ratio, partially offset by decreased favorable net prior year development. Catastrophe losses were $115 million, or 4.7 points of the loss ratio, for the nine months ended September 30, 2012, as compared to $195 million, or 8.1 points of the loss ratio, for the nine months ended September 30, 2011.

The expense ratio increased 0.6 points for the nine months ended September 30, 2012 as compared with the same period in 2011, primarily due to the favorable impact of recoveries in 2011 on insurance receivables written off in prior years.

Favorable net prior year development of $66 million and $78 million was recorded . . .