The company faces risks from investment losses, particularly in fixed maturity securities, due to changes in interest rates and credit spreads. Catastrophe losses from weather events, like hurricanes, are a significant risk for the insurance segment. The company also has potential liability for future policy benefits, which could increase if actual experience differs from expectations. Litigation, including the Boardwalk Pipelines case, poses a risk of substantial financial exposure. The company's investments in derivative instruments carry market risk and potential losses if anticipated market movements don't occur.
Financial Upside
The company's insurance premiums and net investment income are increasing. Boardwalk Pipelines' revenues are rising due to re-contracting and growth projects. Loews Hotels & Co's revenues are improving, partially due to new hotel openings. Favorable changes in the fair value of equity investments and higher income from fixed income securities are contributing to the parent company's investment income. The company has a large portfolio of fixed maturity securities, which could generate future income.
