1. 2007 ANNUAL REPORT

2. Loews Corporation, a holding company, is one of the Revenues
(in billions of dollars)
largest diversified corporations in the United States. 2003 2004 2005 2006 2007
18.4
17.7
16.3 15.8
15.1
CNA Financial Corporation (89 percent owned) is one of the largest commer-
cial property-casualty insurance companies in the United States. (NYSE: CNA)
www.cna.com
Lorillard, Inc. (100 percent owned) is America’s oldest tobacco company. Its principal
products are marketed under the brand names Newport, Kent, True, Maverick and Old
Net Income (Loss)
Gold. Substantially all of its sales are in the United States. www.lorillard.com
(in billions of dollars)
2003 2004 2005 2006 2007
2.5 2.5
Diamond Offshore Drilling, Inc. (51 percent owned) is one of the world’s largest off-
shore drilling companies, offering comprehensive drilling services to the energy
industry around the world. The company owns and operates 44 offshore drilling rigs.
(NYSE: DO) www.diamondoffshore.com
1.2 1.2
HighMount Exploration & Production LLC (100 percent owned) is engaged in the ex- (0.6)
ploration and production of natural gas. HighMount’s primary holdings are located in
the Permian Basin in Texas, the Antrim Shale in Michigan and the Black Warrior Basin
in Alabama.
Total Assets
(in billions of dollars)
2003 2004 2005 2006 2007
Boardwalk Pipeline Partners, LP (70 percent owned) is engaged in the operation of
interstate natural gas pipeline systems. (NYSE: BWP) www.bwpmlp.com
76.1
76.9
77.7
73.7 70.9
Loews Hotels (100 percent owned) is one of the country’s top luxury lodging
companies. It owns and operates hotels and resorts in the United States and Canada.
www.loewshotels.com
Shareholders’ Equity
Table of Contents
(in billions of dollars)
2003 2004 2005 2006 2007
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
17.6
Letter to Our Shareholders and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 16.5
Loews: A Financial Portrait. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 13.1
12.0
10.9
Year in Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Corporate Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Shareholder Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2007 Annual Report on Form 10-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

3. FINA NCIA L H IGH LIGH TS
Net income attributable to Loews com- Net income per share of Carolina Group
Results of Operations
stock for 2007 was $4.91 compared to
Consolidated net income for 2007 was mon stock included net investment losses
$4.46 in the prior year. The increase in
$2,489 million, compared to $2,491 mil- of $67 million (after tax and minority inter-
net income per share was primarily due to
lion in the prior year. est) in 2007, compared to net investment
higher effective unit prices resulting from
gains of $69 million (after tax and minority
Net income attributable to Loews com- price increases in December 2006 and
interest) in the prior year. The net invest-
mon stock in 2007 amounted to $1,956 September 2007, lower sales promotion
ment losses in 2007 were primarily driven
million, or $3.65 per share, compared to expenses and a lower effective tax rate,
by $428 million (after tax and minority
$2,075 million, or $3.75 per share, in the partially offset by an increase in expenses
interest) of other-than-temporary impair- for the State Settlement Agreements and
prior year. The decrease in net income
ment losses at CNA that were partially a charge related to litigation.
reflected reduced investment income,
offset by a gain of $93 million (after tax)
reduced results at CNA and a decrease in Consolidated revenues in 2007 amounted
related to a reduction in the Company’s
the share of Carolina Group earnings at- to $18.4 billion, compared to $17.7 bil-
ownership interest in Diamond Off-
tributable to Loews common stock, due lion in the prior year. At December 31,
shore from the conversion of Diamond
to the sale by Loews of Carolina Group 2007, the book value per share of Loews
Offshore’s 1.5% convertible debt into
stock in August and May of 2006, partially common stock was $32.40, compared to
offset by higher results from Lorillard. Diamond Offshore common stock. $30.14 at December 31, 2006.
2 L O E W S C O R P O R AT I O N

4. Year Ended December 31 2007 2006 2005 2004 2003
(In millions, except per share data)
Results of Operations:
Revenues $ 18,380 $ 17,702 $ 15,832 $ 15,060 $ 16,293
Income (loss) before taxes and minority interest 4,575 4,448 1,827 1,808 (1,375)
Income (loss) from continuing operations 2,481 2,502 1,181 1,224 (666)
Discontinued operations, net 8 (11) 31 (8) 69
Net income (loss) $ 2,489 $ 2,491 $ 1,212 $ 1,216 $ (597)
Income (loss) attributable to:
Loews common stock:
Income (loss) from continuing operations $ 1,948 $ 2,086 $ 930 $ 1,040 $ (781)
Discontinued operations, net 8 (11) 31 (8) 69
Loews common stock 1,956 2,075 961 1,032 (712)
Carolina Group stock 533 416 251 184 115
Net income (loss) $ 2,489 $ 2,491 $ 1,212 $ 1,216 $ (597)
Diluted Net Income (Loss) Per Share:
Loews common stock:
Income (loss) from continuing operations $ 3.64 $ 3.77 $ 1.67 $ 1.87 $ (1.40)
Discontinued operations, net 0.01 (0.02) 0.05 (0.02) 0.12
Net income (loss) $ 3.65 $ 3.75 $ 1.72 $ 1.85 $ (1.28)
Carolina Group stock $ 4.91 $ 4.46 $ 3.62 $ 3.15 $ 2.76
Financial Position:
Investments $ 47,923 $ 53,870 $ 45,360 $ 44,272 $ 42,513
Total assets 76,079 76,881 70,906 73,720 77,674
Debt
Parent Company debt 866 865 1,165 2,305 2,299
Subsidiary debt 6,392 4,707 4,042 4,685 3,521
Shareholders’ equity 17,591 16,502 13,092 11,970 10,855
Cash dividends per share:
Loews common stock 0.25 0.24 0.20 0.20 0.20
Carolina Group stock 1.82 1.82 1.82 1.82 1.81
Book value per share of Loews common stock 32.40 30.14 23.64 21.85 19.95
Shares outstanding:
Loews common stock 529.68 544.20 557.54 556.75 556.34
Carolina Group stock 108.46 108.33 78.19 67.97 57.97
L O E W S C O R P O R AT I O N 3

5. Office of the President (from left to right): Andrew H. Tisch, Co-Chairman of the
Board and Chairman of the Executive Committee; James S. Tisch, President and
Chief Executive Officer; Jonathan M. Tisch, Co-Chairman of the Board, Chairman
and Chief Executive Officer, Loews Hotels.

6. LeTTeR TO OUR S H A R eH OL de R S AN d e M p L O y e e S
A
company’s unique strategic priorities. The
gas and related natural gas liquids totaling
s we are fond of saying, Loews
transaction is also expected to improve
approximately 2.5 trillion cubic feet equiv-
Corporation exists for a simple rea-
the long-term financial strength and risk
alent, are located in Texas, Michigan and
son: to build value for our share-
profile of Loews.
Alabama. We evaluated the natural gas
holders. At Loews, our value-creation
exploration and production sector for
objectives are decidedly long term, and
Holders of Loews common stock who
some time before finding this outstanding
we attach a much greater priority to gen-
wish to invest directly in Lorillard can
opportunity.
erating superior stock price performance
elect to participate in our planned ex-
over the next twelve years than over any
change offer, the terms of which we
In addition to our favorable long-term
single twelve-month period.
expect to announce during the second
view of natural gas pricing, we believe
quarter. Participants will receive Lorillard
HighMount can generate solid returns
The twelve months of 2007 were good
common shares in exchange for their
for Loews shareholders because of its
ones for our company, despite turbulent
shares of Loews common stock at a to-
long-lived reserves, its high success rates
financial markets and an increasingly un-
be-determined ratio. Holders of Caro-
for well completion and its relatively low
certain economic outlook. During 2007,
lina Group stock will receive one share of
drilling and operating costs. Even so, we
we continued to focus on our three prima-
Lorillard common stock in exchange for
would have been hesitant to make the
ry means of creating value: optimizing the
each share they own and will benefit from
acquisition had it not included top-notch
structure and performance of each Loews
the elimination of any tracking stock
management and outstanding technical,
subsidiary, making well-timed acquisitions
discount that might have existed for
financial and field employees.
and repurchasing shares of Loews com-
Carolina Group stock. (See page 8 for
mon stock at favorable prices.
HighMount gives us a platform to take
more details.)
advantage of growth opportunities in the
Loews recorded consolidated net income
exploration and production industry, in-
of $2.5 billion, matching last year’s re- Bulova Sale
cluding reinvesting cash flow into the
cord. Net income attributable to Loews In January 2008, we closed on the sale of
development of existing fields, exploit-
common stock declined from $2.1 billion Bulova Corporation, our watch and clock
ing new development opportunities and
to $2.0 billion, while Carolina Group net subsidiary, to Citizen Watch Company for
acquiring producing assets. The explora-
income increased from $416 million to approximately $250 million. Bulova had
tion and production business plays to our
$533 million. Lorillard, Diamond Offshore been a part of Loews since 1979 and,
strengths in capital allocation and financial
and Boardwalk Pipeline all reported record while small in comparison to our other
discipline.
earnings, while CNA realized near-record subsidiaries, was a highly regarded part
net operating income. Several items, of our company. Though we will miss our
Lorillard Separation
most notably realized investment losses Bulova colleagues, they stand to benefit
In December 2007, our Board of Direc-
at CNA, offset our subsidiaries’ overall from being part of a global leader in quality
tors approved plans for a tax-free spin-off
strong operating performance. timepieces.
of Lorillard to holders of Loews common
We completed a $4.0 billion acquisition stock and Carolina Group stock. Upon The Loews Business Model
of natural gas exploration and production completion of this separation, which is Our acquisition of natural gas exploration
assets and announced plans for the tax- subject to various conditions, Lorillard, and production assets and our planned
free separation of Lorillard from Loews. now a wholly owned Loews subsidiary, separation of Lorillard raise an obvious
Benefiting from strong cash generation by will become a separate publicly traded question: is Loews now intent on becom-
our subsidiaries, we finished the year with company. ing a diversified energy company? Our
$3.8 billion in holding company cash and emphatic answer is no. We are no more
We created Carolina Group tracking
investments, even after deploying $2.4 an energy company than we are an insur-
stock in 2002 to highlight the value of our
billion in the natural gas exploration and ance company or a tobacco company;
tobacco business. The tracking stock
production acquisition and repurchasing rather, we are unabashedly and proudly
structure has been beneficial for holders
$672 million of Loews common stock. a conglomerate – what some might call a
of both Carolina Group stock and Loews
diversified holding company – deeply root-
common stock. Because of significant
The HighMount Acquisition
ed in the principles of value investing.
changes now taking place in the U.S. to-
During the third quarter, our newly formed
Being a conglomerate offers numerous
bacco market, we believe the separation
subsidiary, HighMount Exploration & Pro-
advantages that other corporate struc-
will benefit both companies. The separa-
duction LLC, acquired natural gas explo-
tures do not. Above all, it gives us the free-
tion will allow the management teams of
ration and production operations from
dom and flexibility to make acquisitions
Lorillard and Loews to focus their efforts
Dominion Resources. These properties,
across the broad spectrum of industries –
and deploy their capital based on each
with estimated proved reserves of natural
L O E W S C O R P O R AT I O N 5

7. wherever opportunities exist – without n Boardwalk Pipeline commenced ser- to gauge the ongoing success of our sub-
sidiaries. In general, however, we are
worrying that we might be straying from vice on its expansion project from
drawn to companies with undervalued
some perceived “core business.” We East Texas to Mississippi and con-
assets or the ability to generate stable
make no attempt to fit into a single indus- tinued working on other previously
cash flows for both internal reinvestment
try category; instead, we believe that each announced expansion projects. In-
and the payment of dividends.
of our companies can deliver value for our creased construction costs across the
shareholders. domestic pipeline industry, however,
We believe that our shareholders will ben-
are unfavorably impacting the cost to efit if we continue to buy solid, durable
As a conglomerate, we strive to maintain
complete these projects. companies at attractive prices, without
diversified sources of cash flow. While we
resorting to financial alchemy, such as
n HighMount successfully began opera-
will no longer receive cash dividends from
employing outsized levels of debt, to jus-
tions in the third quarter as our newest
Lorillard following the separation, our other
tify our acquisitions. We also spend far
subsidiary.
sources of cash flow have increased and
more time evaluating the downside risks
diversified. In 2007, dividends from our
n Loews Hotels posted strong earn- of each acquisition than dreaming about
nontobacco subsidiaries and earnings de-
ings, benefiting from a healthy lodg- its upside potential.
rived from our holding company cash and
ing market.
investments totaled $868 million, a sub- Our objectives and our perspective are
For further discussion of each subsid-
stantial increase from $92 million in 2002. long term. We refrain from chasing quar-
iary’s performance in 2007, please turn terly performance targets to the detriment
We believe that value creation can stem
to “Loews Corporation: Year in Review,” of longer-term goals, nor do we compro-
from buying undervalued assets or busi-
mise our financial principles as market
beginning on page 13.
nesses, from financial restructuring and
conditions change. We are patient inves-
from providing management with growth Common Thread tors who firmly subscribe to an invest-
capital. This has been our business model The common thread connecting our ac- ment adage that requires considerable
since it was established by Larry and Bob quisitions over the years is that each has discipline: “When there is nothing to do,
Tisch almost 50 years ago, and judging by represented attractive value for Loews do nothing.” We feel no pressure to buy
the 14.8 percent annualized return on our shareholders. We employ a variety of assets at any given moment and are com-
stock price over the past 25 years, it has metrics to evaluate each investment and fortable maintaining a large amount of li-
withstood the test of time.
Strong Subsidiary performances
We do not manage our subsidiaries’ day-
25 Year Relative Price Performance of Loews Common Stock
to-day business operations; rather, we
December 1982 = 100 percent
ensure that each has an exceptionally ca-
3,900
pable management team with whom we
3,000
work on matters of strategy and capital Loews Common Stock
2,300
allocation. The solid results delivered in
S&P 500 Index
2007 speak for themselves: 1,700
Cumulative Percent Change (Log Scale)
1,300
n At CNA, disciplined underwriting,
1,000
stringent expense controls and other
operating improvements contributed 760
to another year of strong net operat- 580
ing earnings, offset in part by realized 440
investment losses.
330
n Lorillard posted its highest ever rev- 250
enues and profits, maintaining indus-
190
try-leading per unit profitability while
140
increasing market share.
100
n Diamond Offshore turned in another
year of record results in a strong mar- 70
ket for offshore drillers. 1982 1987 1992 1997 2002 2007
6 L O E W S C O R P O R AT I O N

8. prepared to take advantage of potential
35 percent of our common shares that
quidity, which allows us to move quickly
when the time is right. had been outstanding at the decade’s investment opportunities.
start. As a result, there were 530 million
Our patient, value-oriented approach has In short, we are focused on ensuring that
shares of Loews common stock outstand-
worked well over the years. If you pur- we are properly positioned to endure any
ing at year-end 2007, compared with 1.3
chased Loews common stock at almost near-term storms – and we are equally pre-
billion split-adjusted shares in 1971.
any point during the past quarter century pared to embrace the opportunities that
and held it through year-end 2007, chanc- may present themselves. Given Loews’s
2008 Outlook
es are you have had an attractive, market- financial strength and long-term focus, we
As we write this letter, the financial mar-
beating return. Over the 25 year period view difficult environments like this one
kets are unusually volatile and the eco-
from 1982 through 2007, Loews common as periods of opportunity – times during
nomic outlook is uncertain, with major
stock appreciated at a 14.8 percent com- which we can make the investments that
financial institutions announcing substan-
pound annual rate versus 9.8 percent for will continue to reward Loews sharehold-
tial asset write-downs amid weakening
the S&P 500 Index.
ers long after current market turbulence
credit conditions. The U.S. consumer is
has passed.
clearly feeling greater stress and less
Share Buybacks
confidence than at any time in recent
We believe that properly allocating our As always, it is the talent and dedication of
years. What do these conditions portend
capital will ultimately benefit holders of Loews employees and those of our sub-
for Loews?
our common stock. We pursue this goal sidiaries that drive our company forward.
not only by acquiring businesses that we This year, we particularly want to thank
While our subsidiaries are not immune to
intend to own for the long term, but also the people of Bulova and Lorillard and
a slowing economy and the current credit
through purchases of Loews common wish them every continued success in
crisis, our company’s structural diversifica-
stock when we can buy it at prices we re- the future. We also want to welcome the
tion, liquid balance sheet and conservative
gard as favorable. In 2007, we responded employees of HighMount into the Loews
capital structure should serve to buffer
to such opportunities by repurchasing
family. We firmly believe that the quality of
the impact of this challenging environ-
14.8 million Loews common shares at a
Loews’s people, along with our disciplined
ment. With $3.8 billion in holding com-
total cost of $672 million.
approach to managing and in vesting, will
pany cash and investments at the end of
help us continue creating value for Loews
During each of the 1970s, 1980s and 2007 and a favorable outlook for dividends
shareholders for the long term.
1990s, we repurchased between 25 and from our subsidiaries this year, we are
Sincerely,
James S. Tisch Andrew H. Tisch Jonathan M. Tisch
Office of the President
February 27, 2008
L O E W S C O R P O R AT I O N 7

9. LOewS : A FINA NC IA L pORT R AI T
L
a tracking stock, reflects the economic of Lorillard common stock; final approval
oews Corporation is a diversified
performance of the Carolina Group. The by our Board of Directors; the absence of
holding company focused on building
creation of the Carolina Group did not any material changes or developments;
value over the long term as a means
change our ownership of Lorillard, Inc., and market conditions.
of generating wealth for our shareholders.
which remains a wholly owned subsidiary
We aim to achieve superior risk-adjusted
A True Holding Company
of Loews Corporation.
returns for our shareholders in three ways:
We monitor the performance of our sub-
by optimizing the operating performance
In December 2007, we announced that our sidiaries but do not participate in their day-
and capital structure of our subsidiaries, by
Board of Directors had approved a plan to to-day operations. We rely on experienced
making opportune acquisitions and other
dispose of our entire ownership interest in subsidiary management teams to make
investments, and by effectively managing
Lorillard, Inc. to holders of Carolina Group fundamental decisions about operating
and allocating holding company capital.
stock and Loews common stock in a tax- issues, product and service offerings,
To facilitate each of these strategies, we
free transaction. When the separation is marketing and long-range plans. Each
maintain a conservatively capitalized and
completed, probably in mid-2008, Lorillard subsidiary is headed by a chief executive
highly liquid balance sheet.
will be an independent public company, officer who embraces our conservative,
and Carolina Group will cease to exist.
We have six operating subsidiaries: CNA long-term approach to building sharehold-
Financial Corporation, one of the largest er value. Holding company management
The transaction will be accomplished
commercial property-casualty insurers in provides counsel on significant capital and
through the following integrated steps:
the U.S.; Diamond Offshore Drilling, Inc., strategic initiatives, but we leave it to the
one of the world’s largest offshore drilling n We will redeem all of the outstand-
managers of each subsidiary to implement
companies; Lorillard, Inc., America’s old- ing Carolina Group stock in exchange their strategies. Additionally, each publicly
est tobacco company; HighMount Explora- for shares of Lorillard common stock.
traded subsidiary is overseen by a board
tion & Production LLC, a domestic natural The Lorillard shares distributed in the
that includes independent directors.
gas exploration and production company; redemption of the Carolina Group
We believe that holders of Loews com-
Boardwalk Pipeline Partners, LP, an op- stock will constitute approximately 62
mon stock benefit from the fact that three
erator of interstate natural gas pipeline percent of Lorillard’s outstanding com-
of our subsidiaries – Boardwalk Pipeline,
systems; and Loews Hotels, one of the mon stock, which is the percentage
CNA and Diamond Offshore – are publicly
country’s top luxury lodging companies. In of the economic interest in the Caro-
traded companies. We see three primary
January 2008, we completed the sale of lina Group represented by outstanding
benefits for our common shareholders:
Bulova Corporation, a distributor and mar- Carolina Group stock.
keter of watches and clocks, which had
n Market valuation: Third-party investors
n We will distribute our remaining 38
been a Loews subsidiary since 1979.
value these companies directly in the
percent ownership of Lorillard’s out-
public equity markets, providing an ob-
We have two classes of common stock: standing common stock through an
jective measure for holders of Loews
Loews common stock (NYSE: LTR) and exchange offer for shares of Loews
common stock.
Carolina Group stock (NYSE: CG). In 2002, common stock, if we determine that
we created the Carolina Group, to which market conditions are acceptable for
n Disclosure: As public companies, these
we attributed our 100 percent ownership an exchange. If we determine not to
subsidiaries provide financial disclo-
interest in Lorillard and all tobacco-related effect the exchange offer or if the ex-
sures in addition to those offered by
liabilities, and began referring to our other change offer is not fully subscribed,
the holding company, further enhanc-
assets and liabilities as the Loews Group. the remaining shares of Lorillard will
ing transparency.
The Carolina Group includes a liability be distributed as a pro rata dividend to
termed notional intergroup debt, which is n Self-financing: Subsidiaries can directly
the holders of Loews common stock.
payable to the Loews Group. At the time access the capital markets to finance
The consummation of the transaction is
the Carolina Group was created, the no- their operations and expansion plans.
conditioned on, among other things, our
tional intergroup debt was $2.5 billion. As
receipt of a favorable ruling from the In- Holders of Loews common stock have also
of February 12, 2008, the balance had de-
ternal Revenue Service and an opinion of benefited from the existence of Carolina
clined to $218 million, reflecting dividends
counsel as to the tax-free nature of the Group stock. We created Carolina Group
from Lorillard to Loews Corporation that
separation; the effectiveness of the regis- stock in order to have a publicly traded
have been applied to the reduction of the
tration statement filed with the Securities security that would reflect the value and
Carolina Group notional debt.
and Exchange Commission by Lorillard performance of Lorillard. Through Carolina
Carolina Group stock, commonly called with respect to our distribution of shares Group stock, holders of Loews common
8 L O E W S C O R P O R AT I O N

10. and a year later we created Boardwalk
common stock. We do not have a set
stock have had a clear view of Lorillard’s
Pipeline as a master limited partnership.
formula, fixed valuation metrics or a spe-
market value.
We contributed both Texas Gas and Gulf
cific set of target industries; instead, we
The availability of public market valua-
South to this partnership and took it public
review opportunities across many indus-
tions for each of our four largest busi-
in 2005 while retaining complete owner-
tries and focus intently on understanding
nesses helps investors determine an
ship of the general partner.
potential downside risks before turning
estimated sum-of-the-parts valuation for
our attention to the returns we might ul-
In 2007, our new subsidiary, HighMount
Loews common stock. As of February
timately realize. Loews common stock’s
Exploration & Production LLC, purchased
26, 2008, the value of the Loews Group’s
25 year track record of outperforming
natural gas exploration and production as-
38 percent economic interest in Carolina
the S&P 500 Index is largely attributable
sets from Dominion Resources. This ac-
Group, its 89 percent ownership of CNA
to our willingness to search aggressively,
quisition was motivated by our positive
common stock, its 51 percent ownership
but wait patiently, until attractive acquisi-
long-term view of the U.S. natural gas
of Diamond Offshore common stock and
tion opportunities arise.
industry and belief that natural gas prices
its 68 percent limited partnership inter-
would, over the long term, increase faster
One thing that all of our subsidiaries have
est in Boardwalk Pipeline totaled approxi-
than inflation. We believe that the $4.0
in common is that each was acquired at an
mately $23.1 billion, or $43.56 per share
billion purchase price represented reason-
attractive price. For example, we acquired
of Loews common stock. Other assets
able value for HighMount’s low-risk, long-
Lorillard in 1968 and a controlling interest
attributed to Loews common stock in-
lived natural gas assets and the outstand-
in CNA in 1974 – at times when their re-
clude our two wholly owned subsidiaries
ing management team that joined us from
spective industries were out of favor. In
– HighMount and Loews Hotels – as well
Dominion. HighMount gives us a solid
the late 1980s, we created a subsidiary
as our 100 percent ownership of Board-
growth platform within the exploration
to buy a number of offshore drilling rigs
walk Pipeline’s general partner, and hold-
and production sector as future opportuni-
at historically low prices. We formed Dia-
ing company cash and investments, net of
ties present themselves.
mond Offshore from these initial rigs and,
holding company debt.
in 1995, took the company public. In 2003,
We never know when we might encoun-
Awaiting the Right we acquired Texas Gas Transmission at a
ter another acquisition opportunity. In the
Acquisition Opportunities time when several owners of pipelines
meantime, however, we will continue to
We continually seek acquisitions that will were experiencing financial distress. In
build value for shareholders by helping our
create value for the holders of Loews 2004, we acquired Gulf South Pipeline,
subsidiaries achieve their strategic and fi-
nancial goals, by prudently managing the
holding company’s investment portfolio
Shares Outstanding at Year End Since 1971
and by engaging in capital markets ac-
(in millions and adjusted for all stock splits)
tivities, including share repurchases, that
1,400
serve the interests of our shareholders.
1,200 Share Repurchases
Our objective is to allocate our capital for
superior returns that will ultimately be
1,000
reflected in the price of Loews common
stock. We pursue this goal not only by ac-
800 quiring businesses at attractive prices and
managing them for the long term, but also
by repurchasing shares of Loews com-
600
mon stock when we consider them to be
attractively priced. In effect, we apply the
400
same value investing principles that guide
our acquisition efforts and the manage-
200 ment of our investment portfolio to the
repurchase of Loews common stock. The
Loews Common Stock
repurchases that we have made over the
0
years have benefited our shareholders by
1971 1980 1990 2000 2007
L O E W S C O R P O R AT I O N 9

11. CNA’s initiation of a regular quarterly cash
year. The company’s first quarterly special
giving them an increased stake in Loews
dividend during the second quarter of
dividend was $1.25 per share in the fourth
and its subsidiaries.
2007 highlights the progress that CNA has
quarter of 2007. That, combined with the
As shown in the chart on the previous
made over the past few years in strength-
regular quarterly dividends of $0.125 per
page, in each of the last three decades
ening its capital position and improving its
share and the $4.00 per share annual
we repurchased more than 25 percent
operating results. CNA paid a $0.10 per
special dividend paid in the first quarter of
of the Loews common shares that were
share regular quarterly dividend during the
2007, resulted in Loews receiving more
outstanding at the decade’s start. As a re-
second and third quarters, subsequently
than $400 million in dividends from Dia-
sult, on a split-adjusted basis, the number
raising its dividend per share to $0.15 in the
mond Offshore during the year. In Febru-
of outstanding shares of Loews common
fourth quarter. At the current dividend rate,
ary 2008, Diamond Offshore’s board de-
stock declined from 1.3 billion in 1971 to
we stand to receive approximately $145
clared another special quarterly dividend
530 million at year-end 2007. Our share
million in dividends from CNA annually.
of $1.25 per share in addition to its regular
buybacks, combined with our subsidiar-
$0.125 per share quarterly dividend.
In addition to cash flow received from
ies’ strong performances, have supported
subsidiaries, holding company cash and
the superior long-term performance of Boardwalk Pipeline is another increasingly
investments generate interest and divi-
Loews common stock. important source of cash flow for Loews,
dend income, which contribute to the
contributing $156 million in partner distri-
diversified Cash Flows holding company’s available cash and
butions in 2007. As a master limited part-
Our holding company’s strong liquidity investments. During 2007, holding com-
nership, Boardwalk makes quarterly cash
position is made possible by significant pany cash and investments generated
distributions to limited partners and to the
cash inflows. The primary sources of this $295 million of interest and dividends.
general partner, which is wholly owned by
cash flow are dividends received from our
Loews. When Boardwalk Pipeline’s quar-
Investment policy
subsidiaries, the earnings on the holding
terly distributions per limited partner unit
We manage the holding company’s cash
company’s cash and investments, and,
exceed $0.4025, its partnership agree-
and investments and provide investment
from time to time, capital markets trans-
ment specifies that an increasing percent-
services to our subsidiaries. In all cases,
actions.
age of the cash it distributes be paid to the
we seek to maximize financial flexibility
general partner in the form of incentive dis-
While we will not receive cash dividends
and limit potential losses.
tribution rights. Thus, the increased quar-
from Lorillard following the separation,
terly distributions have resulted in a higher Our priorities in managing holding com-
our other sources of cash flow have
portion of the partnership’s payout com- pany cash and investments are to protect
become more diversified in recent years.
ing to Loews. Boardwalk’s quarterly dis- principal and optimize liquidity. We seek
In 2007, dividends received from our
to maintain ready access to our cash and
tribution of $0.46 per partnership unit paid
nontobacco subsidiaries, together with
investments and are averse to subjecting
in February 2008 represented the eighth
the earnings on holding company cash
our shareholders to excessive market or
consecutive distribution increase since
and investments, were $868 million, a
credit risk.
substantial increase from $92 million in the partnership went public in late 2005.
2002. This improvement was largely due
to increased dividends paid by Diamond
Offshore, higher quarterly distributions by
Holding Company Cash Flow
Boardwalk Pipeline and CNA’s initiation of (in millions)
a regular quarterly cash dividend.
Cash and investments, 1/1/07 $ 5,330
Diamond Offshore paid annual special
cash dividends during the first quarters Dividends from subsidiaries 1,844
of 2006 and 2007, in addition to the com-
Other operating cash flow, net 52
pany’s regular quarterly dividend, reflect-
Debt related payments, net (35)
ing the strength of its financial condition
and prospects. During the fourth quarter Dividends paid (CG & LTR) (331)
of 2007, the Diamond Offshore board
Repurchase of Loews common stock (672)
announced that it would consider paying
Acquisition of HighMount business (2,430)
special dividends on a quarterly basis, su-
perseding its prior policy of considering Cash and investments, 12/31/07 $ 3,758
special dividend payments only once per
10 L O E W S C O R P O R AT I O N

12. Condensed Consolidating Balance Sheet
(in billions)
CNA Diamond Boardwalk Loews Corporate
December 31, 2007 Financial Lorillard Offshore HighMount Pipeline Hotels and Other* Total
Cash & Investments $41.9 $1.3 $0.6 $– $0.3 $ 0.1 $3.8 $48.0
Total Assets 56.7 2.6 4.4 4.4 4.1 0.5 3.4 76.1
Total Debt 2.2 – 0.5 1.6 1.8 0.2 0.9 7.2
Total Liabilities 46.2 1.6 1.5 1.9 2.4 0.3 0.7 54.6
Minority Interest 1.5 – 1.4 – 1.0 – – 3.9
Loews’s Interest in
Shareholders’ Equity 9.0 1.0 1.5 2.5 0.7 0.2 2.7 17.6
*Net of eliminations
presented in Note 25 on page 228 in the
CNA’s investment portfolio stood at just we do know that strong companies are
accompanying Form 10-K Report.)
best positioned to withstand adversity
under $42 billion at year-end 2007, with
and to capitalize on opportunities when
approximately 93 percent comprised of
Our subsidiaries operate in different in-
they arise.
fixed maturity securities and short-term
dustries, with unique business and finan-
investments. We provide investment
cial dynamics warranting different capital
Our basic tenets in managing the holding
services to CNA and largely follow a total
structures. In all cases, however, we work
company’s capital are:
return approach. A primary objective in the
n Maintain substantial liquidity in the
management of CNA’s fixed maturity and
form of a large portfolio of cash and in-
equity portfolios is to optimize return rela- Holding Company Cash and
vestments and ensure that the portfo-
tive to underlying liabilities and respective Investments vs. Debt
lio is managed conservatively, so that
liquidity needs. Two important consider- (in millions)
cash will be available when needed.
ations are the characteristics of the under-
Having cash on hand has repeatedly
lying liabilities and the ability to align the Total Cash and
enabled us to move rapidly to capital-
duration of the portfolio to those liabilities Investments*
2003
ize on opportunities such as acquisi-
to meet future liquidity needs, minimize Debt
tions and share repurchases.
interest rate risk and maintain a level of
income sufficient to support the underly-
n Maintain relatively low levels of hold-
ing insurance liabilities.
ing company debt so that we can ser- 2004
vice all holding company obligations in
Our portfolio management team consists
any foreseeable financial environment
of experienced investment profession-
without difficulty.
als with expertise in their specific asset
classes. We have allocated a relatively 2005
The holding company’s balance sheet
small portion of our investments to the strength is highlighted by three 2007 year-
equity market, which is managed by our end figures: cash and investments of $3.8
equity portfolio managers, and a some- billion, debt of $0.9 billion and sharehold-
what larger amount to third-party limited 2006
ers’ equity of $17.6 billion.
partnerships specializing in a variety of
Capital strength and liquidity are as im-
investment strategies.
portant to our subsidiaries as they are to
A Strong and Liquid Balance Sheet the holding company, and the strength
2007
The cornerstone of our ability to create of their capital positions reflects the con-
value for our shareholders is our financial servative approach that each takes to its
strength. We never know when markets own balance sheet. (The table above is
$0 $2,000 $4,000 $6,000
a condensed version of the Company’s
will experience a downturn or when new
consolidating balance sheet information
opportunities will present themselves, but *Net of securities receivables and payables.
L O E W S C O R P O R AT I O N 11

13. with our subsidiaries to ensure that their Book Value Per Share of Loews Common Stock
capital structures are aligned with their
$35
particular financial requirements.
One way to measure our success in build- $30
ing shareholder value is through the in-
crease in book value per share of Loews $25
common stock. Book value per share has
limitations as a financial measure, given
$20
that it reflects a blend of historic costs
and current market values; nonetheless, it
$15
is a useful proxy for per share value mea-
surement. Over the past 25 years, book
$10
value per share of Loews common stock
has increased at a compound annual rate
of 13.4 percent, which closely tracks the $5
14.8 percent compound annual increase
in the market price of Loews common $0
stock over the same period. During 2007, 1982 1987 1992 1997 2002 2007
our book value per share increased by 7.5
percent.
Subsidiaries’ year in Review
An integral part of the process of grow-
ing shareholder wealth – for holders of
both Loews common stock and Carolina
Group stock – is the performance of our
subsidiaries. The section beginning on the
following page lends perspective to the
contributions these companies made to
Loews in 2007.
12 L O E W S C O R P O R AT I O N

14. Y EA R IN R E v I E w
C N A F I N AN C I AL C O R p O RAT ION
I
n 2007, CNA reported net income of
$851 million, aided by another mild hur-
ricane season. The company’s under-
writing and expense management efforts
continued to yield improvements, while
investment income remained strong. Net
operating income totaled $1,060 million,
nearly matching last year’s record.
Net income of $851 million included real-
ized investment losses of $203 million, pri-
marily derived from other-than-temporary
impairment losses. Further dampening
net income was an adverse reinsurance
settlement of $108 million in CNA’s life
and group insurance run-off operations.
In line with its solid financial performance,
CNA paid a dividend to common share-
holders for the first time in more than 30
years. Furthermore, CNA’s balance sheet
strength, solid earnings and market posi- relationships with independent agents Net investment income of $2.4 billion was
tion were recognized by Fitch Ratings, slightly ahead of 2006. The company’s
and brokers. New business represented
which upgraded CNA’s Property & Casu- fixed income portfolio continued to pro-
approximately 18 percent of total premi-
alty ratings to A from A-. duce steady results and also benefited
um volume.
from lower interest expense on funds
Premium production was down 4 per- CNA’s cross-selling efforts – the sale of withheld. Invested assets grew by $1.1
cent from the prior year, in line with dis- additional products to its customers – billion to $41.3 billion, reflective of contin-
ciplined underwriting in an environment continued to provide a significant lift to ued positive cash flow.
of declining rates. Average rates were new business. In 2007, cross-selling ac-
CNA continued to strengthen its balance
counted for $458 million in premium, or
sheet by reducing its reliance on reinsur-
38 percent of new business. Not only
ance. In 2007, the company reduced its
does cross-selling deepen client relation-
reinsurance recoverables by $1.3 billion
ships, which helps drive retention, it en-
to $8.7 billion. Since 2003, CNA has taken
ables CNA to gain more data about a cli-
more than $7 billion of reinsurance recov-
ent’s risk profile, which helps with pricing
erables off of its balance sheet. Not only
CNA is well positioned and selection.
has this added to CNA’s invested assets, it
to manage through the has significantly reduced credit risk.
CNA’s continued focus on reducing costs
cycle, with disciplined over the past several years has yielded
Going forward, CNA continues to face
an expense ratio for Property & Casualty
underwriting and stringent many challenges, such as competitive pric-
Operations – 29.5 percent in 2007 – that
expense controls. ing pressures and the risks posed by natu-
is now competitive with its peers. The ral catastrophes. CNA is well positioned
most important indicator of profitable to confront the challenges it faces given
underwriting is the combined ratio – the its strong financial position, disciplined
ratio of claim costs and operating expens-
down 4 percent while premium retention operating focus, diversified commercial
es to premium revenue. The combined
remained above 80 percent. The ability insurance portfolio, cross-sell momentum
ratio for CNA’s Property & Casualty Op- and targeted growth in profitable market
to retain quality business in a competi-
erations in 2007 was 94.8 percent, versus segments, including small business and
tive market is a tribute to the discipline
96.4 percent in 2006. specialty lines.
of CNA’s underwriters and their strong
L O E W S C O R P O R AT I O N 13

15. Y EAR I N REvIEw
LORIL L A R d
N
prior years. Lorillard prevailed in the only
et income for 2007 was $898 mil-
case that proceeded to a trial against it in
lion, an 8.7 percent increase over
2007, winning a defense verdict, along
net income of $826 million in 2006.
with the other tobacco company defen-
Lorillard was the only major cigarette
dants, in a case brought by a flight atten-
manufacturer to increase overall market
dant for alleged injuries from environmen-
share as well as its share of both the pre-
tal tobacco smoke in airplanes.
mium and discount price segments of the Lorillard maintained
domestic market.
industry-leading unit Meanwhile, there were some develop-
ments in major cases that have been
Lorillard’s business strategy is to focus profitability, while gaining
pending against Lorillard for many years.
on the menthol premium price segment
market share. The former Engle class members were
and to leverage Newport’s strong brand
given until January of 2008 to file individu-
equity in the marketplace. Lorillard adjusts
al claims under the 2006 Florida Supreme
Newport’s promotional spending with the
Lorillard’s total wholesale shipments (do-
Court ruling which overturned the class
goal of balancing profitability and main-
mestic, Puerto Rico and certain U.S. ter-
punitive damage award. Through February
taining its leadership position in the highly
ritories) decreased by 0.8 percent during
26, 2008, approximately 3,000 of these
competitive menthol segment. The com-
2007. Domestic wholesale unit shipments
individual claims have been served on
pany achieved its objective in 2007 and
decreased by 0.8 percent versus an indus-
Lorillard and other tobacco companies;
reported solid earnings, along with market
try decline of 5.0 percent, which resulted
however, the time to serve claims that
share gains.
in an increase of 0.4 of a domestic share
have been filed by the January 2008 dead-
Newport maintained its dominant posi- point over 2006 and brought Lorillard’s
line will not expire until second quarter
tion in the menthol category by achieving share to 10.0 percent of the market.
2008. It is possible that some of these
a 32.9 percent market share, an increase
cases may come to trial this year, and
Newport accounted for 91.8 percent of
of 0.7 of a share point over 2006. New-
Lorillard intends to vigorously defend each
Lorillard’s total sales volume, while pre-
port’s segment share was approximately
one of them.
mium brands together accounted for 94.4
equal in size to its next three largest men-
percent. Lorillard’s share of the premium
There was no new activity in 2007 in the
thol competitors combined. Newport re-
price segment increased 0.3 of a share
appeal in Washington, D.C. from the trial
mained the second largest cigarette brand
point to 13.0 percent.
court’s 2006 ruling in the U.S. Department
in the U.S. market with an overall whole-
of Justice’s case against Lorillard and
sale market share of 9.2 percent, a gain of Litigation against the tobacco industry
other tobacco companies. The trial court’s
0.4 of a share point versus 2006. generally continued the favorable trend of
verdict imposed an injunction against the
defendants, but it did not award monetary
damages. The appellate court has stayed
all proceedings pending the ongoing appeal.
In another important case, the Supreme
Court of Louisiana declined to accept re-
view of the February 2007 ruling by the
Louisiana Court of Appeal in the Scott
class action. That court’s ruling substan-
tially reduced monetary damages award-
ed by the trial court in 2004, but it upheld
the certification of the class and the right
of the class to receive smoking cessation
assistance. The case has been sent back
to the trial court, and further appeals from
any final decision by the trial court may
be pursued. In the fourth quarter of 2007,
Lorillard recorded a pretax provision in the
amount of approximately $66 million for
this matter.
14 L O E W S C O R P O R AT I O N