LOEWS CORP (L) stock intrinsic value fair value estimate & owner earnings analysis

Loews is a holding company controlled by the Tisch family. Most of its earnings come from CNA Financial, a large U.S. commercial property and casualty insurer that Loews owns about 92% of. The rest comes from Boardwalk Pipelines (wholly owned natural gas and natural gas liquids pipelines and storage, running mainly from the Gulf Coast into the Midwest and paid mostly under long-term fixed-fee contracts), Loews Hotels & Co (including its joint-venture hotels at Universal Orlando), and the parent company's own $3.9 billion of cash and investments. Over the past decade Loews let go of the offshore driller Diamond Offshore (no longer consolidated from 2020) and the packaging business Altium (no longer consolidated from 2021), so we judge the business on 2021 onward. How we measured earnings. We start from operating cash flow, take out swings in working capital, deduct stock-based pay, and deduct the capital spending needed to keep the pipelines and hotels in shape. For an insurer, most of the working-capital swing is the growth in claim reserves. That is cash held for future claims, not profit, so we leave it out. On this basis owner earnings were $4.76 a share in 2021, $4.32 in 2022, $6.80 in 2023, $6.05 in 2024 and $9.15 in 2025. The 2024 figure is understated by a non-cash charge of about $265 million from settling CNA pension obligations. Heavy buybacks cut diluted shares from 260 million in 2021 to 209 million in 2025, which pushes up the per-share figures. So we take the typical dollar level and divide it by today's shares. Before interest, the five-year median (with 2024 corrected) is about $1.93 billion. We count the parent's cash pile separately at face value, so we remove about $145 million of after-tax income it earns. That leaves a normal level of about $1.79 billion, or $8.66 a share on 206.5 million diluted shares. We did not start from 2025's stronger $2.18 billion: one strong year is not a normal level, and 2025 is the top of the five-year range. Growth. Owner earnings rose about 43% last year, or about 19% if the 2024 pension charge is excluded. The base case assumes only 2.5% a year for five years and 1.5% a year for the five after that. That growth rests on two things already in motion. First, CNA's bond portfolio keeps rolling into higher-yielding bonds as older ones mature. Second, Boardwalk has been renewing pipeline contracts at higher rates, which helped lift its 2025 results. Separately, Boardwalk has signed precedent or long-term firm agreements for growth projects. These would add 4.2 Bcf/d of pipeline capacity and 10 Bcf of storage, at an expected cost of about $3.3 billion, through 2030. Only $135 million had been spent by the end of 2025. The projects still need regulatory approval and have to be paid for, so we credit only their value net of construction cost: about $0.6 billion in the base case, $1.0 billion in the bull case and nothing in the bear case. We give no credit for growth in insurance premiums, market-share gains, new acquisitions or future buybacks. After year ten, the base and bull cases keep earnings flat in dollars, with no further growth. CNA's franchise dates back to 1897, and pipelines and hotels are long-lived assets, so we expect the earning power to last, but we do not assume it grows. Bear case (roughly the 10th percentile). Earnings before interest drop back to about $1.3 billion, the level of 2022, the weakest of the five years. They stay there for ten years, then shrink 2% a year. The named risks: CNA has taken charges for adverse development on legacy mass-tort abuse claims three years running ($106 million after tax in 2025, against $62 million in 2024). CNA also carries a run-off long-term care book, and commercial insurance pricing moves in cycles. Boardwalk faces contract renewals and permitting and cost risk on its projects. On these assumptions the business is worth about $18.5 billion ($89.40 a share). Net debt takes $23.18 a share and the outside shareholders' 8% of CNA takes $3.49, leaving $62.73 a share. Even in this case, cash flow before interest covers the roughly $420 million annual interest bill more than three times. Base case. Starting from $1.79 billion with the growth described above, plus the net value of Boardwalk's contracted projects, the business is worth about $35.6 billion ($172.51 a share). After $23.18 of net debt and $7.81 for CNA's outside shareholders, that leaves $141.52 a share. Bull case (roughly the 90th percentile). Earnings hold at 2025's $2.18 billion level, then grow 4% a year for five years and 3% for five as the bond portfolio reprices, contracts renew at higher rates and the hotels ramp up, plus $1.0 billion for the Boardwalk projects. The business is worth about $49.0 billion ($237.35 a share). After $23.18 of net debt and $11.18 for CNA's outside shareholders, that leaves $203.00 a share. Debt. Group borrowings were $9.56 billion at the end of 2025: $1.8 billion at the parent, $3.0 billion at CNA, $3.8 billion at Boardwalk and about $1.0 billion at the hotels. The parent does not guarantee its subsidiaries' debt. Even so, we subtract all of it, because we count all of their cash flow. Interest paid was $421 million in 2025, an average cost of about 4.4%. Maturities are spread out: about $1.0 billion in 2026, $1.1 billion in 2027, $1.2 billion in 2029, $1.1 billion in 2030 and $5.1 billion later. Because this debt is cheaper than the 6% return we require, it is worth about $0.9 billion less than its face value. We then add the parent's $3.9 billion of net cash and investments. That leaves net debt of about $4.8 billion, or $23.18 a share. The parent is rated A by S&P and A3 by Moody's, and we see no refinancing problem in any case. What changed since our last estimate. We previously estimated the shares at about $55, $134 and $230 across the three cases. The bear and base values are now modestly higher and the bull value lower. Two things raised the lower cases. We now count the parent company's $3.9 billion of cash and investments as an asset, and we give credit for the low fixed cost of the group's debt. Together these more than offset a stricter earnings measure that leaves out the growth in insurance reserves. The bull case now credits only identified drivers rather than an extension of the recent fast growth. What would make this wrong. Our view would be too high if CNA has to take a reserve charge much larger than recent ones, for example on long-term care or abuse claims, or if commercial insurance prices go through a long soft patch. Large cost overruns on Boardwalk's projects would also hurt. The filings give the parent's investment income for 2023 to 2025 only ($114 million, $242 million and $196 million before tax), so the $145 million after-tax amount we removed is based on those three years.