Loews Corporation (NYSE:L), a conglomerate with interests in insurance and other sectors, announced today that its subsidiary, CNA Financial Corporation, is in the process of evaluating potential counterparties for a group annuity contract. This contract would transfer a portion of the defined benefit pension obligations from the CNA Employee Retirement Plan Trust to an insurer.
The transaction, which is anticipated to close in the fourth quarter of 2024, is subject to the finalization of a commitment agreement and customary closing conditions. It is designed to cover the pension benefits of approximately 6,000 to 8,000 plan participants and beneficiaries, which represents about 50% to 60% of the plan's total obligations, estimated between $800 million to $1 billion.
The potential group annuity contract aims to secure the pension benefits due on and after January 1, 2025, ensuring that there will be no change to the amount of benefits payable to those participants whose obligations are transferred. The purchase of this annuity contract is expected to be funded directly by assets of the plan, without requiring additional cash or asset contributions from CNA.
Upon the completion of this transaction, Loews expects to recognize a one-time non-cash pretax pension settlement charge estimated between approximately $300 to $400 million ($215 to $290 million net of tax and noncontrolling interests) in the fourth quarter of 2024.
This charge is due to the accelerated recognition of the actuarial pension loss from accumulated other comprehensive income into net income, which is not anticipated to impact shareholders' equity or the company's cash flow for the third quarter, fourth quarter, or full year of 2024.
The company's statement, based on the SEC filing, cautions that these forward-looking statements are subject to various risks and uncertainties, and actual results could differ materially from those projected. Investors are advised to review Loews' filings with the Securities and Exchange Commission to fully understand the risk factors involved.
The company has disclaimed any obligation to update forward-looking statements based on subsequent events or changes in circumstances.
In other recent news, Loews Corporation has seen significant developments. The company recently announced a CEO transition with James Tisch set to retire and Benjamin Tisch, the current senior vice president of corporate development and strategy, stepping into the role. Loews also reported a rise in quarterly profits, attributing this to an increase in insurance premiums and improved investment returns.
The company's investment income for the quarter ending June 30 climbed to $639 million, up from $592 million in the same period last year. The majority of Loews' revenue comes from its insurance unit, CNA Financial Corporation, where Loews holds approximately a 92% stake.
CNA reported a revenue increase of 6.5% in the second quarter. Loews' profit for the quarter reached $369 million, or $1.67 per share, a slight increase from the $360 million, or $1.58 per share, recorded a year prior. In addition, Loews Corporation received a favorable ruling from the Delaware Court of Chancery concerning its previous acquisition of Boardwalk Pipelines' minority limited partner interests, effectively concluding the litigation.
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