Property, Plant and Equipment

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Note 6. Property, Plant and Equipment


December 31	2019		2018
(In millions)
Pipeline equipment (net of accumulated depreciation of $3,075 and $2,761)	$	8,229	$	8,238
Offshore drilling equipment (net of accumulated depreciation of $2,885 and $3,067)		5,119		5,144
Other (net of accumulated depreciation of $1,114 and $1,056 )		1,625		1,812
Construction in process		595		317

Property, plant and equipment	$	15,568	$	15,511

Depreciation expense and capital expenditures are as follows:


Year Ended December 31	2019				2018				2017
	Depre-		Capital		Depre-		Capital		Depre-		Capital
	ciation		Expend.		ciation		Expend.		ciation		Expend.
(In millions)
CNA Financial	$	64	$	26	$	76	$	99	$	80	$	101
Diamond Offshore		356		345		332		222		349		113
Boardwalk Pipelines		348		418		346		487		325		689
Loews Hotels & Co		60		216		67		139		63		57
Corporate		70		53		59		48		37		30

Total	$	898	$	1,058	$	880	$	995	$	854	$	990

Capitalized interest related to the construction and upgrade of qualifying assets amounted to approximately $18 million, $27 million and $37 million for the years ended December 31, 2019, 2018 and 2017.

Diamond Offshore

Asset Impairments

During 2019, Diamond Offshore evaluated three drilling rigs with indicators of impairment. Based on the assumptions and analysis at that time, Diamond Offshore determined that the undiscounted probability-weighted cash flow of each of these rigs was in excess of its carrying value. As a result, Diamond Offshore concluded that no impairment of these rigs had occurred at December 31, 2019.

During 2018, Diamond Offshore recorded an asset impairment charge of $27 million ($12 million after tax and noncontrolling interests) to recognize a reduction in fair value of the

Ocean Scepter

. Diamond Offshore estimated the fair value of the impaired rig using a market approach based on a signed agreement to sell the rig, less estimated costs to sell. This valuation approach is considered to be a Level 3 fair value measurement due to the level of estimation involved as the sale had not yet been completed at the time of the analysis.

During 2017, Diamond Offshore evaluated ten of its drilling rigs with indicators of impairment and determined that the carrying values of three rigs were impaired. Diamond Offshore estimated the fair value of two of these rigs using an income approach, whereby the fair value of each rig was estimated based on a calculation of the rig’s future net cash flows. These calculations utilized significant unobservable inputs, including estimated proceeds that may be received on ultimate disposition of each rig. The fair value of the remaining rigs was estimated using a market approach, which required Diamond Offshore to estimate the value that would be received for the rig in the principal or most advantageous market for that rig in an orderly transaction between market participants. This estimate was primarily based on an indicative bid to purchase the rig, as well as the evaluation of other market data points. The fair value estimates were representative of Level 3 fair value measurements due to the significant level of estimation involved and the lack of transparency as to the inputs used. Diamond Offshore recorded aggregate asset impairment charges of $100 million ($32 million after tax and noncontrolling interests) for the year ended December 31, 2017.

Boardwalk Pipelines

Sale of Assets

During 2017, Boardwalk Pipelines sold a processing plant and related assets for approximately $64 million, including customary adjustments. The sale resulted in a loss of $47 million ($15 million after tax and noncontrolling interests) and is reported within Operating expenses and other on the Consolidated Statements of Income.

Loews Hotels & Co

Asset Impairments

Loews Hotels & Co evaluat

properties with indications that their carrying amounts may not be recoverable

. It was

determined that the

carrying values of four properties in 2019 and two properties in 2018 were impaired. Loews Hotels & Co recorded aggregate impairment charges of

$99 million ($77 million after tax) and $22 million ($15 million after tax) for the years ended December 31, 2019 and 2018 and are reported within Operating expenses and other on the Consolidated Statements of Income.

These impairments reduced Property, plant and equipment and Other assets by $62 million and $37 million in 2019 and $16 million and $6 million in 2018.

Loews Hotels & Co utilized an undiscounted probability-weighted cash flow analysis in testing the recoverability of long-lived assets for potential impairment. Assumptions and estimates underlying this analysis include (i) occupancy and room rates, (ii) other revenue, including food and beverage, (iii) operating expenses, including management and marketing fees and (iv) maintenance capital expenditures for repairs and refurbishment. Scenarios were developed using multiple assumptions of expected future events which Loews Hotels & Co assigned a probability of occurrence. This provided a projected probability-weighted cash flow of each property and was compared to the carrying value to assess recoverability. The underlying assumptions and assigned probabilities were estimated based on historical data adjusted for known developments, cost projections and future events that were anticipated by management at the time of the assessment. Loews Hotels & Co primarily uses an income approach to estimate the fair value of its properties by discounting future net cash flows. These calculations utilized significant unobservable inputs, including estimating the growth in the hotel’s average daily revenue and operating costs. The fair value of one property was estimated using a market approach which required Loews Hotels & Co to estimate the value that would be received for its property in the principal or most advantageous market in an orderly transaction between market participants. This estimate was informed by a recent independent appraisal. The fair value estimates were representative of Level 3 fair value measurements due to the significant level of estimation involved