Loews Corporation (L) reported first quarter net income of $420 million or 99 cents per share, compared with a net loss of $647 million or $1.49 per share in the prior-year quarter. Excluding investment gains and losses, results came in at 96 cents, in-line with the Zacks Consensus Estimate. The results also compare favorably with the prior-year quarter loss of 77 cents.
The significant increase in earnings reflects a non-cash impairment charge incurred in the year-ago quarter. This charge of $1.0 billion ($660 million after tax) related to the carrying value of HighMount Exploration & Production LLC’s natural gas and oil properties in the prior-year period, which reflected declines in commodity prices.
Additionally, the results in the first quarter 2010 include higher investment income at CNA Financial Corp. (CNA), driven by an improved performance in limited partnerships and fixed maturities. These were partially offset by a drop in earnings at Diamond Offshore Drilling Inc. (DO) due to lower operating income and increased interest expense.
Loews reported a 23% year-over-year increase in revenues to $3.7 billion in the quarter. The company experienced net investment gains of $11 million compared with net investment losses of $310 million in the prior-year period. Results included $35 million of other-than-temporary impairment losses in the reported quarter compared with $359 million in the year ago quarter.
CNA Financial’s net income attributable to Loews Corp. increased to $206 million compared with $140 million in the year-ago quarter. However, Diamond Offshore’s earnings dropped to $136 million from $163 million in the prior-year period.
Boardwalk Pipeline Partners LP’s (BWP) earnings came in at $38 million, ahead of the prior-year quarter earnings of $22 million. HighMount Exploration reported earnings of $32 million compared with a loss of $641 million in the year-ago quarter, reflecting the impairment charges in the year-ago period.
Also, Loews Hotels incurred a loss of $1 million compared with a loss of $18 million a year ago, as the prior-year quarter results included impairment charges related to the write-down of Loews Hotels’ entire investment in a hotel property.
Reported book value per share increased to $41.80 as on Mar 31, 2010, compared with $39.76 as of Dec 31, 2009. During the reported quarter, Loews acquired 5.4 million shares of its common stock for about $197 million. From Apr 1, 2010 through Apr 28, 2010, the company acquired an additional 1.2 million shares of its common stock for $47 million.
HighMount is selling off some of its assets in the recent times to reduce its debt. This includes the sale in April this year of its exploration and production assets at Antrim Shale in Michigan for about $330 million. The company used the net proceeds of $300 million for reducing its outstanding debt under HighMount’s term loans.
HighMount has also signed an agreement to sell its exploration and production assets located in the Black Warrior Basin in Alabama for about $210 million. This deal is expected to close in the second quarter and the net proceeds of about $190 million would be used to further reduce outstanding debt under its term loans.
Based in New York, Loews Corp. is one of the largest diversified corporations in the United States. Its principal subsidiaries are CNA Financial Corporation, a 90% owned subsidiary; Diamond Offshore Drilling Inc., a 50.4% owned subsidiary; HighMount Exploration & Production LLC, a wholly owned subsidiary; Boardwalk Pipeline Partners LP, a 66% owned subsidiary; and Loews Hotels, a wholly owned subsidiary.
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