Loews Corp posted a better-than-expected 8 percent rise in quarterly net profit, as the hotels and energy conglomerate recorded a gain on investments compared to significant investment losses a year earlier.
Loews, run by the billionaire Tisch family, posted investment gains of $1 million in the second quarter. A year earlier, Loews lost $178 million on investments.
The second-quarter investment gain was driven by Loews’ largest holding, the commercial insurer CNA Financial , which wrote down less bad investments in the quarter from a year earlier.
CNA earned $283 million, or 96 cents a share, more than double the profit of $105 million, or 27 cents a share, it reported a year ago. The No.7 U.S. commercial insurer which is 90 percent owned by Loews earned 5 cents a share on its investments, versus a loss of 74 cents a share in the year-ago quarter.
That reversal in CNA’s investment portfolio helped Loews’ second-quarter profit to shareholders climb to $366 million, or 87 cents a share, compared with $340 million, or 78 cents a share, a year earlier. Loews’ profit beat analysts’ forecast of 75 cents a share, according to Thomson Reuters I/B/E/S.
Chicago-based CNA also beat analysts’ expectations, reporting profit on an operating basis of 91 cents a share, while analysts expected 60 cents a share.
Apart from property and casualty insurance, CNA also offers risk management, information services, underwriting, risk control and claims administration.
Shares of Loews climbed almost 2 percent to $37.76 while CNA shares jumped 3.6 percent to $29.07 in morning trading.
BEFORE INVESTMENTS
Profit before investment gains or losses fell for both CNA and its parent.
New York-based Loews’ reported a profit before investments of $365 million in the second quarter, down from $518 million in the year-earlier quarter.
Loews attributed this to a drop in profit from Diamond Offshore Drilling Inc , in which it has a 50.4 percent stake, as well as lower investment income — driven by lower limited partnership results — at CNA.
Last month, Diamond Offshore Drilling reported a lower-than-expected quarterly profit and slashed its special dividend as it faces restricted activity in the Gulf of Mexico after the BP Plc oil spill.
Loews also owns HighMount Exploration & Production and Loews Hotels, as well as the majority of Boardwalk Pipeline Partners LP .
Separately, Loews said it expects to recognize an after-tax loss of about $375 million related to a recent agreement by CNA with National Indemnity Co.
National Indemnity Co, owned by Warren Buffett’s Berkshire Hathaway Inc said last month it will take over asbestos and environmental pollution risks now held by CNA in exchange for a $2 billion fee.
Loews also said it bought back 1.5 million shares for $56 million in the first quarter.
