Loews Q1 Profit Falls On Lower Revenues From CNA Financial, Lorillard - Update [LTR]
4/28/2008 10:30:47 AM Monday, Loews Corp. (LTR), a commercial property and casualty insurance provider, reported a decline in its first-quarter profit, reflecting lower results from CNA Financial and Lorillard, and net investment losses compared to prior year's gains. The company also said that Carolina Group's (CG) first-quarter net income declined on higher expenses related to the proposed spin-off of Lorillard, and lower investment income.
The company's first-quarter consolidated net income, including both the Loews Group and Carolina Group, was $662 million, lower than $768 million in the previous year.
Consolidated income from continuing operations fell to $581 million from $763 million a year ago.
The New York-based conglomerate's principal subsidiaries include CNA Financial Corp. (CNA), Lorillard, Inc., Boardwalk Pipeline Partners, LP, Diamond Offshore Drilling, Inc. (DO), Loews Hotels and Bulova Corp.
In the quarter, net income attributable to Loews common stock fell to $555 million or $1.05 per share from $650 million or $1.20 per share last year.
The results included discontinued operations primarily consisting of an $82 million gain from the sale of Bulova Corp. in the first quarter of 2008.
On a continuing operations basis, the company's income fell to $474 million or $0.90 per share from $645 million or $1.19 per share last year.
On average, two analysts polled by First Call/Thomson Financial expected the company to report earnings of $1.15 per share for the quarter.
The Chicago-based insurer CNA Financial reported first-quarter net income of $200 million, down from $275 million last year. Cigarette making unit Lorillard recorded net income of $67 million, lower than prior year's $84 million. Meanwhile, Diamond Offshore net income increased to $136 million from $107 million last year.
In the sequential fourth-quarter, the company's consolidated net income was $512 million, and net income attributable to Loews common stock was $384 million or $0.72 per share.
Loews attributed the poor year-over-year first-quarter results to a decline in results at the company's 90% owned subsidiary, CNA Financial Corp., and lower net investment income.
Net investment losses in the first quarter was $29 million in the first quarter of 2008, compared to net investment gains of $75 million last year, which included a gain of $89 million related to a reduction in the company's ownership interest in Diamond Offshore from the conversion of Diamond Offshore's 1.5% convertible debt into Diamond Offshore common stock.
Further, Loews reported that first-quarter net income of Carolina Group, a tracking stock for the company's cigarette business, Lorillard, declined to $171 million from last year's $189 million. First-quarter net income attributable to Carolina Group stock was $107 million or $0.98 per share, lower than $118 million or $1.08 per share a year earlier.
The company said the fall in Carolina's results reflected increased expenses as a result of costs associated with the proposed spin-off of Lorillard, and lower investment income, partially offset by lower interest expense related to the Carolina Group notional debt.
Seven Wall Street analysts, on average, expected the company to report earnings of $1.16 per share.
Loews noted that total consolidated revenues for the quarter decreased to $4.54 billion from $4.61 billion in the prior year quarter. Sequentially, consolidated revenues declined from $4.6 billion recorded in the fourth quarter.
CNA Financial revenues declined to $2.33 billion from $2.54 billion last year. Lorillard revenues also declined to $931 million from $945 million a year ago. However, Diamond Offshore revenues increased to $792 million from $619 million last year.
Insurance premiums in the quarter declined slightly to $1.812 billion from $1.862 billion a year ago. Net investment income fell to $489 million from $765 million last year.
Carolina Group's net sales were $921 million in the first quarter of 2008, higher than $913 million in same period last year, mainly driven by higher average unit prices. Analysts estimated revenue of $884.69 million.
Earlier, on December 17, 2007, the company announced that its Board of Directors had approved a plan to spin-off its entire ownership interest in Lorillard to holders of Carolina Group stock and Loews common stock in a tax-free transaction, which will result in Lorillard becoming a separate publicly traded company.
Completion of the proposed transaction is subject to a number of conditions, the company noted.
Among peers, The Travelers Companies, Inc. (TRV), a provider of commercial and personal property and casualty insurance products and services, on last Thursday reported that its first-quarter net income fell to $967 million or $1.54 per share from $1.086 billion or $1.56 per share in the previous year. Operating income was $1.008 billion or $1.61 per share, compared to $1.078 billion, $1.55 per share last year. Revenues for the quarter declined to $6.232 billion from $6.427 billion in the prior year period.
LTR is currently trading at $42.35, down $2.28 or 5.11%, on a volume of 552 thousand shares.
CG is currently at $69.22, down $3.21 or 4.43%, on a 511 thousand share volume.
CNA stock declined $3.08 or 11%, and currently trading at $24.91.
DO stock is currently at $131.26, $1.44 or 1.09% lower from previous day's close. |
