Loews Corporation Reports Net Income For 2015

OREANDA-NEWS. Loews Corporation (NYSE: L) today reported net income of $260 million, or $0.72 per share, for the year ended December 31, 2015, compared to net income of $591 million, or $1.55 per share, in the prior year. Net income in 2014 included a loss from discontinued operations of $371 million, or $0.97 per share, reflecting the disposition by Loews of HighMount Exploration & Production, LLC and by CNA Financial Corporation of its former life insurance subsidiary.

Results for the three months ended December 31, 2015 were a net loss of $201 million, or $0.58 per share, compared to net income of $208 million, or $0.55 per share, in the prior year period. The three months and full year of 2015 included a reserve charge of $177 million (after tax and noncontrolling interests) related to the long term care business at CNA Financial Corporation. Diamond Offshore Drilling, Inc. recorded asset impairment charges of $182 million and $341 million (after tax and noncontrolling interests) for the three months and year ended December 31, 2015, compared to $55 million of asset impairment charges for the year ended December 31, 2014.

Book value per share excluding accumulated other comprehensive income (AOCI) increased to $52.72 at December 31, 2015 from $50.95 at December 31, 2014.

CONSOLIDATED HIGHLIGHTS

Three Months Ended December 31, 2015 Compared to 2014

Income from continuing operations declined due primarily to lower earnings at CNA and Diamond Offshore, partially offset by higher earnings at Boardwalk Pipeline Partners, LP.

CNA's results decreased primarily due to a charge of $177 million (after tax and noncontrolling interests) resulting from the unlocking of actuarial assumptions related to future policy benefit reserves for the long term care business. Earnings also include lower limited partnership investment results partially offset by a prior year charge of $49 million (after tax and noncontrolling interests) related to a lump sum pension plan settlement. 

Diamond Offshore's results decreased primarily due to an asset impairment charge of $182 million (after tax and noncontrolling interests) related to the carrying value of nine drilling rigs. Excluding this charge, earnings were favorably impacted by higher average daily revenue earned by ultra-deepwater floaters and significantly reduced contract drilling expenses for the fleet offset by lower rig utilization and increased interest expense.

Boardwalk Pipeline's earnings increased primarily due to new rates taking effect as a result of the Gulf South rate case, partially offset by increased depreciation costs.

Loews Hotels' results decreased primarily due to an asset impairment charge of $3 million (after tax) related to a joint venture equity interest in a hotel property as well as increased tax expense due to an adjustment for prior years' estimates and higher Florida state income taxes reflecting increased profits at the Universal Orlando and Miami properties.

Year Ended December 31, 2015 Compared to 2014

Income from continuing operations for year ended December 31, 2015 was $260 million, or $0.72 per share, compared to $962 million, or $2.52 per share, in the prior year. The decline in income from continuing operations was primarily due to the reserve charges at CNA and Diamond Offshore asset impairment charges discussed above. In addition, parent company investment income declined as a result of lower performance of equity securities in the trading portfolio and decreased results from limited partnership investments.

Excluding the insurance reserve charge discussed above, CNA's earnings declined year-over-year primarily due to lower limited partnership results and a $38 million charge (after tax and noncontrolling interests) related to a retroactive reinsurance agreement to cede its legacy asbestos and environmental pollution liabilities. This earnings decline was partially offset by improved underwriting results driven by higher favorable net prior year development.

Diamond Offshore's results for 2015 include asset impairment charges totaling $341 million (after tax and noncontrolling interests) related to the carrying value of 17 drilling rigs, as well as lower rig utilization. In addition, earnings were impacted by a $20 million impairment charge to write-off all goodwill associated with the Company's investment in Diamond Offshore as well as increased depreciation and interest expense. In 2014, Diamond Offshore recognized an asset impairment charge of $55 million (after tax and noncontrolling interests).

Boardwalk Pipeline's earnings increase primarily stemmed from the impact of a $55 million charge (after tax and noncontrolling interests) in 2014 related to the write off of all capitalized costs associated with the terminated Bluegrass project. Absent this charge, earnings were largely consistent with the prior year as additional revenues from the settlement of the Gulf South rate case and a franchise tax refund related to settlement of prior tax periods were offset by lower natural gas storage revenues and increased depreciation and interest costs.

Loews Hotels' earnings were slightly higher as increased income from Universal Orlando joint venture properties were largely offset by increased interest expense and higher income taxes as described above.

Discontinued operations in 2014 included impairment charges related to the sale of both CNA's former life insurance subsidiary and HighMount.

SHARE REPURCHASES

At December 31, 2015, there were 339.9 million shares of Loews common stock outstanding. For the three months and year ended December 31, 2015, the Company repurchased 17.0 million and 33.3 million shares of its common stock at an aggregate cost of $632 million and $1.3 billion. From January 1, 2016 to February 5, 2016, the Company repurchased an additional 0.9 million shares of its common stock at an aggregate cost of $33 million. Depending on market conditions, the Company may from time to time purchase shares of its and its subsidiaries' outstanding common stock in the open market or otherwise.

ABOUT LOEWS CORPORATION

Loews Corporation is a diversified company with three publicly-traded subsidiaries: CNA Financial Corporation (NYSE: CNA), Diamond Offshore Drilling, Inc. (NYSE: DO) and Boardwalk Pipeline Partners, LP (NYSE: BWP); and one wholly owned subsidiary, Loews Hotels & Resorts.