Diversified holding company Loews Corp. (L) reported Monday a profit for the fourth quarter that dropped 42 percent from last year, reflecting lower investment income and higher insurance reserves for the payout annuity business. Earnings per share for the quarter came in lower than analysts' expectations.
The New York-based company reported net income of $268 million or $0.67 per share for the fourth quarter, sharply down from $466 million or $1.12 per share in the prior-year quarter.
On average, three analysts polled by Thomson Reuters expected the company to report earnings of $0.90 per share for the fourth quarter. Analysts' estimates typically exclude special items.
The company attributed the plunge net income to lower investment income and higher insurance reserves for the payout annuity business. Further, there were lower earnings at Diamond Offshore Drilling, Inc. (DO) and decreased results from the parent company trading portfolio due to lower performance of equity investments.
Loews owns a stake of 50.4 percent in Diamond Offshore and 90 percent in CNA Financial Corp. (CNA). HighMount Exploration & Production LLC and Loews Hotels are its wholly owned subsidiaries. Boardwalk Pipeline Partners, LP (BWP) is its 62 percent owned subsidiary.
Total revenues for the quarter decreased 6.5 percent to $3.48 billion from $3.72 billion in the same quarter last year.
Of this, insurance premium edged up 0.8 percent from the year-ago period to $1.66 billion, while net investment income decreased 22.6 percent to $550 million. Contract drilling revenues decreased 11 percent to $734 million, while other revenues increased 5.4 percent to $601 million from last year.
Total expenses for the quarter grew to $3.0 billion from $2.77 billion in the year-ago quarter.
Among Loews' principal subsidiaries, CNA Financial, Diamond Offshore, Boardwalk Pipeline and HighMount all posted year-over-year decline in revenues, while Loews Hotels reported a growth in revenues.
As at December 31, 2011, book value per share increased to $47.49 from $44.51 as at December 31, 2010.
For fiscal 2011, the company reported net income of $1.06 billion or $2.63 per share, lower than $1.29 million or $3.07 per share in the prior year. Total revenues for the full year declined to $14.13 billion from $14.62 billion in the previous year.
Wall Street analysts were looking for full-year 2011 earnings of $2.73 per share, on annual revenues of $14.17 billion.
In Monday's regular trading session, L is currently trading at $38.27, down $0.34 or 0.88% on a volume of 65,826 shares.
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