Loews Corporation reported net income for the first quarter ended March 31, 2016 of $102 million, or $0.30 per share, compared to $109 million, or $0.29 per share, in the prior year period.
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Net income declined by $7 million as compared to the prior year due to lower earnings at CNA Financial Corporation and reduced results from the parent company investment portfolio, partially offset by higher earnings at Diamond Offshore Drilling because of the absence this quarter of an asset impairment charge.
Higher earnings at Boardwalk Pipeline Partners, LP also served as a partial offset. The increase in net income per share is due to treasury share purchases over the past year.
Loews Corporation book value per share excluding accumulated other comprehensive income (AOCI) increased to $52.98 at March 31, 2016 from $52.72 at December 31, 2015.
CNA's earnings decreased due to a $74 million (after tax and noncontrolling interests) charge related to the 2010 retroactive reinsurance agreement to cede its legacy asbestos and environmental pollution liabilities (Loss Portfolio Transfer, or LPT).
Under retroactive reinsurance accounting, amounts ceded through the LPT in excess of the consideration paid result in a deferred benefit that is recognized in income in proportion to paid recoveries over future periods.
CNA's earnings were also impacted by a decline in net investment income driven by limited partnership investment results, as well as realized investment losses in 2016 as compared to gains in 2015.
These investment-related declines, which totaled $99 million (after tax and noncontrolling interests), were partially offset by improved property & casualty underwriting results and improved results in the Life & Group segment.
Diamond Offshore's prior year earnings reflected a $158 million (after tax and noncontrolling interests) asset impairment charge. Year-over-year earnings also benefited from revenue earned by newbuild drillships, demobilization fees, lower operating costs, lower depreciation expense resulting mainly from the asset impairment charges taken in 2015, and a lower effective tax rate.
These favorable items were largely offset by a substantial reduction in the number of operating rigs.
Boardwalk Pipeline's earnings increased as new rates took effect following the Gulf South rate case. Additionally, the Evangeline pipeline, which was placed into service in mid-2015, and new growth projects contributed to earnings.
At March 31, 2016, there were 339 million shares of Loews common stock outstanding.
During the first quarter of 2016, Loews Corporation repurchased 0.9 million shares of its common stock at an aggregate cost of $33 million. The Company also purchased 0.3 million shares of CNA common stock at an aggregate cost of $8 million. ■