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Diversified holding company Loews Corp. reported Monday a decline in first-quarter profit, mainly reflecting higher impairment charge and lower investment income. The company’s 90 percent owned property and casualty insurance unit CNA Financial Corp. generated flat profit, while its 50.4 percent-owned unit Diamond Offshore recorded lower results. Loews’ revenues remained almost flat, despite good performance at most of its units, including CNA.
Looking ahead, CNA Financial Chairman and Chief Executive Officer Thomas Motamed said, “While we are encouraged by our growth momentum, our primary focus remains the need to drive improvement in our underwriting margins, which improved modestly in the first quarter. We expect to accelerate our progress through the remainder of 2013 and into 2014 as sustained rate increases and non-rate underwriting actions continue to improve our results.”
In the first quarter, net income attributable to Loews declined to $242 million or $0.62 per share from $367 million or $0.92 per share a year ago.
The latest quarter results included a ceiling test impairment charge of $92 million at HighMount related to the carrying value of its natural gas and oil properties, compared to an impairment charge of $28 million last year.
Adjusted net income, which excluded non-cash impairment charges, was $334 million, lower than last year’s $395 million, chiefly due to reduced parent company investment income as a result of lower performance for the trading portfolio.
Income before net investment gains and ceiling test impairment charges also declined to $320 million from last year’s $376 million.
CNA’s first-quarter net income was $250 million or $0.93 per share, unchanged from last year. Net operating income was $231 million or $0.86 per share, higher than $226 million or $0.84 per share last year. On average, four analysts polled by Thomson Reuters expected the company to report earnings of $0.71 per share for the quarter. Analysts’ estimates typically exclude special items.
At CNA, property & casualty operations’ net operating income declined from last year as improved non-catastrophe current accident year underwriting results were more than offset by lower net investment income, higher catastrophe losses and decreased favorable net prior year development.
Diamond Offshore last week reported a decline in first-quarter earnings reflecting the absence of a prior year gain, as well as lower utilization primarily from fewer revenue earning days due to increased rig surveys.
Loews’ total revenues, including investment gains, were $3.73 billion, compared to last year’s $3.74 billion. CNA’s revenues increased to $2.48 billion from last year’s $2.37 billion, as net written premiums grew 10 percent primarily due to increased rates across both CNA Specialty and CNA Commercial. Analysts expected CNA to generate revenues of $2.28 billion.
Boardwalk Pipeline and Loews Hotels also generated higher revenues, but were more than offset by poor performance at Diamond Offshore and HighMount.
CNA also declared a quarterly dividend of $0.20 per share, payable May 29 to stockholders of record on May 13.
On Friday, Loews shares closed trading at $44.44, down 1.27 percent, and CNA Financial settled at $33.39, down 1.24 percent.