01—Abstract
Summary
Summary of the 10-K filed February 23, 2011. Cited figures are marked; the original filing is the authoritative source.
Loews Corporation, a holding company, reported 2010 consolidated net income attributable to Loews Corporation of $1.3 billiona, or $3.07 per diluted share, compared with $564 million, or $1.30 per share, in 2009.
Income from continuing operations was $2.0 billionb before noncontrolling interests, and the results included a $309 million after-tax charge tied to CNA's Loss Portfolio Transfer, under which substantially all of CNA's legacy asbestos and environmental pollution liabilities were ceded to National Indemnity Company, a Berkshire Hathaway subsidiary, subject to a $4.0 billion aggregate limit. Results also benefited from significantly lower other-than-temporary impairment losses and increased favorable prior year reserve development at CNA, while 2009 included a $660 million after-tax HighMount impairment. The company's five operating subsidiaries are CNA Financial (90% owned, commercial property and casualty insurance, 63.0% of 2010 consolidated revenue), Diamond Offshore Drilling (50.4% owned, offshore drilling, 23.0% of revenue), HighMount Exploration & Production (wholly owned, natural gas, 2.9% of revenue), Boardwalk Pipeline Partners (66% owned, interstate natural gas pipelines, 7.7% of revenue), and Loews Hotels (wholly owned, 2.1% of revenue).
Book value per common share rose to $44.51c from $39.76, and shareholders' equity reached $18.45 billion. Parent company cash and investments, net of receivables and payables, totaled $4.6 billion at year-end 2010, up from $3.0 billion, and the company repurchased 10,964,200 shares for $405 million during 2010.
Key risks disclosed include CNA's reserve adequacy, A&EP exposure, and credit-rating sensitivity; Diamond Offshore's exposure to the Gulf of Mexico drilling moratorium following the Macondo incident and to customer concentration, with Petrobras and OGX together accounting for about 38%d of its 2010 revenue; HighMount's full-cost ceiling test and commodity price volatility; and Boardwalk's expiring contracts and narrowing basis spreads. The company also disclosed that it is a defendant in three tobacco-related lawsuits, which it says are indemnified by Lorillard.
02—Key points
Key Highlights
- Consolidated net income attributable to Loews Corporation was $1.3 billion ($3.07 per diluted share) in 2010, up from $564 million ($1.30 per share) in 2009.
- CNA's Loss Portfolio Transfer with National Indemnity Company resulted in a $328 million net loss attributable to Loews, including $309 million from continuing operations, with a $4.0 billion aggregate reinsurance limit.
- CNA contributed 63.0% of 2010 consolidated total revenue, and Diamond Offshore contributed 23.0%.
- Book value per share of Loews common stock increased to $44.51 at December 31, 2010, from $39.76 a year earlier.
- Loews repurchased 10,964,200 shares of its common stock for $405 million in 2010 and paid quarterly dividends of $0.0625 per share.
- HighMount's proved reserves declined by 664 Bcfe in 2010 after asset sales in Michigan and Alabama, leaving 1.3 Tcfe of net proved reserves, and 2009 included a $660 million after-tax impairment.
- Diamond Offshore's contract drilling backlog was about $6.6 billion as of February 1, 2011, and it ordered two new ultra-deepwater drillships for delivery in 2013 at an expected cost of about $1.2 billion.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 23, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $14.62B$14.12B | +3.5% |
| Operating Income | $1.31B$566.00M | +131.1% |
| Interest Expense | $517.00M$448.00M | +15.4% |
| Net Income | $1.29B$564.00M | +128.5% |
| EPS (Basic) | $3.08$1.30 | +136.9% |
| EPS (Diluted) | $3.07$1.30 | +136.2% |
| Shares Outstanding (Basic) | 418.72M432.81M | −3.3% |
| Shares Outstanding (Diluted) | 419.52M433.45M | −3.2% |
05—Questions
Frequently Asked Questions
How did Loews perform in 2010 compared with 2009?
Net income attributable to Loews Corporation was $1,288 million, or $3.07 per diluted share, compared with $564 million, or $1.30 per share, in 2009. Results in 2010 included the $309 million after-tax charge from CNA's Loss Portfolio Transfer, while 2009 included a $660 million after-tax HighMount impairment.
What was the Loss Portfolio Transfer at CNA?
On August 31, 2010, CNA ceded substantially all of its legacy asbestos and environmental pollution liabilities to National Indemnity Company, a subsidiary of Berkshire Hathaway, subject to an aggregate limit of $4.0 billion. CNA paid a reinsurance premium of $2.0 billion, and the transaction produced a net loss of $328 million attributable to Loews.
Which subsidiaries are the most significant to Loews' revenue?
CNA Financial accounted for 63.0% of 2010 consolidated total revenue and Diamond Offshore for 23.0%. Boardwalk Pipeline accounted for 7.7%, HighMount for 2.9%, and Loews Hotels for 2.1%.
What are the main risks disclosed for Diamond Offshore?
Diamond Offshore faces exposure to the Gulf of Mexico drilling moratorium and new safety regulations following the Macondo incident, customer concentration (its five largest customers accounted for about 56.0% of 2010 revenue), rising rig supply through 2011 to 2013, and international operating risks. It also disclosed that a customer, OGX, asserted force majeure to terminate the Ocean Monarch contract, which Diamond Offshore is contesting in litigation.
How much did Loews return to shareholders in 2010?
Loews repurchased 10,964,200 shares of its common stock for an aggregate cost of $405 million during 2010. Loews common stock dividends paid totaled $105 million, at $0.0625 per share per quarter, or $0.25 for the year.
06—Continue