01—Abstract
Summary
Summary of the 10-K filed February 22, 2013. Cited figures are marked; the original filing is the authoritative source.
Loews Corporation reported consolidated net income attributable to Loews Corporation of $568 milliona, or $1.43 per diluted share, for 2012, compared with $1.1 billion, or $2.62 per share, in 2011.
Net income in 2012 includes catastrophe losses of $243 millionb (after tax and noncontrolling interests) at CNA, primarily related to Storm Sandy, and after-tax ceiling test impairment charges of $433 million at HighMount on its natural gas and oil properties. Lower results at Diamond Offshore also reduced net income, partially offset by higher earnings at Boardwalk Pipeline and higher parent company investment income. Book value per share rose to $49.67 at December 31, 2012 from $47.33 at December 31, 2011.
Loews is a holding company whose principal operating subsidiaries are CNA Financial Corporation (90% owned, commercial property and casualty insurance, 65.6% of 2012 consolidated revenue), Diamond Offshore Drilling (50.4% owned, offshore drilling, 21.1%), Boardwalk Pipeline Partners (55% owned, natural gas and NGL transportation and storage, 8.1%), HighMount Exploration & Production (wholly owned, natural gas and oil, 2.0%), and Loews Hotels (wholly owned, 2.7%). Parent company cash and investments, net of receivables and payables, totaled $3.9 billionc at December 31, 2012. The filing notes that Boardwalk Pipeline expects transportation contracts renewed in 2013 to be at lower rates and that Diamond Offshore's contract backlog was approximately $8.6 billion as of February 1, 2013.
The filing shows total revenues of $14.55 billiond in 2012 versus $14.13 billion in 2011, total assets of $80.02 billion, and total shareholders' equity of $19.46 billion. Loews paid regular quarterly dividends of $0.0625 per share and repurchased 5.6 million shares for $222 million during 2012.
02—Key points
Key Highlights
- Net income attributable to Loews fell to $568 million ($1.43 per diluted share) in 2012 from $1.06 billion ($2.62 per share) in 2011.
- HighMount recorded $680 million ($433 million after tax) in non-cash ceiling test impairment charges on natural gas and oil properties, reflecting lower natural gas and NGL prices.
- CNA's catastrophe losses of $243 million (after tax and noncontrolling interests) were driven primarily by Storm Sandy, and CNA's net income attributable to Loews rose to $570 million from $557 million.
- Diamond Offshore's net income attributable to Loews declined to $337 million from $451 million, reflecting lower rig utilization and average dayrate; contract backlog was about $8.6 billion as of February 1, 2013.
- Total revenues increased to $14.55 billion from $14.13 billion, and book value per Loews share rose to $49.67 from $47.33.
- Boardwalk Pipeline's net income attributable to Loews increased to $109 million from $77 million, aided by the Louisiana Midstream and HP Storage acquisitions, though renewals of expiring transportation contracts are expected at lower rates in 2013.
- Loews repurchased 5.6 million shares for $222 million in 2012 and paid $0.25 per share in annual dividends.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 22, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $14.07B$14.13B | −0.4% |
| Operating Income | $968.00M$1.06B | −8.9% |
| Interest Expense | $426.00M$522.00M | −18.4% |
| Net Income | $568.00M$1.06B | −46.5% |
| EPS (Basic) | $1.44$2.62 | −45.0% |
| EPS (Diluted) | $1.43$2.62 | −45.4% |
| Shares Outstanding (Basic) | 395.12M404.53M | −2.3% |
| Shares Outstanding (Diluted) | 395.87M405.32M | −2.3% |
05—Questions
Frequently Asked Questions
Why did Loews' net income decline sharply in 2012?
Net income attributable to Loews Corporation fell to $568 million from $1.06 billion. The filing attributes the decline to $243 million of after-tax catastrophe losses at CNA, primarily from Storm Sandy, $433 million of after-tax ceiling test impairment charges at HighMount, and lower results at Diamond Offshore. These were partially offset by higher earnings at Boardwalk Pipeline and higher parent company investment income.
How did CNA Financial perform in 2012?
CNA's net income attributable to Loews increased to $570 million from $557 million. Net investment income rose $228 million, driven by significantly favorable limited partnership results, while insurance premiums increased $279 million, including the Hardy acquisition. Catastrophe losses and lower favorable net prior year development partially offset these gains, and the combined ratio for CNA's property and casualty operations was 105.0% in 2012.
What are the main risks flagged for Diamond Offshore and Boardwalk Pipeline?
Diamond Offshore faces a growing rig supply, with about 67 floaters on order for 2013 to 2016 and Petrobras planning 29 locally built rigs, which could pressure utilization in Brazil. Boardwalk Pipeline faces narrowing basis spreads and new Marcellus and Utica supply that are lowering renewal rates on transportation contracts, with the filing expecting negative effects on 2013 transportation revenues and distributable cash flows.
What did Loews return to shareholders in 2012?
Loews paid regular quarterly cash dividends of $0.0625 per share in each quarter of 2012, totaling $0.25 per share, and paid $99 million in cash dividends to shareholders. The company also repurchased 5.6 million shares of common stock at an aggregate cost of $222 million during the year.
06—Continue