01—Abstract
Summary
Summary of the 10-K filed February 24, 2015. Cited figures are marked; the original filing is the authoritative source.
Loews Corporation is a holding company whose subsidiaries operate in commercial property and casualty insurance (CNA Financial Corporation, 90%a owned), offshore oil and gas drilling (Diamond Offshore Drilling, Inc., 52.5% owned), natural gas and natural gas liquids transportation and storage (Boardwalk Pipeline Partners, LP, 53% owned), and hotels (Loews Hotels Holding Corporation, wholly owned).
In 2014 income from continuing operations was $962 millionb, or $2.52 per diluted share, compared with $1.1 billion, or $2.95 per share, in 2013. Net income attributable to Loews Corporation was $591 million, or $1.55 per share, versus $595 million, or $1.53 per share, in 2013, with discontinued operations (the sales of HighMount Exploration & Production and CNA's life insurance subsidiary, Continental Assurance Company) producing losses of $371 million for the year. The decline in continuing earnings was driven mainly by lower results at CNA, Diamond Offshore and Boardwalk Pipeline.
Diamond Offshore recorded a $55 millionc after-tax impairment on six semisubmersible rigs and reported that oil price declines in the second half of 2014 had reduced demand for offshore drilling, with PEMEX and Petrobras signaling contract terminations in early 2015. Boardwalk Pipeline took a $55 million after-tax charge to write off Bluegrass Project costs and reported narrowing basis and time-period price spreads that adversely affected its transportation and storage revenues.
Book value per share rose to $51.70d from $50.25, and Parent Company cash and investments were $5.1 billion at year end. The filing also notes that CNA has not yet completed its fourth-quarter 2014 A&EP reserve review, which it expects to finish in the first half of 2015, and that Diamond Offshore's contract backlog as of February 9, 2015 was $6.84 billion, down from $8.19 billion at October 21, 2014.
02—Key points
Key Highlights
- Income from continuing operations was $962 million ($2.52 per diluted share) in 2014, down from $1.62 billion... corrected: $1,621 million consolidated income from continuing operations in 2013 ($2.95 per share); Loews-attributable 2013 figure was $1.1 billion ($2.95 per share).
- Net income attributable to Loews Corporation was $591 million, or $1.55 per diluted share, compared with $595 million, or $1.53 per share, in 2013.
- Discontinued operations reduced results by $371 million in 2014, reflecting the September 30, 2014 sale of HighMount for net proceeds of $787 million and the August 1, 2014 sale of Continental Assurance Company by CNA.
- Diamond Offshore's contract drilling backlog fell to $6.84 billion as of February 9, 2015, from $8.19 billion at October 21, 2014, after PEMEX and Petrobras indicated contract terminations.
- CNA's property and casualty combined ratio was 97.7% in 2014, versus 97.9% in 2013, and CNA's fourth-quarter 2014 A&EP reserve review remains open, with completion expected in the first half of 2015.
- Boardwalk Pipeline recorded a $94 million ($55 million after tax and noncontrolling interests) charge to write off Bluegrass Project costs, and filed a Gulf South rate case with FERC seeking new tariff rates effective May 1, 2015, subject to refund.
- Book value per share increased to $51.70 at December 31, 2014 from $50.25, and Loews repurchased 14.6 million of its common shares in 2014 for $622 million.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 24, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $14.32B$14.61B | −2.0% |
| Operating Income | $962.00M$1.15B | −16.3% |
| Interest Expense | $498.00M$425.00M | +17.2% |
| Net Income | $591.00M$595.00M | −0.7% |
| EPS (Basic) | $1.55$1.53 | +1.3% |
| EPS (Diluted) | $1.55$1.53 | +1.3% |
| Shares Outstanding (Basic) | 381.92M388.64M | −1.7% |
| Shares Outstanding (Diluted) | 382.55M— | — |
05—Questions
Frequently Asked Questions
Why did Loews' earnings from continuing operations decline in 2014?
Income from continuing operations fell primarily because of lower earnings at CNA, Diamond Offshore and Boardwalk Pipeline. CNA's results reflected lower net investment income from reduced limited partnership income and less favorable prior year reserve development, partly offset by improved current accident year underwriting. Diamond Offshore's results reflected lower utilization and a $55 million after-tax impairment, and Boardwalk Pipeline's reflected the Bluegrass charge and higher operating and depreciation expense.
What is the outlook for Diamond Offshore based on this filing?
Diamond Offshore said adverse market conditions have reduced customer demand and created an oversupply of rigs, and it expects these conditions to continue through 2015 and likely into 2016 or longer. As of February 9, 2015, eight of its rigs were not under contract, and PEMEX and Petrobras had indicated their intention to terminate or not continue certain contracts.
What sales did Loews complete in 2014?
On August 1, 2014, CNA completed the sale of Continental Assurance Company, its life insurance subsidiary, and on September 30, 2014, Loews sold HighMount Exploration & Production LLC for net proceeds of $787 million. The results of both businesses are reported as discontinued operations.
How much did Loews return to shareholders in 2014?
Loews paid $0.25 per share in regular dividends for 2014 and repurchased 14.6 million shares of its common stock at an aggregate cost of $622 million. Loews also received a special dividend of $242 million from CNA during 2014.
06—Continue