01—Abstract
Summary
Summary of the 10-K filed February 12, 2020. Cited figures are marked; the original filing is the authoritative source.
Loews Corporation is a holding company with five reportable segments: CNA Financial (89%a owned, commercial property and casualty insurance), Diamond Offshore Drilling (53% owned, offshore drilling), Boardwalk Pipelines (wholly owned, natural gas and NGL transportation and storage), Loews Hotels & Co (wholly owned, 26 hotels), and a Corporate segment that includes Altium Packaging (99% owned, rigid plastic packaging).
CNA accounted for 72.3% of consolidated total revenue in 2019. For 2019, net income attributable to Loews Corporation was $932 millionb, or $3.07 per diluted share, compared with $636 million, or $1.99 per share, in 2018. The filing attributes the increase mainly to higher earnings at CNA and Boardwalk Pipelines and higher parent company net investment income, partly offset by lower results at Diamond Offshore and Loews Hotels & Co. Diamond Offshore remains under pressure.
It reported a 2019 net loss attributable to Loews of $175 million, its contract drilling backlog fell to $1.6 billionc from $2.0 billion a year earlier, and it expects negative cash flows in 2020 and to draw on its credit facilities. Its senior unsecured notes are rated below investment grade, with S&P at CCC+. CNA recorded a $151 million after-tax charge for a premium deficiency on its long term care reserves following the third quarter 2019 gross premium valuation, and Other Insurance Operations posted a core loss of $211 million.
Total assets were $82.2 billiond and shareholders' equity was $19.1 billion at year end. At the parent level, Loews received $927 million in dividends from subsidiaries in 2019, including a $485 million special dividend from CNA.
It spent $1.1 billion repurchasing 21.5 million shares and paid $76 million in common dividends. The filing notes that Parent Company cash and investments, net of receivables and payables, totaled $3.3 billion at year end.
02—Key points
Key Highlights
- Net income attributable to Loews Corporation rose to $932 million ($3.07 per diluted share) in 2019, up from $636 million ($1.99 per share) in 2018.
- CNA Financial, 89% owned, generated net income attributable to Loews of $894 million in 2019 versus $726 million in 2018 and accounted for 72.3% of consolidated total revenue.
- Diamond Offshore posted a net loss attributable to Loews of $175 million in 2019; its contract drilling backlog declined to $1.6 billion from $2.0 billion, and it expects negative cash flows in 2020.
- CNA recorded a $151 million after-tax charge for a premium deficiency on long term care reserves following the third quarter 2019 gross premium valuation.
- Boardwalk Pipelines' net income attributable to Loews rose to $209 million from $135 million, and Loews now owns 100% of Boardwalk after the 2018 purchase of public common units.
- Parent Company received $927 million in dividends from subsidiaries in 2019, including a $485 million special dividend from CNA, and repurchased $1.1 billion of Loews stock.
- Loews Hotels & Co posted a net loss attributable to Loews of $31 million in 2019, including $99 million of asset impairment charges.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 12, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $14.93B$14.07B | +6.1% |
| Cost of Revenue | $1.08B$923.00M | +17.2% |
| Gross Profit | $13.85B$13.14B | +5.4% |
| Interest Expense | $591.00M$574.00M | +3.0% |
| Net Income | $932.00M$636.00M | +46.5% |
| EPS (Basic) | $3.08$1.99 | +54.8% |
| EPS (Diluted) | $3.07$1.99 | +54.3% |
| Shares Outstanding (Basic) | 302.70M319.06M | −5.1% |
| Shares Outstanding (Diluted) | 303.35M319.93M | −5.2% |
05—Questions
Frequently Asked Questions
How did Loews Corporation perform in 2019 compared with 2018?
Net income attributable to Loews Corporation was $932 million, or $3.07 per diluted share, in 2019, compared with $636 million, or $1.99 per share, in 2018. The filing attributes the increase to higher earnings at CNA and Boardwalk Pipelines and higher parent company net investment income, partly offset by lower results at Diamond Offshore and Loews Hotels & Co.
What are the main risks facing Diamond Offshore?
Diamond Offshore faces a protracted industry downturn with an oversupply of roughly 240 floater rigs, lower dayrates, and a backlog that fell to $1.6 billion. It expects negative cash flows in 2020, plans to draw on its credit facilities, and has credit ratings below investment grade (S&P CCC+, Moody's B2). Its customer base is concentrated, and it may record further rig impairments.
What drove CNA's 2019 results and what reserve issues did it disclose?
CNA's net income attributable to Loews rose to $894 million, driven by higher net investment income from limited partnership and common stock returns and favorable current accident year underwriting. Results were offset by a $151 million after-tax charge for a long term care premium deficiency identified in the third quarter 2019 gross premium valuation. Other Insurance Operations recorded a core loss of $211 million.
How much cash did Loews return to shareholders in 2019?
Loews repurchased 21.5 million shares of its common stock for $1.1 billion in 2019 and paid $76 million in common stock dividends at $0.25 per share. CNA also paid a special dividend of $2.00 per share in 2019, and it declared another $2.00 special dividend in February 2020.
What is the Corporate segment and how did Altium Packaging contribute?
The Corporate segment includes Parent Company investment income, Parent Company interest and expenses, and the operations of Altium Packaging LLC, a rigid plastic packaging manufacturer that Loews owns 99%. Altium Packaging revenues were $932 million in 2019 compared with $867 million in 2018, and Corporate segment net income attributable to Loews was $35 million, compared with a loss of $161 million in 2018.
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