Loews (NYSE:L) reported on Monday a 78% drop in second-quarter profit, hurt by weakness in its 50%-owned Diamond Offshore Drilling business that could not be offset by improvements in CNA Financial (NYSE:CNA), by far the company’s largest business group.
The New York-based holding company that operates a wide range of businesses, from property and casualty insurance to energy exploration, reported net income of $56 million, or 14 cents a share, compared with a year-earlier $250 million, or 61 cents.
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The results for the three months ended June 30 included $142 million in ceiling test impairment charges and $170 million at HighMount Exploration & Production related to the carrying value of its natural gas and oil properties.
Excluding the costs, analysts in a Thomson Reuters poll were looking for a profit of 76 cents.
Revenue fell more than 4% to $3.37 billion from $3.5 billion a year ago, hurt by an 11% revenue decline in Diamond Offshore Drilling to $793 million. Diamond’s earnings were impacted by lower rig utilization, a decrease in average dayrate and an increase in contract drilling expenses.
Declines were partially offset by higher earnings at CNA Financial, a reflection of lower catastrophe losses and better underwriting results, partially offset by lower net investment income due to weaker results from partners.
CNA, Loews’ biggest holding by revenue, saw catastrophe losses fall to $44 million from $65 million a year earlier, bringing net income up 25% to $166 million.
“We are pleased to report continued progress on our strategies to drive margin improvement and growth in our core Property & Casualty Operations,” CNA chief executive, Thomas Motamed, said in a statement.
Also benefiting Loews was improvement in its Boardwalk Pipeline Partners business, which grew on an acquisition of Boardwalk HP Storage Company in Dec. 2011 as well as an impairment charge related to steel pipe material in the prior year.