Loews Corporation Reports Third Consecutive Profit on Insurance, Gas

Published: Tue 09 Feb 2010

Lucas Eichmann

Yesterday, the Loews Corporation reported its third consecutive quarterly profit on better results from gas exploration and insurance. A holding company, Loews is run by the Tisch family in New York.

The company's $403-million fourth-quarter net income, or 94 cents per share, contrasts with a $958-million loss, or $2.20 per share, during the same period of the prior year, New-York-based Loews disclosed yesterday in a statement. Loews' business insurer, CNA Financial Corporation, reported improved investment results from selling its stake in Verisk Analytics Inc. and from purported limited partnership holdings.

CNA Financial posted $75 million in income from those partnerships, contrasted with a loss of $309 million in fourth-quarter 2008. As other businesses shunned such investments, which may include hedge funds, real estate, and private equity, CNA staid with them after they lowered investment income for four consecutive quarters, Jim Tisch, Loews' CEO, said yesterday in an interview. He said that CNA's partnerships are focused in hedge funds.

"Oftentimes the worst time to get out of investments is right after they've sold off," Mr. Tisch explained. "We saw money coming out of the hedge funds, people withdrawing. That means there was going to be less capital competing for each of the different strategies," Tisch said. "We are the type of people that as things go down, we tend not to bail out. We tend to buy more."

The hedge fund industry, worth $1.6 trillion, reported returns of 20.1 percent last year, which is the largest gain in ten years, according to data released by Hedge Fund Research Inc. Hedge funds lost 19 percent in 2008, a record.

Loews owns HighMount Exploration and Production, an oil and natural gas exploration unit, and a chain of hotels. In the fourth quarter of 2009, Loews' net income from HighMount totaled to $35 million, contrasted with a $717-million loss the year before when the company booked costs associated with dropping commodity prices.

On the insurance end of things, CNA's property and casualty insurance policy sales dropped from $1.56 billion to $1.47 billion in the last quarter of 2008 as companies, stretched thin by the economy, cut jobs and reduced their coverage. Industrywide, commercial insurance rates in the United States dropped by 5.6 percent in the fourth quarter, according to the Council of Insurance Agents and Brokers in Washington.

"The decrease reflects the impact of the economy on our exposure base as well as our decision to push for improved pricing and risk selection," CNA CEO Thomas Motamed explained yesterday during a conference call with investors and analysts.