We are upgrading Loews to Neutral from Underperform on favorable
second quarter results wherein earnings surpassed the Zacks
Consensus Estimate as well as year-ago earnings. The quarter
witnessed higher earnings at CNA Financial and an increase in
parent company investment income driven by improved performance of
the trading portfolio. However, lower earnings at Diamond Offshore
limited the upside. Loews remains on track to strengthen its hotel
business by doubling its hotel count within the next two to four
years and expects to triple its net income by 2015. Though Diamond
Offshore continues to improve its fleet, a weakening
ultra-deepwater and deepwater market will dampen results. Boardwalk
remains on track to expand existing pipeline infrastructure as
market condition improves. The acquisitions of HP Storage and
Louisiana Midstream support its strategy to focus on
diversification, to become less dependent on its base gas
transportation business. A strong balance sheet with low leverage
and adequate cash and strong rating scores are among the positives.
Based in New York, Loews Corporation (L) is a diversified
holding company. Loews' principal subsidiaries are:
CNA Financial Corporation (CNA), which is the 14th largest
property-casualty insurer in the U.S., provides standard commercial
lines, specialty lines (specialty property-casualty, professional
and financial), surety, marine and other property and casualty
coverage as well as life and group insurance coverage. 90.0% of CNA
is owned by Loews. This insurance provider contributed 67% of
Loews' full-year 2013 revenues.
Diamond Offshore Drilling Inc. (DO), which owns and operates 49
offshore drilling rigs on a contractual basis for oil and gas
exploration and production companies. Loews currently owns a 50.4%
stake in DO, which accounted for 19% of full-year 2013
Boardwalk Pipeline Partners LP (BWP), approximately 66.0% is
owned by Loews. Through its subsidiaries, Boardwalk Pipeline is
engaged in the operation of interstate natural gas pipeline
systems. The company derived 8% of full-year 2013 revenues.
Boardwalk Pipeline conducts all of its operations through its three
operating subsidiaries Gulf Crossing Pipeline Company LLC, Gulf
South Pipeline Company LP and Texas Gas Transmission LLC.
HighMount Exploration & Production LLC, also a wholly owned
subsidiary, engaged in natural gas and oil exploration and
production operations located in the Permian Basin in Texas, the
Antrim Shale in Mich. and the Black Warrior Basin in Ala. In Apr
2010, HighMount sold its exploration and production assets located
in the Antrim Shale in Mich. and entered into a definitive
agreement with another purchaser to sell its exploration and
production assets located in the Black Warrior Basin in Ala. This
operation contributed 2% of full-year 2013 revenues.
Loews Hotels Holding Corporation, a wholly owned subsidiary that
owns and operates 19 hotels in U.S. and Canada, generated 3% of
full-year 2013 revenues.
Loews Corporation (L): Read the Full Research
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