UPDATE 3-Diamond Offshore drags down Loews profit

Mon Jul 30, 2012 1:35pm EDT

* Q2 EPS $0.14 vs $0.61 last year

* CNA net operating income up 33 pct

* Diamond Offshore rev falls 11 pct

July 30 (Reuters) - Loews Corp, controlled by the billionaire Tisch family, reported a fall in second-quarter profit, mainly due to lower earnings at 50 percent-owned Diamond Offshore Drilling Inc.

The drilling company's profit fell 25 percent in the second quarter on higher costs and a lower demand for its services. Diamond Offshore accounts for a quarter of Loews' revenue but is the biggest contributor to its profit.

However, insurer CNA Financial, Loews biggest holding, reported a robust quarter on lower catastrophe losses.

After-tax catastrophe losses at CNA fell to $44 million from $65 million a year earlier. CNA's net operating income rose 33 percent to $152 million.

"We achieved meaningful first half rate increases across our P&C (property and casualty) portfolio, which helped drive nearly three points of improvement in our P&C combined ratio," CNA Chief Executive Thomas Motamed said in a statement.

CNA Financial, 90-percent owned by Loews, struck a deal in March to buy loss-making Lloyd's of London rival Hardy Underwriting Bermuda Limited for about $227 million.

Loews, which has interests ranging from insurance and luxury hotels to energy exploration and natural gas pipelines, said its net investment income fell by a quarter to $386 million.

Net income fell to $56 million, or 14 cents per share, from $250 million, or 61 cents per share, a year earlier.

Loews' total revenue fell more than 4 percent to $3.37 billion.

Chief Executive James Tisch told analysts on a post-earnings conference call that he was "very concerned" about the economy.

"You don't see anybody really expressing optimism about what's going on in the economy either here in the United States or overseas. So for a whole host of reasons, I don't see growth picking up anytime soon," Tisch said.

Shares of Loews, which has a market value of about $16.55 billion, were down more than 5 percent at $39.60 on the New York Stock Exchange.