UPDATE 2-Loews' unit CNA to sell life and group insurance business
* CNA expects net proceeds of about $615 mln from sale
* To book a charge of $220 mln in first quarter
* Posts fourth-quarter profit vs loss year earlier
* Loews' quarterly loss widens due to impairment charges
By Avik Das
Feb 10 (Reuters) - CNA Financial Corp said it would sell its life and group insurance business to focus on property and casualty insurance, on the same day that parent Loews Corp reported a bigger quarterly loss due to impairment charges.
CNA's shares rose as much as 7.5 percent on the New York Stock Exchange, after the company also posted a quarterly profit compared with a loss a year earlier.
CNA said it was selling the business, Continental Assurance Co, to a subsidiary of Wilton Re Holdings Ltd for about $615 million, and was expecting to book a charge of about $220 million in the first quarter.
"The life business returns have been pretty uneven and I would say relatively low," CNA Chief Financial Officer Craig Mense said on a conference call.
CNA joins Hartford Financial Services Group and Allstate Corp in shedding life insurance assets as the companies struggle to make a profit on these products due to low interest rates.
"(Property and casualty) companies want to go back to their core insurance underwriting and let someone who is really good at life insurance to focus on it," Macquarie analyst Amit Kumar said.
The sale will reduce CNA's non-core life and group gross GAAP insurance reserves by $3.4 billion, or 25 percent, and dispose of most of CNA's payout annuity business.
CNA said it expected the transaction to close in the second quarter of 2014.
CHARGES HIT LOEWS PROFIT
Loews' net loss widened to $198 million, or 51 cents per share, in the fourth quarter ended Dec. 31 from $32 million, or 8 cents per share, a year earlier.
The company said it took goodwill impairment charges of $398 million in the quarter, primarily related to low market prices for natural gas and natural gas liquids in its HighMount Exploration & Production LLC unit.
Loews, owned by the billionaire Tisch family, also booked a charge of $111 million, related to CNA's transfer of its asbestos and pollution liabilities to Berkshire Hathaway Inc's National Indemnity Co unit.
Loews' revenue rose 5 percent to $3.89 billion in the quarter.
Excluding charges, the company had an income of $356 million for the quarter, mainly due to higher earnings at CNA and increased investment income.
CNA posted a profit for the fourth quarter compared with a loss a year earlier, helped by an improvement in its underwriting results and lower disaster-related claims. .
Boardwalk Pipeline Partners LP, Loews' third biggest revenue generator, reported a 78 percent drop in profit and cut its dividend to boost cash flow.
Loews also controls Diamond Offshore Drilling, which reported a better-than-expected quarterly profit last week as the rates it earned for its ultra-deepwater rigs shot up.
Loews' shares were down about 4 percent to $43.19 on the New York Stock Exchange, while Boardwalk's stock plunged 39 percent to $14.71.
- China food scandal spreads, drags in Starbucks, Burger King and McNuggets in Japan |
- U.S. court rulings create new uncertainty over Obamacare
- Israel pounds Gaza despite international peace efforts |
- EU readies possible capital, tech sanctions on Russia
- Train carrying MH17 bodies on final journey reaches Ukraine city |