NEW YORK (Reuters) - Loews Corp LTR.N said on Monday fourth-quarter profit fell 31 percent, hurt by subprime investment losses and weaker-than-expected results in its insurance, tobacco and drilling businesses.
Net income at New York-based Loews, a conglomerate run by the billionaire Tisch family, fell to $512 million from $746 million a year earlier.
Profit attributable to shareholders fell to $384 million, or 72 cents per share, from $609 million, or $1.11 per share.
Excluding investments, profit was 81 cents per share, 26 cents below the average analyst forecast, according to Reuters Estimates. Revenue fell 5 percent to $4.57 billion. For all of 2007, profit was essentially unchanged at $2.49 billion.
Loews’ businesses include financial, tobacco, energy and hotel companies, and as such are exposed to a broad swath of a U.S. economy that economists believe may be in recession.
“The economic outlook is very, very difficult to discern for the next quarter, or for the next year,” Chief Executive James Tisch said on a conference call. “There’s a lot more volatility to the economic outlook than we anticipated at any time in the recent past.”
Loews shares fell to their lowest since January 2007, closing down $3.73, or 8.3 percent, at $41.
The shares at CNA Financial Corp (CNA.N), a commercial insurer in which Loews owns an 89 percent stake, plunged $6.16, or 19.1 percent, to $26.07, a three-year low, hurt by the subprime losses and lower premiums as competition intensified.
Carolina Group CG.N, a tracking stock for the Lorillard Inc cigarette business, fell $3.66, or 4.5 percent, to $76.92. Lorillard brands include Newport, Kent and True.
Profit at Chicago-based CNA fell 50 percent to $164 million, or 60 cents per share. Operating profit declined 10 percent to $223 million, or 82 cents per share, 20 cents below the average forecast.
CNA Chief Executive Stephen Lilienthal said 2008 “will present significant challenges as the market continues to deteriorate and the weather will not always be our friend.”
Results at CNA also included $61 million of investment losses, compared with $108 million of gains a year earlier, reflecting write-downs for subprime securities. CNA said it is buying some subprime debt whose prices had plunged.
Financial companies in the last few months have written off well over $100 billion tied to credit market turmoil.
“Given a lack of flexibility in capital management, stemming from lower ratings and a large parent ownership, we believe returns will continue to deteriorate,” Goldman Sachs & Co analyst Christopher Neczypor wrote.
Lorillard earnings fell 6 percent to $206 million, hurt by litigation costs. Profit attributable to Carolina shareholders was $128 million, or $1.18 per share.
Excluding items, profit was $1.30 per share, 7 cents below the average analyst forecast, Reuters Estimates said. Net sales at Lorillard rose 2 percent to $957 million as higher prices offset a 4.3 percent drop in domestic shipments.
Houston-based Diamond Offshore Drilling Inc (DO.N), in which Loews has a 51 percent stake, on Thursday said quarterly profit fell 25 percent to $164.9 million, or $1.19 per share, as the use of drilling rigs declined. Excluding items, profit was $1.61 per share, 7 cents below the average forecast.
Profit rose 10 percent at Boardwalk Pipeline Partners LP BWP.N, in which Loews has a 70 percent stake, and more than doubled to $7 million at Loews Hotels.
Loews said it is on track to spin off Lorillard in June or July. It expects a $105 million pretax gain from the Jan 10 sale of its Bulova Corp watch-making unit to Japan’s Citizen Holdings Co (7762.T).
Tisch said there is “no need to be in a rush” to make acquisitions: “We don’t want to put ourselves in a position where we buy something one day and two days later find it’s worth half of what we paid for it.”
He also said “this is a time of opportunity, not stress” for Loews to make selective fixed-income investments that may perform well over the longer-term.
Editing by Maureen Bavdek/Andre Grenon