When it comes to diversification, Loews definitely has the low-down. The holding company's main interest is insurance through publicly traded subsidiary CNA Financial, which offers commercial property/casualty coverage. Other wholly owned and partially owned holdings include hotels in the US and Canada through its Loews Hotels subsidiary. Its energy holdings include contract oil-drilling operator Diamond Offshore Drilling (which operates roughly 35 offshore oil rigs), and interstate natural gas transmission pipeline systems operator Boardwalk Pipeline. Loews is controlled and run by the Tisch family, including co-chairmen and cousins Andrew and Jonathan.
Loews' flagship unit, CNA Financial, is the company's cash cow, accounting for more than two-thirds of its annual revenue. Rig operator Diamond Offshore Drilling represents about 20% of annual sales, while pipeline systems operator Boardwalk Pipeline accounts for most of the rest. Hotels contribute just 3% of annual sales.
CNA is organized into four business segments: Specialty (professional, financial, and specialty property/casualty products), Commercial (property/casualty coverage for businesses), International, and Other Non-Core (primarily run-off long-term care businesses). CNA's affiliates include The Continental Insurance Company and CNA Surety. While commercial insurance is generally stable stuff, CNA has faced the same downturn other big insurers have seen over the past few years. With commercial lending still sluggish, businesses have less to insure and fewer workers to cover.
Diamond Offshore Drilling owns and operates rigs located offshore about 10 countries including the US. Boardwalk Pipeline consists of interstate natural gas pipeline systems originating in the Gulf Coast region, Oklahoma, and Arkansas, and extending north and east; natural gas storage facilities in four states; and natural gas liquids pipelines and storage facilities in Louisiana.
Loews Hotels operates a chain of 23 hotels -- 22 in the US and one in Canada.
Through its subsidiaries, diversified Loews has operations in Canada and beyond. Its CNA Financial unit operates primarily in the US. Loews Hotels has 22 properties in the US and one property in Canada, while Diamond Offshore has drilling rigs located off the coasts of about a dozen countries in addition to the US and markets its products worldwide. Boardwalk Pipeline operates 14,000 miles of pipelines in 13 US states and serves customers in the northeastern and southeastern US.
Sales and Marketing
Loews' largest division, CNA Financial, markets its products through independent brokers, agents, and managing general underwriters. CNA Financial targets small to large businesses, as well as insurers, associations, and other groups.
Diamond Offshore's main customers include oil and gas companies, ranging from large corporations to independent businesses, as well as government-owned entities. Major customers include Petrobras and OGX. Boardwalk Pipeline serves gas producers, distributors, transporters, and marketers, as well as electric and industrial plants.
The company's HighMount unit uses internal sales and marketing representatives to promote its oil and gas products.
Revenues have remained somewhat flat over the past five years; in 2014, revenue slipped 5% to $14.3 billion on declines in both CNA Financial and Diamond Offshore, its largest segments. CNA Financial's Commercial segment had lower sales that year; the unit also saw revenues fall after selling life insurance subsidiary Continental Assurance Company. Loews' net income, which has been holding relatively steady since 2012, decreased 1% due to higher operating expenses.
Cash flow from operations rose 43% to $2.9 billion in 2014 due to an increase in cash provided by receivables.
Each Loews business pursues customer growth in their various industries. CNA Financial, for instance, is working to grow its base of commercial customers in each of the small, midsized, and large account categories. It has been strengthening its core property/casualty operations while exiting underperforming segments; it sold life insurance subsidiary Continental Assurance Company in 2014, recording a $189 million loss on the sale. Meanwhile Diamond Offshore pursues new drilling contracts and Loews Hotels has been adding to its presence in key markets with acquisitions.
In 2014 amid record low natural gas prices, the company sold its HighMount Exploration & Production natural gas company to EnerVest for $805 million.
Mergers and Acquisitions
Loews Hotels purchased hotels in Chicago (now known as Loews Chicago O'Hare Hotel), Minneapolis, and Tuscon, Arizona, in 2014. It bought another hotel in Chicago in 2015.
To promote long-term growth and diversification, Boardwalk Pipeline acquired Boardwalk Petrochemical (which owns and operates the Evangeline ethylene pipeline system) for $295 million in 2014.
Members of the Tisch family, including co-chairmen cousins Andrew and Jonathan Tisch, CEO James Tisch, and their mothers, control more than 20% of the company. Investment firm Davis Selected Advisers owns about 10% of Loews' shares.