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 50 offshore oil rigs), interstate natural gas transmission pipeline systems operator Boardwalk Pipeline, and HighMount Exploration & Production (also natural gas). Loews is controlled and run by the Tisch family, including co-chairmen and cousins Andrew and Jonathan.
Through its subsidiaries, diversified Loews has operations in Canada and beyond. Its CNA Financial unit operates primarily in the US. Loews Hotels has 17 properties in the US and two 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 14 US states and serves customers in the northeastern and southeastern US.
Loews' flagship unit, CNA Financial, is the company's cash cow, accounting for nearly 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'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 couple of years. With commercial lending still sluggish, businesses have less to insure and fewer workers to cover.
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.
Loews' 2012 revenues increased 3% to $14.6 billion due to increased investment income from limited partnerships, increased trading portfolio income, and higher fixed-maturity securities income. The revenue increase also reflected a 7% increase in sales at CNA Financial and a 4% growth rate at Boardwalk Pipeline.
Though its finances have shown general growth over the last five years, the company experienced a 3% revenue decline in 2011 that was driven by declines at CNA Financial and Diamond Offshore, down nearly 3% and 1%, respectively. (While CNA's premium revenue increased in 2011 vs. 2010, investment income declined, and the insurer suffered investment losses.)
Profits declined in both 2012 and 2011, largely due to CNA's high catastrophe losses, among other factors. The 2012 net income of $568 million showed a 47% dip from 2011 results.
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. Meanwhile Diamond Offshore pursues new drilling contracts; in 2012 it agreed to construct four deepwater drilling structures for Hyundai Heavy Industries for some $2.6 billion.
While it is working to grow the hotel business, in 2012 Loews Hotels sold a noncore Denver property. Other recent divestitures in the Loews organization include CNA Financial's sale of its stake in the First Insurance Company of Hawaii to partner Tokio Marine Holdings.
Mergers and Acquisitions
Loews Hotels purchased the Renaissance Hollywood Hotel along the renowned Walk of Fame and renamed it the Loews Hollywood Hotel in 2012. It also acquired a Washington, DC, hotel (now known as Loews Madison Hotel) and a Boston hotel (Loews Boston Back Bay Hotel) in 2013.
In 2012 CNA Financial acquired Hardy Underwriting Bermuda for $227 million to expand its global specialty business. CNA Financial also widened its presence in the specialty realm through its 2011 purchase of the 39% of CNA Surety that it didn't already own for some $463 million.
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.