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Holding company Loews (NYSE:L) this week posted second-quarter results that were marked by a massive writedown in its oil and gas drilling subsidiary, Diamond Offshore (OTC:DO). The impairment pushed Loews to a net loss despite improving metrics at its other major businesses, CNA Financial (NYSE:CNA), Boardwalk Pipeline (NYSE:BWP), and Loews Hotels.

Here's how the overall numbers compared against last year's Q2:


Q2 2016 Actuals

Q2 2015 Actuals

Growth (YOY)


$3.3 billion

$3.4 billion


Net income

($65 million)

$170 million


Earnings per share




YOY = Year over year. Source: Loews' financial filings.

What happened with Loews this quarter?

As a collection of several diverse businesses, growth in Loews' better-performing segments is vulnerable to being swamped by weakness in other parts of the operations. Investors saw that risk play out this quarter as gains in the insurance and gas pipeline divisions were more than offset by sharp contractions in energy drilling.

Here are some of the highlights of the quarter for Loews' businesses:

  • CNA Financial's revenue held steady as growth in the U.S. offset declines in international premiums. Operating income for the segment spiked by 65%, to $277 million.
  • Diamond Offshore's revenue plunged as demand for rigs continued to decline amid lower oil prices. The company booked a nearly $700 million writedown on a group of semi-submersible rigs that it could no longer productively employ. As a result, the subsidiary removed $657 million of operating income from Loews' results, compared to its $106 million contribution in the prior year.
  • Boardwalk Pipeline improved sales and profits, thanks to price increases and new delivery projects.
  • Loews Hotels boosted revenue, but its operating profit ticked lower as it took a small impairment charge on a joint venture property.
  • Loews spent $65 million repurchasing its stock, up from $33 million in the prior quarter.
  • Book value has held steady since the start of the year at $53 per share.

What management had to say

Diamond Offshore executives highlighted the fact that the company would have been profitable -- absent the impairment charge. "Despite facing both market and operational headwinds during the quarter, Diamond was able to record adjusted earnings per share of $0.16," CEO Marc Edwards said in a press release. "Although the market continues to be challenged, our focus is on striking a balance between controlling costs and laying the foundation to ensure Diamond Offshore is well positioned for the recovery."

Meanwhile, executives at CNA Financial, Loews' largest subsidiary, were encouraged by the steady premium gains. "Overall I am pleased with the result this quarter," CEO Thomas Motamed said in a press release. "Although our International segment had a disappointing quarter, all of our North American businesses produced solid results, led by another great underwriting result in our Specialty segment."

Looking forward

The contraction in the oil-rig industry looks set to dominate Loews' operating results for the time being. Prices and rig demand will eventually recover, though, and the falling global rig inventory that Diamond contributed to with its latest writedown plays a key role in bringing the industry closer to that inflection point.

In the meantime, advancements in Loews' Boardwalk business and investment portfolio are keeping the company just barely profitable this year despite the huge impairment charges. As a result, investors have good reasons to expect book value to keep up its steady -- although modest -- pace of growth.

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