Holding company Loews (NYSE:L) posted its third-quarter earnings results on Nov. 2. The stock sure limped into the report: Loews shares had slipped 14% lower since the start of the year. The latest results may not do much to change that negative dynamic since Loews posted a big drop in third-quarter revenue and profits.

Here's how the big-picture results stacked up against the prior-year period:

Loews' results: The raw numbers


Q3 2015 Actuals

Q3 2014 Actuals

Growth (YOY)


$3.2 billion

$3.5 billion


Net Income

$182 million

$208 million






Source: Loews' financial filings.

What happened with Loews this quarter?
Revenue and profit both fell substantially overall even as book value ticked higher -- from $52.01 per share up to $52.52 per share. But Loews is a collection of very diverse businesses, and so it pays to look at the four biggest subsidiary results individually:

  • Insurance giant CNA Financial's revenue fell 7% to $2.2 billion as operating income rose 10%.
  • Rig drilling specialist Diamond Offshore's revenue fell 18% to $608 million and adjusted profit dipped slightly.
  • Natural gas seller Boardwalk Pipeline's sales rose 6% and income jumped 70% higher thanks to higher prices.
  • Hospitality company Loew's Hotels logged slightly higher sales and profit as its Universal Orlando properties attracted more guests.

What management had to say
CNA Financial, which is responsible for roughly two-thirds of Loews' revenue, booked steady operating improvements despite losses from its investment portfolio. "Each of our segments achieved a solid underwriting result in the quarter highlighted by a [property and casualty] combined ratio of 85.7%," said CEO Thomas F. Motamed. That ratio was low enough to mark CNA's best result on that metric in over a decade.

Meanwhile, Diamond Offshore's management stressed the company's success at keeping expenses low during the cyclical downturn in the industry. "I am pleased with our solid third quarter results, which demonstrate Diamond Offshore's ability to execute on managing our costs and controlling downtime," according to CEO Marc Edwards. Executives couldn't do much to boost sales as contract drilling revenue dove. But they were able to make an impressive dent in expenses: Operating costs fell from 87% of sales last year to 70% of sales this quarter. The company also announced two major new drilling rig contracts.

Looking forward
But thanks mainly to lower profits out of Diamond Offshore, operating income for the holding company is down substantially through the first three quarters of the year: Profit has fallen 38% to $461 million so far in 2015.  

On the plus side, Loews still maintains an unusually large cash position -- over $5 billion at last count. That hoard has given management plenty of ammunition to opportunistically take advantage of the company's cheaper valuation. And they have: CEO Jim Tisch and his executive team spent $328 million buying back stock this quarter, up from $233 million in the second quarter and $7 million at the start of the year. As long as the stock's valuation continues to fall relative to a rising book value, investors shouldn't be surprised to see these buybacks continue their elevated pace.