Loews Corp on Monday reported a nearly 40 per cent drop in second quarter net income from continuing operations to $341m, as a drop in investment income led the company to widely miss analysts’ expectations.

Net income from continuing operations at the company, excluding special charges, was $0.78 per share, compared with $1.00 per share in the second quarter last year. Analysts had been expecting earnings per share of $0.98. Revenues fell almost 10 per cent to $3.53bn.

Including special charges, Loews Corporations net income fell from $9.54 per share to $0.78 per share, mostly due to a one-time gain on the sale of tobacco business Lorillard. It spun the maker of Newport menthol cigarettes off as the US economy slowed, capitalising on the business’ defensive nature, and protecting itself from tobacco related lawsuits.

Loews subsidiary CNA Financial Corporation, of which the company owns a 90 per cent stake, saw its net income fall 42 per cent to $105m, as the property downturn hit its residential and commercial mortgage-backed security portfolios.

Excluding investment losses, the company’s income from operations fell less than 10 per cent to $511m year on year.

Loews rose 3 per cent to 30.92 in early trading in New York on Monday.