Ladies and gentlemen, good day and welcome to the CNA first quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. If you would like to ask a question at the conclusion of prepared remarks, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the call over to Ralitza Todorova, Assistant Vice President, Investor Relations for opening remarks and introductions of today’s speakers. Please go ahead.

Thank you Andrew. Good morning and welcome to CNA’s discussion of our first quarter 2023 financial results. Our first quarter earnings press release, presentation and financial supplement were released this morning and are available on the Investor Relations section of our website, www.cna.com. Speaking today will be Dino Robusto, Chairman and Chief Executive Officer, and Scott Lindquist, Chief Financial Officer. Following their prepared remarks, we will open the line for questions. Today’s call may include forward-looking statements and references to non-GAAP financial measures. Any forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made during the call. Information concerning those risks is contained in the earnings press release and in CNA’s most recent SEC filings. In addition, the forward-looking statements speak only as of today, Monday, May 1, 2023. CNA expressly disclaims any obligation to update or revise any forward-looking statements made during the call. Regarding non-GAAP measures, reconciliations to the most comparable GAAP measures and other information have been provided in our earnings press release, financial supplements, and other filings with the SEC. This call is being recorded and webcast. A replay of the call may be accessed on our website. If you are reading a transcript of this call, please note that the transcript may not be reviewed for accuracy, thus it may contain transcription errors that could materially alter the intent or meaning of the statement. With that, I will turn the call over to our Chairman and CEO, Dino Robusto.

Thank you Ralitza, and good morning all. Before I begin my remarks on the quarter, I would like to acknowledge the contributions of Tom Motamed to our organization. As you all know, Tom passed away on April 18, leaving behind an incredible legacy in our industry, which he served with distinction for 45 years. Tom was truly an insurance man through and through, climbing the ranks at Chubb for over 30 years and then joining CNA as Chairman and CEO in 2009. His myriad contributions and effective leadership helped define CNA’s capabilities and reputation. Our entire organization is saddened by Tom’s passing and we will always be grateful for his commitment to not only CNA but to our entire industry. In the first quarter, CNA produced very strong results with excellent profitability and double-digit top line growth from significant new business success, continued high retention, and a rebound in rate change from the fourth quarter of last year. Core income increased by $27 million in the first quarter to $325 million. Net investment income of $525 million pre-tax increased $77 million year-over-year, and our pre-tax P&C underlying underwriting gain was up 19% to a record $197 million in the quarter. Against a backdrop of elevated industry catastrophe losses in the first quarter, the all-in combined ratio was very strong at 93.9% with pre-tax catastrophe losses of $52 million, or 2.4 points of the combined ratio, which is well below our 10-year first quarter average of 3.1 points, which we believe is strongly reflective of our prudent management of catastrophe exposures. Prior period development for P&C overall was slightly unfavorable by 0.7 points on the combined ratio from adverse development on a professional liability segment we exited several years ago as part of our re-underwriting actions in our London portfolio. The…

Thank you Dino, and good morning everyone. I will provide some additional information on our results, as Dino indicated. Core income of $325 million is up 9% compared to the first quarter of last year, leading to core return on equity of 10.8%, while our P&C segment had record pre-tax underlying underwriting income of $197 million. Turning to investments, total pre-tax net investment income increased 17% to $525 million in the first quarter. The increase was driven by our fixed income in other investment portfolios, which were $57 million favorable to the prior year quarter, while our limited partnership and common stock results returned a $28 million gain in the current quarter compared to an $8 million gain in the prior year quarter. Our fixed income portfolio continues to produce consistent net investment income which has been steadily increasing over the last year as a result of favorable reinvestment rates in our P&C portfolios, as well as a growing investment base funded by strong cash flow from operations. Within our P&C and corporate segment portfolios, the average fixed income effective income yield was 4% in the first quarter compared to 3.6% in the prior year quarter. As of the end of the first quarter, reinvestment rates were well above our P&C effective income yield while our life and group portfolio effective income yield was flat in the first quarter compared to the prior year quarter, as this portfolio is longer duration and has embedded yields more comparable to today’s interest rate environment. Additionally, within the other category investment income, which includes short term investments, we are benefiting from significantly higher short term rates as compared to a year ago. We believe our investment portfolio to be both high quality and well diversified. Our fixed income portfolio, which makes up 90%…

Thanks Scott. To recap, we had an excellent start to the year with strong top and bottom line performance. Pricing resiliency persists, evidenced by the rebound in several lines of business in the quarter which I believe reflects a broader awareness that rate increases need to continue to compound for longer, given the compound effects of inflationary pressures on loss cost trends. The pricing environment should in turn allow us to maintain strong retention levels. We are well positioned to continue to secure high quality new business in our target areas, and on the investment side the improved fixed income yields will continue to be a tailwind. With that, we will be happy to take your questions.

We will now begin the question and answer session. [Operator instructions] The first question comes from Derek Han with KBW. Please go ahead.

Good morning, thank you. My first question is on reserve development. You had an absence of reserve releases in the specialty and commercial segments. Could you talk about what’s driving that, where the offsets are on the adverse front?

Sure, thanks Derek. It’s Scott here. That’s right - development was flat for both specialty and commercial for the quarter. Just a little bit more color on specialty - we had unfavorable claim settlements in old accident years in our one-off healthcare portfolio, but were offset by favorable reserve developments in other parts of our special portfolio that’s resulting in the flat result. Then as far as commercial, just some puts and takes there. Again, it’s consistent with prior years, relatively flat this quarter.

Got it, that’s helpful. Then my second question is on cat losses. You said that first quarter was running maybe 70 BPs below the historical pace. Can you just talk about maybe the guidance or 2023 outlook in terms of cat losses for the year?

Derek, it’s Dino. We don’t give out guidance, but I just wanted to highlight our conservative and prudent management, and that’s why I referenced the 10-year, sort of looking it backwards, but we don’t give guidance on cat.

Okay, no, that makes sense. Then my last question, just on the pricing environment, DNO pricing worsened 3 points sequentially quarter-over-quarter, but is there any change in the bank DNO pricing? Just kind of curious about the impacts of the banking fallout.

You know, when you look at it in the fourth quarter, it was negative, and then when you started to see some of the news, that started to change in the first quarter and then started to stabilize closer to flat.

Got it, that’s helpful. Thank you very much.

You’re welcome.

Again, if you have a question, please press star then one on a touchtone phone. Again, that is star then one to ask a question. This concludes our question and answer session. I would like to turn the conference back over to Dino Robusto for any closing remarks.

Okay, thank you everyone for joining us, and we look forward to telling you about the results for the second quarter next quarter, so thank you.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.