Ladies and gentlemen, thank you for standing by and welcome to the Loews Fourth Quarter Year End Earnings Conference Call. [Operator Instructions] It is now my pleasure to hand our program over to Mary Skafidas, Vice President of Investor Media Relations. Please go ahead.

Thank you, Kristin. Good morning, everyone and welcome to Loews Corporation’s fourth quarter and year end 2015 earnings conference call. A copy of our earnings release, earnings snapshot and company overview maybe found on our website, loews.com. On the call this morning, we have our Chief Executive Officer, Jim Tisch and our Chief Financial Officer, David Edelson. Following our prepared remarks this morning, we will have a question-and-answer session. Before we begin, however, I will remind you that this conference call might include statements that are forward-looking in nature. Actual results achieved by the company may differ materially from those projections made in any forward-looking statements. Forward-looking statements reflect circumstances at the time they are made and the company expressly disclaims any obligation to update or revise any forward-looking statements. This disclaimer is only a brief summary of the company’s statutory forward-looking statements disclaimer, which is included in the company’s filings with the SEC. During the call today, we may also discuss non-GAAP financial measures. Please refer to our security filings for reconciliation for the most comparable GAAP measures. I will now turn the call over to Loews’ Chief Executive Officer, Jim Tisch.

Thank you, Mary, and good morning everyone. Last quarter, I spent a great deal of time talking about the decline in the share prices of each of our publicly traded subsidiaries starting my remarks by referring to these declines as the proverbial elephant in the room. Well, unfortunately, that elephant has not gone away and chaos continues to reign over the energy markets. Case in point. On November 2, the day of our last earnings call, oil was trading just below $47 a barrel. Although we didn’t like that number then, it looks pretty good compared to today since oil prices have continued to plummet. On January 20, oil dropped below $27 a barrel far below its replacement cost. If these pricing levels persist over the next 2 years, we will be in a drastically undersupplied oil market. The natural gas market is under the same dark cloud as the entire energy industry is being affected by this precipitous downturn, which has led to a steep decline in capital spending by exploration and production companies. Oil price declines have largely been driven by the exceptional strength of supply, not by the weakness of demand. In fact, demand for oil is still growing and remains quite healthy. If there is any bright spots on which to focus it’s that the lack of drilling activity today will only help speed up the recovery in the oil market tomorrow. As they say in the oil business, the best cure for low prices is low prices. While we wait for market rebalancing in oil prices, the reality for offshore drilling companies is stark. The drop in oil prices is causing oil companies to slash exploration and development budgets and reduce or cancel drilling contracts decimating day rates and idling rigs. The market for rigs…

Thank you, Jim, and good morning. Loews reported a fourth quarter net loss of $201 million or $0.58 per share. Both CNA Financial and Diamond Offshore posted quarterly losses driven by unusual items. Excluding unusual items, which I will describe more fully, Loews’ income from continuing operations declined from $264 million in Q4 2014 to $183 million in Q4 2015. For the full year, Loews had income from continuing operations of $260 million or $0.72 per share, compared to $962 million or $2.52 per share for the prior year. Unusual items and lower operating results at CNA and Diamond were the main drivers of the year-over-year decline. Excluding unusual items, our income from continuing operations declined from $1.1 billion in 2014 to $858 million in 2015. I will start by reviewing our fourth quarter results and then return to the full year. CNA’s earnings in Q4 2015 were reduced by a reserve charge, as Jim mentioned related to its long-term care business, as well as by a change in accounting estimate adopted to better reflect the yields on fixed maturity securities that have call provisions. The long-term care reserve charge and the accounting change reduced Loews’ income from continuing operations by $177 million and $22 million, respectively. Absent these two unusual items in 2015 and a non-recurring pension settlement charge in 2014, CNA’s fourth quarter net operating income decreased by 35% versus Q4 2014. Several factors contributed to the fourth quarter year-over-year decline in net operating income at CNA, excluding these unusual items; lower LP income, higher catastrophe losses, less favorable prior year development and lower non-cat accident year underwriting income, driven by higher loss ratios in specialty and international and an expense ratio that was about 2 points above the company’s run rate. Partially offsetting these negative factors was…

Thank you, David. Before we proceed to our Q&A, let me review why I am confident about the long-term prospects of each of our businesses. CNA has improved its underwriting performance and paid significant dividends to shareholders, while maintaining its strong capital position. Diamond is in a tough market. And although we can’t predict when its market will turnaround Diamond is ready to weather the storm. It’s been conserving its financial resources and maintaining its position as the strongest offshore drilling company in terms of finance, innovation and leadership. Hopefully, during these challenging times for the offshore drilling industry, Diamond will be able to add productive rate assets at attractive valuations. Boardwalk has made smart capital decisions that should allow us to fund its announced growth projects without having to issue equity in 2016. And Loews Hotels continues to grow its chain steadily with an eye towards profitability. Whether confronting headwinds or aided by tailwinds Loews’ strategic imperative remains the same creating value for shareholders over the long-term. And now, I would like to turn the call back to Mary Skafidas.

Thanks, Jim. Kristin, we are ready to begin the Q&A portion of our call. Could you please give participants the instructions on how they can participate?

[Operator Instructions] Our first question comes from Josh Shanker with Deutsche Bank.

Good morning, everyone.

Good morning.

So, my first question, I guess a Boardwalk question. I would like to talk about the investment cycle versus the distribution cycle. And how you think about – how long Boardwalk will invest and when you might be seeing dividend begin to increase?

So, as you know, Boardwalk right now has about $1.6 billion of investments that it’s funding. Hopefully this year, it will find more attractive projects to do. It is also working to bring down its ratio of debt to EBITDA and it’s been very successful with that this past year in 2015. It would be very nice for Boardwalk to be able to increase its distribution. And by the way, Loews would be the biggest beneficiary of such an increase. But Boardwalk will not do that until such time as it has the distributable cash flow available to it and total access to markets in order that the dividend could be increased responsibly. I cannot give you a date for when that’s going to happen. But even without the dividend, we believe that the management of Boardwalk is building tremendous value with these new projects that it’s embarked upon.

So Jim, I am not asking for a date so much, but in Board level meetings, is there a general census that there is an investment stage followed by a distribution stage? And is it part of a cycle or is this very Boardwalk specific?

I think this is Boardwalk specific. You are asking about what’s going on in the Boardwalk Board meeting. I am not a Board member there and I think you should ask the management of Boardwalk that.

That’s very reasonable. Hotels, I noticed that the earnings power is much stronger in the first half of the year. As you grow, is there a seasonality to earnings?

Yes, there are some modest seasonalities, but we also have a pretty balanced portfolio, so that when city hotels may not be doing well, then, for example, over Christmas, then resort hotels do, do well. But overall, there isn’t dramatic seasonality to the business.

So in terms of – I am not really asking - some modeling questions thinking what looks like seasonality for 2015 could totally be less apparent in 2016?

Yes. I think what you are saying is more the impact of pre-opening expenses at hotels, a new hotel coming in and ramping up, etcetera, less seasonality.

Okay, that makes sense. And then I think in the past, you said back in the financial crisis, public equities got cheap, but private equity never got cheap enough to act on new investments the way you like. You are sitting on a lot of potentially optionality, I guess, with the cash you have. Do you have a market appetite? And are you looking at private equity or public equity saying this is a market for Loews and I would like to make something happen in the next 12 months, 18 months? I don’t know, how do you think about that?

We look at what’s available to buy. A lot of the assets that become – companies that become available to buy, especially in the strike zone that we are looking at are owned by private equity firms. And those companies, those firms have the ability to time when they want to sell their assets. So, one would think that right now prices of companies that private equity firms might want to sell are coming down, because the financing markets have become so much more expensive. But in fact, what we are seeing is not too much that’s on the market. In fact because now it’s not a particularly attractive time to be selling those businesses. If the financial markets that we have today continue for another several quarters, then it’s entirely possible that we could see assets that come on the market that could be attractively priced.

Okay. Well, good luck in finding something. We would love to see it.

In the meantime though, we spent $1.3 billion repurchasing our shares. So that was a significant use of our cash over 2015.

I understand there is more of them available.

Yes.

Take care. Thank you.

Thank you.

Our next question comes from Bob Glasspiegel with Janney Capital.

Good morning Loews. Quick numbers question, what was the impairment in hotels?

It was – it hit by $3 million after-tax.

Okay. Question two, on the CNA call, when I asked them about partnerships, their partnerships were down about $400 million year-over-year and they said they have been selling ahead of this market weakness, reducing partnerships and would continue to reduce, reflecting sort of a cautious view on equities in that sort of asset class. I was wondering if – I assume that’s consistent with or perhaps even driven by your outlook, then maybe you could expand on that strategy and where you are and with the market down 10% year-to-date?

Sure. CNA manages its risk assets very carefully because CNA wants to make sure that risk assets do not become too big a percentage of its equity. And additionally, Loews in helping to manage those assets for CNA also is seeing attractive risk investments beyond the hedge fund market. So for example, if you look at bank loans that are available in the marketplace, there has been a tremendous sell-off in many names that now to us are seemingly good investments. So the move out of hedge funds was made in order to make room for additional risk assets that CNA can acquire that we think will be more attractive investments than the hedge funds have been. For the past 20 years, hedge funds have been a very, very attractive investment of risk assets. And what we are seeing now is just that there are other places where we can invest and get good returns.

I would love to go back to the transcript, I thought they had said they had a cautious view towards equities before the sell-off and we are likely to continue the reduced exposure to equities, but that doesn’t square necessarily within and you publicly wanted to say about equities at this point?

So actually my comment was pretty consistent with that. I was talking about attractive investments that we are seeing in the bank loan and fixed income markets. And listen, from my own personal point of view, the more equities go down, the more attractive they get. So at Loews, as the stock market has been going down, we have been modestly increasing our exposure to equities.

Got it. You have been right on sort of your macro views the economy is going to grow gradually and slowly and positively as far as I could see it, I think what’s your comment originally 5 years ago and is that – are you still in that camp?

I am. I am doing better than a stopped clock. A stopped clock is right twice a day. My 2% forecast for the economy has been right for 5 years, so why I change it now?

Well, there are people a little bit nervous about some more risks and out there and beyond energy, European credit, but these...?

There is a lot to be worried about in the world. But I also think that those of us that are on Wall Street can sometimes be overwhelmed by the problems that we see on the horizon. And I think from time-to-time, it’s important to step back, take off your Wall Street glasses and put on industrial America glasses. And I think things don’t look as bad when you look that – with that lens.

No, I am in your camp, too. I just wanted to make sure you were still there. Thank you.

Thank you, Bob.

Thanks Bob.

[Operator Instructions] Our next question comes from Michael Millman with Millman Research.

So would you suggest or should investors rather than buying Diamond, for example, be buying crude and buying gas futures or crude futures I should say and gas futures rather than Boardwalk to get kind of a pure play and maybe quicker upside when and if there is upside?

I am not a registered rep. I don’t give out the public investment advice. There are an awful lot of different ways to play what I think I and you are describing as the improvement in oil and natural gas prices. And it all depends on the risk parameters that you are willing to take, the amount of leverage that you want, a whole host of factors that I think it’s inappropriate for me to opine on right now.

Does Loews at all invest in futures of this type?

Yes. In fact, yes Loews has plenty of exposure to crude oil and to gas through Boardwalk and as well through Diamond Offshore. And to the extent that those commodities go up in place for long enough, then we should see improvement in Diamond’s business and hopefully an increase in Diamond’s share price. And likewise, we should see improvements in Boardwalk’s business and its share price as well. Beyond that, yes, we have invested in some futures in the oil markets. We are sort of like the guy who ran for mayor, he said the rent is too damn low or too damn high, we say oil prices are too damn low. And so I believe that in a number of years, I am not making a prediction for the next number of months, but in the next number of years, we think that oil prices will be significantly higher than the levels we are at today.

Okay, I appreciate the color. Thank you.

Pleasure.

And ladies and gentlemen, that concludes our Q&A session for today. I would like to hand the program back over to Mary Skafidas for any closing remarks.

Thank you, Kristin. And thanks to all of you who dialed in and the joined us today. The replay will be available on our website, loews.com in approximately two hours. That concludes our call today.