Good day, everyone and welcome to today’s Loews Corporation Q1 Earnings Conference Call. [Operator Instructions] Please note that this call maybe recorded and I will be standing by if you need any assistance. It is now my pleasure to turn the conference over to Mary Skafidas, Vice President of Investor Relations and Corporate Communications.

Great. Thank you, Katie and good morning everyone. Welcome to Loews Corporation’s first quarter earnings conference call. A copy of our earnings release, earnings supplement 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 with questions from shareholders. 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 made or implied in any forward-looking statements due to the wide range of risks and uncertainties, including those set forth in our SEC filings. Forward-looking statements reflect circumstances at the time they are made. 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 might also discuss non-GAAP financial measures. Please refer to our security filings and earnings supplement for reconciliation to the most comparable GAAP measures. With that, I’d like to turn the call over to Jim. Jim, over to you.

Thank you, Mary and good morning. Loews is off to a tremendous start in 2022 with each of our consolidated subsidiaries continuing to produce solid results in the first quarter. Before we talk about the financial performance of our subsidiaries though, I want to give you an update on the ongoing Boardwalk litigation in Delaware. As some of you already know, 4 months ago, the Delaware Court of Chancery found that Loews improperly utilized a call right embedded in Boardwalk’s Master Limited Partnership agreement when we bought in the minority unitholder shares of Boardwalk. Astoundingly, we were found liable for damages of almost $700 million plus interest, which amounts to more than a 60% premium to the unaffected price of Boardwalk in 2018. I have been told that this is the largest class damages award in Delaware court history. We were shocked by the decision. Why? There are three basic reasons. First, the decision disregarded and dismissed a well-supported opinion of counsel, a document to which the Delaware courts traditionally give great deference; second, the numerous well-reputed lawyers who advised us on this matter were found to have participated in a corrupt scheme to deliver what was called a contrivance; and finally, we were assessed the damage number that in terms of both dollars and premium flies in the face of established Delaware precedent that market price should serve as a barometer in assessing the value of a public company. Those who know me and know Loews will understand why I’m outraged and frustrated by this outcome. At Loews, we have always believed that operating ethically and with integrity is paramount. The notion that we might have been so duplicitous in our dealings with the minorities’ unitholders of Boardwalk is simply not true. So where do we stand now? Currently,…

Thank you, Jim, for those kind words. Working with you and the whole Loews team since 2005 has been a tremendously gratifying professional and personal experience. This morning, Loews reported first quarter net income of $338 million, a 30% increase from net income of $261 million in last year’s first quarter. Earnings per share rose 40% to $1.36, spurred on by a 7% year-over-year reduction in average shares outstanding, thanks to our share repurchase activity. All three of our consolidated subsidiaries, CNA Financial, Boardwalk Pipelines and Loews Hotels posted excellent results in the first quarter. While CNA accounted for the bulk of our Q1 net income, the earnings increase was driven by significantly improved results at Loews Hotels as well as by the absence of non-recurring charges related to Altium Packaging that depressed last year’s first quarter results. Partially offsetting these positives was a decline in parent company investment income as equity markets sold off in Q1. Before I walk through our subsidiaries results, let me touch on the impact on our earnings of recent financial market turbulence. The S&P 500 was down 4.6% in Q1, and the NASDAQ 100 was down almost twice that at 8.9%. In fixed income, the 10-year treasury yield increased 83 basis points to 2.34%, and the Bloomberg Barclays U.S. Aggregate Bond Index was down about 6% in the first quarter. Since both CNA and the Loews parent company hold equity securities and LP investments correlated to equities, the decline in equity markets had a negative impact on earnings in these two portfolios. The decline in bond prices caused by higher fixed income yields, however, did not negatively affect current period net investment income at either CNA or the Loews parent company. At the parent company, almost 83% of the portfolio is made up of…

Thank you so much, David. We are now going to move on to the Q&A portion of the call. We have a number of questions from shareholders. Our first question is for Jim. Jim, how should we think about the future of natural gas in light of the war in the Ukraine?

So, let me start by saying that I am horrified by the images that I see on the news. I hope and pray that sanity and peace can be restored, but the cost in terms of human lives is already way too high. Because of Europe’s dependence on Russian hydrocarbons, energy has become a focus of many discussions surrounding this conflict. I believe the war in Ukraine has made it clear that we should be encouraging drilling for natural gas along with LNG export development in the United States. We want to be able to supply LNG to Europe and other countries and the world who previously were supplied by Russia. We are fortunate that natural gas is a very abundant resource in the United States and we have more than enough to maintain our energy independence and still be able to safely export large volumes to those who need it. The companies that make the significant investments for LNG facilities will need long-term contracts from Europeans and others in order to make this happen. Looking at the broader picture, I also want to discuss the transition to renewable energy in the U.S. and the world. The increased use of natural gas has meaningfully reduced greenhouse gas emissions worldwide. Globally, natural gas has an important role to play in reducing emissions through the displacement of coal and as a backup to renewable energy by providing reliable power for times when the sun doesn’t shine and the wind doesn’t blow. In the United States, CO2 emissions from power generation are down by 40% over the last 20 years as power plants have switched from coal to natural gas. As the U.S. develops reasonably-priced natural gas exports, we can help wean the world off of coal. Currently, global demand for natural gas…

Great. Thank you, Jim. Next question for you, Jim. You and David covered this a little bit on the call, but can you comment further about how interest rates will affect CNA’s portfolio going forward?

Sure. At the end of ‘21, unrealized gains for the CNA portfolio were $4.4 billion. At the end of the first quarter of ‘22, unrealized gains were $1 billion, primarily due to higher prevailing interest rates. Over the long term, however, higher interest rates will generally be beneficial for CNA, allowing the company to invest its cash flow at higher rates than it previously could. On average, CNA invests between $300 million and $400 million a month in its fixed income portfolio, so higher interest rates will improve that portfolio’s return over time. Also, the increase in the general level of interest rates has been very beneficial for CNA’s long-term care book of business. In the current environment, CNA has been able to invest at rates significantly higher than was previously possible. Additionally, until now, the long-term care book of businesses operated at the lower end of its targeted duration. With the current increase in rates above its targeted rate, CNA is now buying long-term securities at yields that previously it could only hope for and has begun the process of lengthening the duration of the long-term care portfolio.

Great. Thank you, Jim. Last question. Jim, for the past several quarters, you have ended our earnings conference calls with your views on inflation and interest rates. Could you please update us on these topics?

Sure can. First of all, kudos to Jay Powell for finally recognizing the seriousness of the inflation problem. Some may argue whether the next Fed funds rate increase should be 25 basis points, 50 basis points or even 75 basis points, but Powell has stayed out 50 basis points. And to me, it seems perfectly reasonable in the context of more rate increases in the near future as needed. The age of yield curve intervention has ended. Since 2008, the Fed has basically controlled not only the short end of the yield curve, but also the entire maturity spectrum in the fixed income markets. How did we get here, in 2008, I believe the Fed acted appropriately when it intervened in a time of financial emergency. However, the intervention went on for way too long. The Fed’s control of the yield curve by means of quantitative easing squelched any signals that the markets might have sent through price moves in fixed income securities. In other words, the Fed was implicitly saying that their judgments on the shape of the yield curve were better and wiser than the markets. As we now see, that strategy has had disastrous results with regard to today’s level of inflation. We are left with the highest level of inflation in 40 years, brought about by zero-cost money, loose, loose, loose fiscal policy and COVID, all of which caused the inflation genie to come gushing out of the bottle. And unfortunately, the Fed kept the proverbial punchbowl out for so long that there are no easy solutions to the inflation problem that the Fed is currently trying to fix. The market now is in the beginning stages of a big adjustment as investors, and not the Fed, determine term interest rates. Lots of people have guesses,…

Great. Thank you, Jim. And that concludes the Loews call for today. As always, thank you for your continued interest. Please feel free to reach out to me with any additional questions at mskafidas@loews.com. A replay of this call will be available on our site, loews.com, in approximately two hours. Thanks so much. You may now all disconnect.

Ladies and gentlemen, this concludes today’s event. You may now disconnect.