Good day, everyone and welcome to today’s Loews Corporation Q2 Earnings Conference Call. [Operator Instructions] Please note this call maybe recorded and I will be standing by if you need any assistance. It is now my pleasure to turn today's call over to Chris Nugent, Investor Relations. Please go ahead.

Thank you, Ashley. Good morning, everyone and welcome to Loews Corporation’s second quarter earnings conference call. A copy of our earnings release, and investor presentation maybe found on our website, loews.com. I’m joined today by our Chief Executive Officer, Jim Tisch; and Chief Financial Officer, Jane Wang. Following our prepared remarks this morning, we will have a question-and-answer session with questions from our 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 a 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 filing and investor presentation for a 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, Chris and good morning. Loews is off to a great start in the first half of 2022 with each of our consolidated subsidiaries continuing to produce strong results. CNA had another quarter of solid underwriting results, and Boardwalk continues to benefit from robust natural gas flows. Loews Hotels had a record first half of the year, especially at the resort destinations, despite the lingering effects of the pandemic on business travel. CNA continues to be a success story for Loews. The company's underlying combined ratio improved by 60 basis points to 90.8%, driven by a lower expense ratio. Excluding the impact of the quota share treaty implemented last June, net written premiums grew by 13% in the second quarter, due to strong new business and retention. CNA continues its laser like focus on underwriting and the results speak for themselves. In the financial markets in the past quarter, two major things happened, risk assets dropped dramatically, and interest rates rose significantly. CNA's core income was negatively impacted by low returns on its private equity hedge fund and common stock portfolios, which were down by $171 million pre-tax versus the prior year period. With respect to the rise in interest rates, at the end of the second quarter, CNA's fixed income portfolio had a pre-tax unrealized loss of $1.8 billion. By comparison, at the end of 2021, the portfolio had a pre-tax unrealized gain of $4.4 billion. As a result, CNA's book value per share was about $35at the end of the second quarter, compared to about $47 at the end of 2021. In fact, it is important to note that regardless of the prevailing interest rates, CNA will still receive the same cash flows from the fixed income securities that are currently in its portfolio, and the company…

Thank you, Jim, and morning, everyone. I'm really looking forward to engaging with you all in this new role. Second quarter of 2022, Loews reported net income of $180 million or $0.73 per share compared to net income of $754 million or $2.86 per share in last year's second quarter. Net income for the 6-month period was $518 million or $2.09 per share versus $1 billion or $3.82 per share for the comparable prior period. The decrease year-over-year may seem large, but it's driven by two items that masked a very strong operating performance of our subsidiaries. The first being the non-recurrence of last year's $438 million after-tax investment gain on the partial sale and deconsolidation of Altium Packaging; and the second being lower investment results at both CNA and Loews, which I'll discuss more in detail later. Book value per share declined from $71.84 at year-end 2021 to $62.90 at the end of the second quarter, due mainly to the effect of higher interest rates, lowering the market value of CNA's fixed income investments. As a reminder, this unrealized loss sits in accumulated other comprehensive income or AOCI on the balance sheet within shareholders' equity. If you exclude AOCI, book value per share actually increased from $71.09 at year-end to $73.26 at the end of June 2022. Turning first to our largest subsidiary. CNA contributed net income of $183 million to Loews this quarter compared to $330 million last year. The year-over-year decline primarily reflects lower net investment income from LP and common stocks, partially offset by improved underwriting results and higher income from fixed income securities. In addition, investment gains and losses declined due to the unfavorable change in the fair value of nonredeemable preferred stock. Putting aside the investment results, we are pleased that CNA showed a…

Thank you, Jane. Moving on to the question-and-answer portion of the call. We have a number of questions from our shareholders. Every quarter, we encourage shareholders to send us questions in advance that they would like us to answer on our earnings call. Our first question is for Jane. Jane, can you give us an update on the Boardwalk litigation?

Sure. We filed both our appeal brief and our reply brief, and we expect to argue our case before the court on September 14. We anticipate a decision hopefully by the end of the year.

Great. Thank you, Jane. The next question is also for you. Did the recent incident at the Freeport LNG liquefaction plant have an impact on Boardwalk?

No, it did not. And just for context, in early June, there was a fire at Freeport LNG, which is one of the largest LNG export facilities in the U.S. Freeport shut down its operation and does not expect to be back at full capacity until later on this year. However, Boardwalk's transportation contracts with the Freeport shippers are on a take-or-pay basis, so it was not materially impacted by this incident.

Thank you, Jane. Next question is for Jim. Jim, can you provide us with an update on how labor shortages are affecting Loews' subsidiaries?

Gladly. So a few quarters ago, I discussed labor issues at Altium and at Loews Hotels. Since then, for Loews Hotels, I'm happy to report the labor has become less of a problem. Increased staffing levels are enabling Loews Hotels team members to deliver the high-quality service to which its guests are custom. At Altium, labor continuity continues to be a challenge in some manufacturing locations. To address this challenge, Altium is offering sign-on retention and employee referral bonuses. They've also adjusted base wages to keep up with the market. These actions have enabled Altium to close staffing gaps in many facilities. Overall, we are pleased that both Loews Hotels and Altium are seeing improvements in staffing.

Great. Thanks, Jim. Our final question is also for you. Would you like to share with us your most recent thoughts on inflation and interest rates?

Sure. So since our last call in May, the Fed seems to be following through in their fight against inflation. At that time, the yield on 90-day treasury bills, a market closely tied to the Fed funds rate, has tripled from about 80 basis points to about 2.3%. On the other hand, in that same time period, the 10-year treasury note has moved down in yield from a yield of 3% to about 2.65%. This price action tells me that the market believes that the Fed is delivering on its promise to enact policies to tame inflation. The prices of some commodities helped to tell the story. Since the beginning of the year, lumber is down 50%. Wheat [ph] is pretty much unchanged, notwithstanding the war in Ukraine, and [indiscernible] is down about 20%. As measured from the peaks, the prices are down significantly more than from the beginning of the year. So what does all of this mean? As I look at what's going on, I have a hunch that we may be in for what I would call a full employment recession. The current unemployment rate is 3.6% and job growth for the past 1.5 years has averaged 400,000 new jobs per month. While job openings are about twice the number of job seekers, so there's plenty of room for a decline in the demand for labor, but for unemployed people to still find a new job. What's been going on for the past year is that wages have not kept pace with inflation. For example, in the latest July employment report, average hourly earnings were up 5.1% versus a year-ago, but the CPI was up 9.1% in that time span, meaning that workers fell behind inflation by 400 basis points. The thing that has kept the economy…

Great. Thank you, Jim. 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 cnugent@loews.com. A replay of this call will be available on our site, loews.com in approximately 2 hours Thank you so much. You may now all disconnect.

Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.