Loews Corporation Q4 FY2023 earnings call

• CNA experienced robust growth with record core income, and Loews purchased 4.5 million shares of CNA common stock in 2023.
• Boardwalk Pipelines had strong EBITDA and completed the acquisition of Bayou Ethane.
• Loews Hotels performed well with Adjusted EBITDA, and made substantial investments in growth, including a new hotel in Arlington and properties at Universal Orlando.
• Share repurchases were significant in 2023, with 14 million shares repurchased for $852 million.
• CNA's investment portfolio contributed to earnings, with the fixed income portfolio boost expected to continue.
• Loews Hotels' new developments have substantial equity investment, and it typically takes 3 - 4 years for hotels to reach fully stabilized results.

CNA: In 2023, CNA reported record core income of nearly $1.3 billion, a more than 50% increase over 2022. Net written premiums increased by 9% and net earned premiums by 10%. The yearly combined ratio was 93.5% with record underwriting income of $585 million. For the full year, CNA's net income contribution to Loews increased by $482 million to $1.094 billion. Boardwalk Pipelines: Full year 2023 EBITDA was $929 million, benefited from stronger natural gas flows and improved pricing. Completed acquisition of Bayou Ethane for $355 million in September 2023. Loews Hotels: Had Adjusted EBITDA of $328 million in 2023. A new nearly 900-room hotel in Arlington, TX is set to open in February 2024, and Loews Hotels has a 50% interest in 11 hotels with 11,000 rooms under construction at Universal Orlando.

• Continue to be bullish on the outlook for CNA's business.
• Share repurchases will remain a key capital allocation lever as shares are viewed as undervalued.
• Expect the boost from CNA's fixed income portfolio to remain a tailwind for the foreseeable future.
• Boardwalk's acquisition of Bayou Ethane is a strategic fit for its existing gas liquids business.

• Impact of lower interest rates on CNA's investment income, though CNA lengthened the duration of its investment portfolio and the unrealized loss position is viewed as transitory.
• Regulatory environment poses challenges for Boardwalk's growth prospects, with onerous regulations inhibiting new pipeline construction but increasing demand for existing pipelines; also, the Biden administration moratorium on new LNG export facilities is a concern.
• Unrealized loss position on CNA's fixed maturity securities portfolio is noted as transitory.

Q: How would potential interest rate cuts impact the subsidiaries, particularly CNA?

A: Lower interest rates are generally not favorable for the insurance industry as they impact future investment income. However, interest rates are expected to remain substantially higher than pre-pandemic, CNA lengthened the duration of its investment portfolio to reduce reinvestment risk, and the unrealized loss position on fixed maturity securities is transitory.

Q: Jim, you mentioned that Loews is trading near an all-time high. How does that impact your share repurchase strategy?

A: We continue to believe our shares trade at a discount to their intrinsic value, so share repurchases will remain a key component of our capital allocation strategy.

Q: How much have you invested in the four new developments at Loews Hotels and when do you expect the earnings potential of those hotels to be fully reflected in the financial results?

A: Loews Hotels has substantially completed its equity investment of nearly $435 million in these four new developments. Typically, it takes 3 to 4 years after a hotel opens for the property to produce fully stabilized results.

Q: How is the regulatory environment impacting Boardwalk's growth prospects?

A: Current regulations and permitting requirements regarding new pipeline construction are extremely onerous, inhibiting new pipeline development, but the lack of new development generally increases demand for existing pipelines; also, the Biden administration moratorium on new LNG export facilities is a concern.

Q: Are there any updates on the Boardwalk litigation?

A: In December 2022, the Delaware Supreme Court reversed the Delaware Court of Chancery's ruling in favor of the former Boardwalk minority unitholders and remanded three unresolved issues to the Chancery Court, which will hold a hearing in April of this year.