LOEWS CORP Q1 FY2023 earnings call

James Tisch's Remarks

• Highlighted CNA's strong performance with record underlying underwriting income and net written premiums growth, and Boardwalk's EBITDA being essentially flat. Noted Loews Hotels' adjusted EBITDA growth due to strong occupancy. Mentioned share repurchases with nearly 8.2 million common shares repurchased in Q1 2023. Provided update on litigation related to the 2018 acquisition of the minority interest in Boardwalk Pipelines, with the Delaware Supreme Court ruling in Loews's favor and remaining issues remanded for trial court consideration.

Jane Wang's Remarks

• Explained the adoption of the new accounting standard LDTI, its impact on shareholders' equity and net income. Detailed financials of CNA (net income contribution increase), Boardwalk (net income contribution decrease slightly), Loews Hotels (adjusted EBITDA and net income increase), and the corporate segment (improved after-tax investment income).

CNA

• Financial performance: CNA's first quarter underlying underwriting income reached an all-time high. The underlying combined ratio was 90.8%, improving by 0.6 points year-over-year. The all-in combined ratio rose to 93.9% year-over-year due to higher catastrophe losses and unfavorable prior period development. Net written premiums grew by 11%. Core income was $325 million, a 9% increase year-over-year. The commercial real estate portfolio is well-diversified geographically and by property type, and CNA is not anticipated to be materially impacted by current commercial real estate industry challenges.
• Revenue contribution: Not explicitly stated as a percentage but detailed financial figures provided.

Boardwalk

• Financial performance: EBITDA was essentially flat at $256 million in the first quarter, compared to $258 million in the prior year. Revenues increased primarily due to re-contracting at higher rates, growth projects, and higher storage revenues, but were offset by higher operation and maintenance expenses. Net income contribution to Loews was $86 million, a $5 million decrease from the first quarter of 2022.
• Revenue contribution: Not explicitly stated as a percentage but detailed financials provided.

Loews Hotels

• Financial performance: Adjusted EBITDA grew from $67 million in the first quarter of 2022 to $86 million in the first quarter of 2023, driven by strong occupancy, which increased by nearly eight points. Net income contribution to Loews was $24 million in the first quarter of 2023, compared to $15 million in the prior year's first quarter, partially offset by higher interest expense on floating rate debt.

Guidance

• Optimistic about the litigation related to the 2018 acquisition of the minority interest in Boardwalk Pipelines being resolved favorably and hopeful for a lower court decision by the end of 2023. No new explicit forward-looking financial guidance beyond the litigation timeline.

Risks

• Commercial real estate market challenges could potentially have an impact on CNA, although currently not anticipated to be material. Potential future flare-ups in the banking system crisis as local and regional banks lack the government implied guarantee enjoyed by money center banks.

Q: Loews has a substantial net cash position. How do you manage it?

A: At the end of the first quarter, only a tiny portion of cash and investments is in cash deposits; most is held as short-term treasuries or swept into money market accounts. The average duration of the treasury portfolio is typically less than four months, and higher interest rates benefit the portfolio with an average yield of 4.8%.

Q: Jane, is Loews planning on refinancing its May 2023 bond maturity?

A: We are planning to repay the $500 million maturity. Given that our subsidiaries are performing well and mostly self-funding their growth, there is no need to refinance this maturity.

Q: Jim, would you like to share your latest thoughts on the economy, interest rates and inflation?

A: Discussed the Fed's rate increases being too much for some banks leading to the banking system crisis, the need for the Fed to pause rate increases to assess data, and potential future flare-ups in the banking crisis while addressing the question of how much higher rates may need to go to combat inflation.