L - Earnings call transcript Q4 2018

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Loews Corporation Q4 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I will now turn the call over to Mary Skafidas to begin.

Mary Skafidas

good and Laurie, you, morning, everyone. Thank Loews to Corporation’s fourth call. earnings year-end and quarter Welcome our earnings earnings overview, of copy A release, found our may supplement on website, loews.com. be company and

Chief this we our call Financial Edelson. David Officer, Jim the On Chief have our Tisch; Executive morning, and Officer,

Following our will morning, this have which session, question-and-answer prepared questions include remarks will from we a our shareholders.

company the statements Actual begin, any that SEC update from or statements filings in this filings range statements might to expressly with the the including statements. the by forward-looking in reflect include forth uncertainties, you any results materially I forward-looking nature. is conference those time forward-looking a and statutory in Company’s remind obligation that of may will disclaimer however, forward-looking disclaimer, brief those or summary Before at implied which we forward-looking a are differ in to included wide company is achieved made. statements set Company’s risks only revise call our circumstances made disclaims of This The any they SEC. are due the

reconciliation security also and the to Jim, today, refer financial before earnings GAAP our call. In CFO, most the During does, measures. minutes, the call supplement Please non-GAAP discuss Jim our through comparable walk might the CEO, to we the But for kick measures. to few you filings a the David off year. he will quarter Tisch, Edelson key you. drivers and for will our over

Jim Tisch

negatively Loews’ investment affected of at catastrophe the than morning. XXXX, Loews severe stock end had market Thank portfolios. disappointing losses impacting declines you, quarter, and expected a good higher CNA’s both Mary, results in fourth and by the at CNA and

in context. Specifically these with related to put CNA, losses equity let’s regard

operations CNA’s market quarter portfolios $XXX for in common While underlying underlying straight while or CNA’s on XXXX, written X% net CNA’s investment peers. declined slightly grew million, counterbalancing quartile fourth improved second by partnership down fourth CNA’s top premiums ratio and quarter, ticked were combined In were increased year the by its loss a up XX% strong. equity ratio limited performance, it’s essentially stock XXXX, for X.X%. in with par the X.X% full the the and and about rate year

the Additionally, by points making CNA the still payments as and technology, two while $X.XX necessary and dividend. full analytics XXXX CNA CNA results a in reduced dividends has balance well and of These from investments March the its sheet $XXX Loews in million special CNA quarterly expense a positive today, Board’s Earlier in X ratio its over dividend talents. light strong years, declared in $X year. as of dividend outlooks, year will in this result past receiving

have upcoming the almost in including years, five $X Loews payment, last the will from dividends billion Over received dividend March CNA.

ongoing Moving happy company progress XXXX. on XXXX, year. by two operational areas. to to had and focus improvements XX% grew has since to report that Company’s the is grow Loews This Hotels Loews to commitment Hotels, EBITDA I’m stellar doubled due tremendous and the adjusted nearly In a in

hotels is Hotels the Beach, between hotels group Loews be hotels as distinguished better withstand disruptors our to are significant City XXX on concentrating to hotel. Loews Chicago First, economy. opened These as such business. highly that such with in and hotels XXX as cater soon sharing rooms to able properties space, Kansas the meeting along well These have profitable as typically Miami and

on themed Rangers set one-of-a-kind set profitable first highly John ago, XXX a hope Loews strategy occupancy has in XX-XX and Hotels. their with Loews to in generators. in daily in the The resulted XXX RevPAR. has our destinations Loews We dramatically and in Live! the properties Hotel of for year. rooms, which Orlando are that this developing XXXX Live! rate Live! with By By of Life area to June Texas rooms Cordish set partnership initial to be Loews our to that properties of Starting developed at Louis success Bay six Companies venture and outperformed developing other partnership their Hotels early this the long-term the Loews for motion hotels open is open. NBCUniversal XX The rate Company’s this another Hotels Park the are in focus open base Tisch Orlando CEO, Hotel X,XXX rooms. with joint than More in theme These park therefore hotels have Arlington, and to construction, Portofino In demand Universal. concepts the unique average managing The under Globe St. and in on next the By with hotel in competitive continue in years AT&T Loews Texas summer will in the XXXX, with continues Hotels set Loews campus Stadium. partnership X,XXX partnership with There being now with a of campus, built-in Orlando

Companies We St. property located next be The well this are will Busch to Cordish as Cardinals. The on hotel Louis partnering with Stadium. the along with

just have XX for true, of all Loews shares. don’t We call and to that over be one of we of the buy In you. common turning means million an value shareholders our repurchase to Loews We sensitive long-term. our at have view of We of best ways create And because $X we’re share over intrinsic this believe of trading repurchased the significant program, Loews price I outstanding tools Before value when the shareholders. was to allocation to for value. X% Loews share creating XXXX, about its below discuss for want the note, repurchased it’s repurchases, shares. stock over to intermediate over stock only capital David, little is automatic will which David on to which which believe a a to billion, been over I our we equivalent shares continue back

David Edelson

good of $X.XX or Jim, quarter fourth Today $XXX per Thank to last share, share of net morning. in or million quarter. and million per reported $X.XX $XXX we net year’s you, fourth as compared loss income

full year, income $X.XX $X.XX the we or per from billion in $XXX For net $X.XX of per XXXX. million down share, share or reported

fourth Act. and the reminder, last included was net the net full year to Tax a a in of quarter year’s Jobs passage related income As $XXX Cuts million and benefit

by my of net speak QX the tax I U.S. We the have supplement XXXX included to lower remarks, segment. year-over-year the this the impact will Act. affected earnings ongoing that impact of were comparisons results ensuing out corporate before a table Tax by of laying in our Note benefit In reporting impact the rate. the also

results. Let fourth key to and then quarter by turn drivers the me start discussing attention full of year my our our loss

two fourth for net and decline lost and CNA equity As This by by positive Jim the Michael catastrophe earnings return in At in in common at a Company’s $XXX at the to income. investments market in stock on yielding main QX Hurricane the investment mentioned, our the quarter, CNA, losses versus results difficult negative were million both swing our the partnership conditions CNA contribution the XXXX. caused ground drags company accounted caused parent and and primarily of wildfires. CNA’s California limited results QX

quarter in when are highlighted, S&P XX% negative was XXX Jim the no down returns As a surprise.

decline. million last realized for CNA, the the $XX losses year. fourth parent This in lower and in company gains A decline common QX, of investment level of versus in Additionally realized income. in also ground change accounting accounted limited contribution. at income assets lost million of another partnership also had after-tax stock net contributed XXXX decline quarter investment of The the the company the investments year-over-year in for Loews to portfolio CNA’s $XX invested

for the fourth CNA, absorb results after-tax quarter, reflecting catastrophe losses tax our couple rate, of declined as Tax one-time and factors activity. of quarterly turning in just quarter. such fourth significant million income. accounted for is risk, summarize, Average the last in exaggerated the net $XX over our total the losses, the before catastrophe actually To company. higher year. accounted in of in quarter quarter our booked decline year-over-year corporate to at impact level contribution year’s year-over-year CNA the for pre-tax year-to-year the CNA net parent income, share CNA’s in last at of losses the compared million size in reduction pre-tax year’s CNA the repurchase XX% to losses A full As X% so on of cited Diamond it catastrophe The of fourth the expects and our in $XXX fully business from in activity $XX outstanding variance losses given decline shares quarterly assuming observations the million of in the the the catastrophe the Act. to quarter, above more to excluding the with

me Now review full results. our let year

net favorable company prior of of the year-to-year written XXXX, Catastrophe up which results strong the realized actually $XXX amount all, in of our lower consistent impact earlier, ratio losses, in underlying modestly. million income related lesser growth contribution X%. investment and income annual therefore, All and charges underwriting lower at core XXXX excludes $XXX in CNA’s offsetting of million Act. income net $XXX mentioned combined to premium transfer. CNA, The pre-tax I but the posted one-time the income As Tax an loss as basis, year the P&C underwriting to a XXXX, was in our main posted investment development. portfolio decline a were drivers earned it million losses on CNA’s of this, down was net net we than of were XX.X% increased were net the in

investments, income year. Let net to $XXX million generated losses from me swung XXXX million to This in prior pre-tax our of the and income pre-tax touch by loss investment for year. last gains last in stock was This common reduced by swing net income on $XXX year. versus XXXX relative $XX gains XXXX. P&C million [indiscernible] by by our in compared CNA as partnership to $XXX limited million hurt realized a reduced change

contributed transfer decline, the Finally year development to to on with Indemnity. National portfolio largely year-to-year due the prior CNA’s segment Corporate loss

in reserve described a in net which sees using recorded its National and Loews’ the accounted CNA which transfer loss portfolio XX-K. transfer. glory all portfolio its a the substantially income to adverse portfolio loss is asbestos reinsurance reduced in transfer As loss for of year-over-year all accounting, million. retroactive our through by XXXX, in Activity environmental year a XXXX, under liabilities is net Indemnity, legacy prior development reminder, under $XX CNA

XXXX. against a compared pre-tax the XXXX, pre-tax early the income Turning XXXX, loss to average both items, extinguishment fell market income both operating year-to-year of years reported earning pre-tax fall-off of XXXX. in excluding non-recurring continued XXXX, a out resulting drilling $XXX revenues loss a $XX to on swing million declined in the and million XX% in in in of such in contract $XXX loss $XXX experience Stripping Diamond. pre-tax impairments XXXX daily million revenue operating a XXXX. the items days renegotiations. in at a and effects given pre-tax of Diamond in as comparison as X%, debt and Offshore asset loss revenues to Diamond difficult of a declined. non-recurring of from loss only million in to revenue Operating expenses conditions an is in Contract

to and of its $XXX Boardwalk loss XXXX, ended As pre-tax on as million Net decline utilization over customers. up restructurings. to positioning the $X.X were projects to higher decline pre-tax as XX% the top experienced XXXX. new were with and given in income, Boardwalk’s itself into upturn. growth in investing by held offset declining until more the in in considered common The Diamond transportation and Moreover, net $XXX income, Boardwalk. excluding billion rose loan resulting be of revenues Diamond one-time which a and pre-tax capacity sale cash approximately ensure fleet from contribution contract $XXX continue in system revenues plant XXXX an negative of higher from to publicly The million declined to outstanding and Diamond capacity the revolver in of over the XX% eventual from is in excludes its XXXX. of impacts $XXX loss our our in X%, million XXXX in revenues, renewals XX%. year Despite than expense transportation will as projects, depreciation unfavorable in income company contribution to XXXX net of on we’ve discussed, million relates units increased of has margins storage processing the In for the by $XXX July tier a income parking from and be XXXX. expenses purchase Tax growth expirations, Act net equivalents. XXXX, well race sale million impact

income, the in year, of XX% second first our the half XXX% during earnings – XXXX. XXXX of all Boardwalk’s half just the net XX% and we included of of For versus

had As of million XXXX. Jim year, mentioned, $XX Loews million, up generating a from in income Hotels pre-tax $XX strong

Beach Miami in posted losses name XXXX. Loews Excluding six investment Philadelphia during again, billion consistent from the Loews portfolio from in the cash Parent year. net activity decrease. year, XX% earnings and at for the meaningfully to all and focus million. the XXXX, in to of defined $XXX averaged equity the the The our $XX to relates caused average company’s hotels Orlando portfolio is our management XXXX of and over Loews from well Hotels we The an the Universal of disposition non-recurring repurchase in a all small returns Hotels hotels securities investments gains Boardwalk Also, XXXX income in and strategic LPs, which the disclosed to just the with our on non-recurring Resort, million $X.X and destinations. adjusted largely down income the group Numerous meetings in impairments, items EBITDA, pre-opening holdings to company supplement, the along increased of stemmed on down including quarterly expenses, and immersive in properties, performed the extent units, QX. new $X of such Loews was loss market as ongoing $XX XXXX. with million few pre-tax XXXX. and drop attributable primarily items development properties, of equity purchase and billion in disappointing Share rose

to securities X% company marketable remaining LPs XX% parent cash maturities. sheet. continue equivalents, with in We the maintain extremely year-end, $X.X At balance equity totaled the billion XX% in liquid portfolio an and and strong and in fixed and

we dividends $XX million and fourth $XXX our from million the quarter, received subsidiaries. $XX in Boardwalk. During CNA from from million

declared total received $XXX million we this CNA will that quarterly $X.XX from CNA million year, full $X Loews share Combining two, $XXX and per million in a CNA to regular in receive of CNA the For with Boardwalk, dividends dividend. dividend addition Today dividends of the $XXX contributing special its amount. quarter. just We X.X price million year-end, million X.X shares an $XX.XX. XXXX an I a over of $X XX.X will the fourth now call million Mary. billion. Since during repurchased the hand $XXX average have quarter of million we for at for shares repurchased about back additional in and to all shares from

Mary Skafidas

We’ll to David. questions you, now go shareholders. Thank from

Mary Skafidas

earnings Can prepared this question on further results? their CNA’s first add your ugly. Our quarter are to comment you and is, pretty remarks

Jim Tisch

Mary. Sure,

a one were I all, it main in were very for of quarter. we that in of was in two was for and that First $XX catastrophe catastrophe CNA. to that prior points department, million size versus driven disproportionate On the million but that catastrophe quarter was quarter in add the X.X our the of was earnings ugly, versus the factors, year way points no $XXX ratio by year. prior combined losses the losses X.X the losses million in $XXX had should the basis,

year temporary the going And factors Board’s rate X%, the CNA results $XX quarterly of the were at were good between which gross additional reflecting and – opinion, significant difference the is premiums the The the in $X company the to Net prior paid quarterly losses, which earnings confidence the versus other catastrophe a the fourth was up that reinsurance loss year. million are operating the and CNA proceeding. year increases CNA and investment $XXX and achieve a XX.X% way special specifically results across the X% in – CNA. from thing lot written is of the from things that continues the underlying written was in number as was quarter hurt our the those dividend well combined the of and that up dividend last dividend, significantly opinion, in ratio and that gain. lines. – dividend Aside the my the the million stocks, the my on was LP a results, common purchasing. portfolio quarter two last a as X% overshadowing for premiums CNA’s year, of about is same CNA as X% announced announced a regular the are

So pretty from notwithstanding CNA, quarter, my are perspective, at relatively things the ugly going well. really

Mary Skafidas

Thank that you, additional Jim for clarification.

projects Hotels. of on expand Can is Loews number next you development has way. a on strategy? Our Loews question Hotels the Hotels under Loews

Jim Tisch

moving see Sure. rather especially there theme is in What parks. experiences We Orlando, shift venture we’ve joint toward that generational the is in play spending, than generation more where with is out our a with millennial seen this Universal things.

hotels and six we’re a have X,XXX there rooms. that building seventh has hotel now We

that earnings higher over Roberts hotels of remarks, numbers as in call, average extraordinary that the we’re ratio achieve On a than mentioned already occupancy market the Comcast is reported the result my ratio knew that we market. Brian something I XX%. to of rate, daily occupancy the RevPAR as in and our And able Orlando

So done applied we Orlando the is we’ve taken of learnings from our it what and we’ve the we’ve have to rest business. that

be to convention a it’s arena, to center. stadium we generators, sports a are First, demand or a whether striving close

opportunities, own are to properties our up put partners. willing and position well And our we to own result, And us. find working therefore, partners financial with that not a hotel very those the of a we business. in as leverage hard as as are partners to to Secondly, are are hotels, unique hotel money we’re We When we of work partners hotels. cognizant willing very, to manager develop cash, municipal we’re Arlington holding forward of find and Louis, procure with just doing believe for in that. company we’re St. Kansas we’re that we we’re very to that City. investing result, a rates the attractive the – ourselves need development moving earn in good are in and we return, as investing now And which able very hotels

We that in that we’re is years, attractive have opportunities, suspect a that’s coming to that as look in team continuing three right the now. developing markets what and I opportunities for additional these new we’ll see doing us to we’re

Mary Skafidas

you, Jim. Thank Great.

Diamond taken on on is Diamond hasn’t the question Next industry do about drilling you feel recovering is market Offshore. the Why horizon? consolidation? in offshore part How

Jim Tisch

there years I the XX I’ve with in of the things. having So, offshore a increase in And this the that deterioration thing slight of recovery lot to XXXXs. glut think of in like a is supertanker offshore the supertanker over And respect for one to In for the about drilling Through was of been I business, business. a in supertankers saw a seen nice similar that before now. things happening that’s rigs you’ve mid movie a early in to seen we business drilling, demand, see and late ’XXs. the scrapping, whipsaw the

First that to they’re companies in they Cash of to that at offshore and order cash. this is is the need managing business. one And thing that all, one earning to desperately are all drilling in only point the time. not thing thing in stay

prices can Brent they tanker in left and not rapidly. water prices, My barrel with Combined are rigs I an clearly oil. at happening, think no a for that I’ve industry the increase they what from see for for about sight. WTI, then are on operating, very relatively we offshore $XX the is happens, a that to them belief oil for ships, rigs, when from right is barrel rigs I could oil deteriorate very maintaining a are later now, that and with that which years, and those So about $XX will also the business significant with coming opportunities drillships demand big on pretty and to that that are cash that seen it’s in a then, first are drilling and increase the demand not over stacked. rigs on to already lift rigs operating, operating increase spend in go And low are see

cash excess recommission rigs. to $XXX years rig a the industry of cost more for million just the doesn’t a per be in stacked in that’s today number easily that recommission is rig, exist estimation to can been than Our that and few a of

been So the that tend I especially think are being that the view will have working, to rigs that of recommissioning customers fact slow, in of already that use like to recommissioned. rather rigs our be than rigs

be meet to demand a I long to foresee So that I time think it’s forward. come rigs back for going the going to

of Diamond. the has runway an million relatively terms $XXX Diamond In had billion. it quarter has and additional of the of about industry. at capacity about borrowing Diamond in $X cash within a end long the

of Diamond, competitors. for $X.X So that lot liquidity excess of is a is got billion to the which other really our it’s substantially close in runway of

what be In to terms we transactions have find for of Diamond the all I any been is value but we’ve opportunities, looked accretive say shareholders. able consolidation, that to would not for – would

shares. spread and So to continue for ask these seem bid transactions days buying to very for in we where their I discussions, much say other between only would opportunities. report. wide, for return there’s that but somebody the really are gives to get shares look to done earth the not that continue the to and scour assets have we is to But date, drilling transactions

Mary Skafidas

call like you for Okay. additional over Jim. we’d questions. the Laurie, call to open the up turn Thank to you, to

Operator

comes [Operator line Instructions] Bank. first Josh the from of question of Our Shanker Deutsche

Josh Shanker

morning, Good everybody. Yes.

Jim Tisch

morning. Good

David Edelson

Hi.

Josh Shanker

risk to assets? way And a this money Loews being bunch you morning. risk small pool but I kind in in a trying takes, allocate run funds, of those of a hedge of asked I funds, about Jim, disagree getting that hedge not What feel hedge I put think those new out Loews? around it – money. to to that you money question also in the you with they’re know part sense meaning. at is into, overriding money may sort is says I CNA’s be good that of philosophy is portfolios terms you have CNA your assets investment and make a risk of before, that think for Good the of they you funds guess, pool I like it. on a of have going What

Jim Tisch

Sure.

let first, of or five issue weeks, address year, the back earned results. At this five the the So fourth quarter weeks we last of first all lost six we of have me that year. Loews, in in

the a quarter year, the let $XX reported about of we by over CNA, than portfolio But last So Loews. loss be was talk of in and up fourth in of million invested types recovered about portfolio people take the that our their can different a me XX% they’ve and minute at more At losses. of things that in.

exam. down private there equity a equity There private I can a It’s is our stocks, incredulous. the things in XX%, past hedge the firms inconceivable can was the funds, down X%, self-graded invest equity. You private have what in board the equity. the private a that reported drop no that’s market And generally, would few S&P quarter, in loss actually you of in and at be report struck hedge I in in down could – me – to that stocks and It’s across funds no can were past firms fourth XXX the in you XX% temporary all. that invest And months about is one the call invest in didn’t that was me loss and that’s loss. quite this find

moving but average, that pain the have bearing just ways some call something is it’s deal of mark in is to with. in CNA would mark-to-market, whereas being more what to private there equity, a of we I So

very run had with Loews. of hedge funds In a good CNA’s strategy, as the terms has

them competed think in number de-emphasize We’re there’s starting capital them. of awful returns an because down. that, to one, the invested We that’s has we think been lot

balances. the earn – years, Additionally, earn can today’s able X%. on to you you to your X.X% zero cash were over easily XX in past Today

So alternative simply funds. terrible such not a cash investing is in to hedge

go looking and risk private at equity. funds We’re hedge beyond assets that

at looking certain instruments. We’re debt

at certain, I call, We’re investments. equity nontraditional private would what looking

to out for what the for will coming for just vehicles best We’re year Loews. assets trying both be CNA figure risk and the over

David Edelson

the it you quarter, looks on it returns. that made X% This just ugly let it And, made just obviously, prior at The if that, year year. the pretty under X% Josh, down add portfolio me year And before was the returns. X%. look

clearly, fourth on it’s the an quarter in focusing solely So just aberration.

Josh Shanker

Thank get it and we acquisition if Okay. for I you. can Container? looks more And one Changing how gears, about in. talk can pipeline Consolidated

Jim Tisch

they There’s of three other and our tires. a in last What we relatively X as their is opportunities pipeline And I made, kick thesis at are they’re is one it, year, X acquisition small. X continuing think that’s EBITDA. of a EBITDA, number proving there at containers that to scale say, each our and found own – out smaller or to that because times of economies result, we’re acquire of a manufacturers times able X and and

in So and we’re very with investment pleased CCC. overall with also the pleased market, acquisition we’re our

Josh Shanker

acquisitions all does CCC Would that self-funded? be

Jim Tisch

be self-funding. at, they we that date, will To have the looking continue we’re to believe on been, and they based that set of opportunities

Josh Shanker

Thank much. you very Okay.

David Edelson

you. Thank

Operator

the Thank Q&A conference. for any call return conclude comments. I’ll Skafidas the to of now does That Mary portion the you. closing

Mary Skafidas

you, Laurie. Thank

website, for Loews be two call always, loews.com concludes everyone of hours. replay will thank continued you, for A That today. available this our As interest. your call in on approximately

Operator

Loews in the conference XXXX participating Corporation Thank call. for earnings you QX

now You disconnect. may

Loews (L) 11 Feb 192018 Q4 Earnings call transcript